A co-signer addendum is a document that can be added to a standard lease to add protection to a secondary party responsible for the lease, in addition to the tenant signing the primary lease. A co-signer of a lease may wonder what kind of responsibilities they will have if they decide to sign the document. While specific responsibilities depend on the conditions listed in the addendum, there are few things in common: this guide explains what a co-signer is, when someone might consider a co-signer when assessing an applicant, the pros and cons of being a co-signer in a lease, and how to review tenants and their co-signers. Add this addendum to the default lease to legally transfer the terms of the lease to a non-resident co-signer. According to Nolo, a co-signer is a person who is destined to make rent payments if the tenant does not pay. They sign their name for the lease and are fully responsible for the rent if the tenant stops paying the rent. As always, these documents should start by listing all the credentials of the tenant, co-signer, property, and date. Although everyone involved is familiar with these details, create a permanent record of the agreement. Each piece of information must be recorded accurately to ensure that the document is complete and legal. The added security of this document will help you and the tenant feel safe in the agreement. Accepting a co-signer can help you fill vacancies when the market is tight, while ensuring you have recourse if rent is not paid on time. Instead of just rejecting an applicant with a poor credit score or low income, you can choose to accept it and mitigate your risk with a co-signer. Some landlords prefer to accept a higher deposit rather than add a co-signer to the lease.
However, according to Zillow, there may be national or local housing laws that limit the amount you set. For example, you may not be able to charge more than two months` rent as a deposit. If the deposit is not enough to compensate for your losses in the event of non-payment or damages, a co-signer may be the best option. RentPrep compares a co-signer to insurance if you`re considering an applicant who might not meet your rental criteria. According to You Check Credit, a reasonable co-sign agreement should make the co-signer jointly liable for all of the tenant`s financial obligations, including deposit, rent, fees and expenses related to damages. In this case, renting to someone using a secondary co-signature agreement is a great way to provide financial security. If you`ve never encountered this situation before, you may be wondering when the lease could be used for co-signers. There are situations where a co-signer for rent protection is a good idea for landlords. As an independent owner, you have the opportunity to make the best decision for your rental property.
If you decide to accept a co-signer, you need to make sure that you also perform a thorough tenant check on that person. This is one of the best ways to make sure your investment is protected. Some people may opt for a co-signer because they do not have a significant credit history (e.B students) or do not meet income requirements. Perhaps they are self-employed and it is more difficult for lenders and homeowners to accurately estimate their real income. There may be circumstances in which a co-signer may not be the answer. If a tenant isn`t high enough to cover the rent, it`s likely that you`re running after both parties` rent, which means more work for you. If a person has a relevant criminal record, a co-signer may not mitigate the risk involved. This signed document proves that the co-signer has agreed to resolve the financial issues in case the primary tenant is unable to do so for any reason. In addition, it ensures that both parties fully agree on the use of the document. Usually, a co-signer is a family member, friend, or colleague with a strong credit history and a stable financial situation who earns enough to pay the monthly rent. If the tenant no longer pays the rent due to certain circumstances, a co-signer assumes full responsibility for paying the rent.
That`s why it`s important to understand any potential liability issues that a co-signer might face. .
