Tips for Cosigners

We got an email in our inbox recently with a rather desperate question from a mother of a college student, who had been asked to co-sign a lease for her child. It was a lease with several students, and the mom was confused that individual portions of rent didn't appear to be identified in the lease, nor was there anything specific about her obligations as a cosigner. 

Cosigning a lease is tricky business. The terms are often unclear, and many cosigners go into a contract assuming that they will only be held responsible for their ward's portion of the contract, but that's NOT TRUE. In this post, I hope to clarify what the expectations are for cosigners, and some tips to avoid the pitfalls.

What Cosigners Need to Know:

  • You sign for the WHOLE LEASE: Because of joint and several liability, when you cosign for a lease, you cosign for the whole lease, not just the portion that applies for the person that you care about.
  • Joint and Several Liability: Most leases with more than one tenant are "jointly and severally liable." I wrote a post on this a while back, so you should click through and read it. But the upshot is that each individual tenant can be held responsible (by the landlord) for the mistakes of any tenant on the lease. Tenants can be sued or evicted individually or as a group for the mistakes that one person or all of them have made, at the discretion of the landlord. (In court, tenants can argue that they shouldn't be held responsible, but before it gets to court, the landlord can hold any or all of the individuals responsible for whatever problems may have arisen).
    • What this means for cosigners: you can be held responsible for any financial problem that any tenant (or group of tenants) on the lease has incurred.
    • How to be sure this applies to you: on the part where the tenants are named, see if the lease has a part that says that the tenants shall be "jointly and severally liable" or "jointly and separately liable." If so, then this applies to you.

Cosigner Tips:

  • Role of the landlord: It isn't the landlord's job or responsibility to ensure that you only get charged for the things that your ward did. Trying to change the terms of the lease so that you only cosign for the actions of your loved one is not likely to be successful, so don't be offended when the landlord or manager denies your request.
  • Roommate agreement: One of the best ways to protect yourself is to make sure that the tenants sign a roommate agreement. We have a sample agreement here. A great way for cosigners to handle this is to say that a roommate agreement is something that the tenants need to sign before the cosigners will sign their lease as a guarantor. Roommate agreements don't have to be notarized, as long as everyone agrees later on that they signed it, and these agreements should say clearly who is responsible for what amount of rent, utilities and security deposit.
  • Make sure you're only cosigning for this one lease, this one time. Some leases, in the spot where the cosigner puts his/her signature, explains that the cosigner is the guarantor for "this lease and all subsequent" leases or terms. You don't want to be on the hook for the indefinite future, especially if your loved one leaves the contract before the roommates. Clarify that you're willingness to cosign is only for this one term and no future terms.
  • If cosigning feels like a bad idea, try to re-negotiate. Some landlords will allow the tenants to have a lease together if other forms of security are given:
    • More security deposit: you might offer an extra month or two worth of rent in security deposit. To ensure this comes back to you, get a signed agreement from all the tenants about the return of the security deposit.
    • More rent: you might offer to have the tenants (or you) pay more rent each month, in order to avoid having a cosigner. You could pay this, or negotiate with the other cosigners/tenants to pay this.
  • Check out the other people: One of the most frequently occurring errors of first-time renters is the one where they don't think too carefully about the folks they'll be living with or renting from. Something you can do to make sure their rental term will be a success is to check out those other people. Here are some ideas: 
    • Criminal background checks: on co-tenants, landlord, managers, maintenance staff. 
    • How much will things actually cost? Check out the average cost of utilities, internet, etc. MG&E will estimate the average cost of utilities, and most utility companies can give you a good guess. 
    • How will other tenants pay their portion of the rent? Ask, and see what happens.
    • What are the personalities of the other tenants? Are they messy or tidy? Do they study in a quiet environment or a noisy one? Do they have a boyfriend/girlfriend (and where will they be spending their time as a couple, if they do)? do they stay up late or get up early? How do they handle additional not-fun responsibilities (like mowing the lawn, shoveling the snow)?
    • Is the house safe? Call the local building inspector and see if that address, or that landlord, have had big problems in the past.
    • Make sure disclosures have been followed: our "Preparing to Rent" page has lots of pre-renting information.