If a child, relative, or friend asks you to co-sign on an apartment for them, you may want to help. However, co-signing is more than just adding your name to help your loved one get approved to rent. Learn everything you need to consider, from how the process works to your own responsibilities, before saying yes to co-signing on a lease.
What Is a Co-Signer?
A co-signer is someone who agrees to be equally responsible for making payments on a debt agreement. Co-signers step in to help a primary applicant who doesn't have strong financials to get approved on their own. When it comes to an apartment, the co-signer uses their strong credit history and higher income to help a renter get approved for a lease. In addition to providing financial information, the co-signer legally agrees to take on the financial responsibility of the tenant under the lease agreement.
How Apartment Co-Signing Works
Much like applying for a credit card or loan, qualifying for an apartment lease requires adequate income and credit history. Applicants who don't quite meet the qualifications—for example, they don't make enough money or have a troubled credit history—may be able to qualify for the lease with a co-signer older than age 18 who meets the qualifications. The co-signer provides information about their income, agrees to a credit check, and signs an agreement outlining their responsibility for rent payments.
Let’s look at a real-life example. Young adults renting their own apartment for the first time often need a parent to co-sign for them. As a parent, you may feel more responsible for helping your child get their first apartment and may not think twice about helping them pay for rent when needed. However, there are many responsibilities you need to be aware of.
Apartment co-signing isn't limited to adult children. Friends, relatives, or significant others also might ask for a co-signature. No matter who's asking, co-signing on an apartment for someone is a decision you have to make carefully.
Your Responsibilities When You Co-Sign a Lease
Co-signers are responsible for monthly rent payments for the lease term and, generally, any property damage, cleaning, associated fees, and repair costs should the resident of the apartment be unable to pay these debts. That means if the tenant misses any rent payments, the landlord can collect payment and any late fees from you.
When you co-sign on a lease, you are often co-signing for the entirety of the lease, not just one tenant. Depending on your state's laws and the terms of the agreement, a co-signer may be responsible for the actions of all the apartment's tenants, even if you're not living in the apartment. For example, if your child asks you to co-sign on the lease of an apartment they are living in with three other people and you accept, you may be legally, equally responsible for all payments of the tenants on the lease.
In some states, if a tenant chooses to sublet their apartment, the financial responsibility of the co-signer remains the same. In New York, for example, a sublessor needs the written consent of any co-signer or guarantor to sublet the unit at hand. You may be released of financial responsibility if the landlord explicitly agrees to cancel the agreement.
Co-signing involves a promise to pay another person’s debt arising out of a contract if that person fails to do so. This practice is often common by guardians of those with intellectual and developmental disabilities.
By co-signing a lease, a guardian or conservator would obligate themselves to be personally liable to pay an incapacitated person’s debt, such as back rent, penalties, or damages. If a tenant who is incapacitated needs a co-signer, then it is not a conflict for the individual serving as guardian to voluntarily take on this liability.
Read the terms of the lease. In some cases, you may waive your right to be notified of late payments or even lease renewals.
Co-Signer vs. Guarantor: What’s the Difference?
Co-signing isn't the only option for helping someone get an apartment. Another option—albeit just as risky—is to be a guarantor.
A co-signer is jointly responsible for making monthly rent payments and can be a tenant named on the lease. A guarantor, on the other hand, is only responsible for paying rent when the primary borrower defaults on payments. The guarantor won't be named on the lease and has no rights to the property.
In both cases, when signing to be a guarantor or a co-signer, having a strong credit history and high income are taken into consideration. As a guarantor, though, many landlords may have additional requirements, including higher income requirements, proof of income, and residence either in state or within a geographical area, depending on the state. In New York, for example, landlords typically require the guarantor’s annual income be at least 80 times the monthly rent. That means if monthly rent on an apartment is $3,000, the guarantor must be able to prove their annual income is at least $240,000.
Sometimes a guarantor may be referred to as a co-signer. Carefully read the language on the application to determine the rights and responsibilities of the signer.
Should You Co-Sign a Lease?
When you co-sign a lease, you're agreeing to be responsible for making the payments, whether you live there or not. Before you agree to co-sign, here are some things to consider.
- Your relationship with the tenant: Co-signing for an adult-age child may seem more appealing and acceptable for some, rather than co-signing for a friend or another relative.
- Level of trust: Consider what you already know about the renter's job stability and financial habits. Co-signing for someone who's not very responsible could mean you have to pay more often than not.
- Other roommates: Since you could be held responsible for other roommates’ actions, this may affect your decision.
- Financial ability: Paying for monthly rent payments is essentially what you're agreeing to do when you co-sign. Consider whether your personal finances would be impacted if you had to make the full rent payments for several months.
The Bottom Line
Co-signing an apartment is risky, but the risk may be manageable if you have a close relationship with the renter and trust their (and your own) financial standing. Keep in mind that any unpaid balance—either from past due rent or unpaid damages—can potentially affect your credit score. If the tenant stops paying rent, is evicted, or the landlord sends unpaid lease payments to a collection agency, the co-signer’s credit may be impacted.
Ultimately, the decision of whether or not to co-sign comes down to whether you're able and ready to accept responsibility for payments if it becomes necessary.
Frequently Asked Questions (FAQs)
Who can co-sign on an apartment lease?
Anyone who meets the landlord's qualifications can co-sign an apartment lease. Requirements often include having a high credit score, an established rental or mortgage history, and a certain income relative to the monthly rent. A co-signer could be a parent, relative, or friend of the renter.
How old do you have to be to co-sign for an apartment?
In most states, you have to be at least 18 years old to sign a contract, which includes co-signing on an apartment. Even if you meet all other requirements for co-signing, the contract wouldn't be valid if you haven't reached the age of maturity in your state.