Landlording & Rental Properties

5 Ways to Protect Yourself When Allowing Rental Cosigners [With Sample Cosigner Addendum!]

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
593 Articles Written

A cosigner is an individual who agrees to become legally obligated for the payment and condition of a rental. A cosigner is used when the tenant cannot qualify by themselves, usually due to income or a lack of rental history. Whether or not you choose to accept a cosigner to help bolster your potential tenant’s qualifications is up to you, but if you do, be sure to:

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

1. Screen the cosigner like a tenant.

They should fill out an application and be screened thoroughly, including background, income, employment, references, etc. Since the cosigner is guaranteeing the terms of the tenancy are consistently met, the landlord needs to be sure they are financially able to meet that requirement and that they exhibit the same responsible characteristics that are sought out in a tenant.

2. Be sure the cosigner owns property and lives in the county in which your rental is located.

By having these standards of a co-signer, you have a much higher likelihood that you will be able to locate them in the event that you need them to perform, since their address isn’t as likely to change compared to a cosigner who is also a renter. Renters move much more often than homeowners, so there’s a good possibility you will not be able to locate your renting cosigner when you need them.


Related: Tenant Screening: The Ultimate Guide

3. Require an application fee from the cosigner as well.

It is the applicant’s responsibility to meet your minimum standards for qualification. If they are unable to on their own, you should have no qualms about requiring the application fee to make it work with a cosigner since you have to incur the time and expense qualifying that person as well.

4. Fully explain to the cosigner that they are financially responsible for the property.

Let them know that you will hold them responsible should the tenant cause damage or refuse to pay rent. They need to understand that they are entering into a serious responsibility and not simply signing on the dotted line. You will need to have them sign a Cosigner Agreement, which will be included with the lease or rental agreement that states that they guarantee performance of the lease or rental agreement. You can find an example of a Cosigner Agreement at

Related: The Completely Free Way to Produce Customized Lease Agreements (& More!)

5. When using a cosigner, some landlords will also require that the cosigner pay a “performance fee.”

The performance fee is in addition to the normal security deposit and acts as the cosigner's personal skin in the game. They will receive the performance fee back when the tenant fulfills their lease, minus any amounts not covered by the tenant's security deposit. The performance fee gives the cosigner additional motivation to ensure compliance by the tenant since they will have to pay if the tenant does not.

When considering a cosigner, just remember that no cosigner, not even a great one, can stop a bad tenant from destroying a property. Avoid using a cosigner as an excuse to put in a terrible tenant that will just cause you headaches.


[This article is an excerpt from Brandon Turner’s The Book on Managing Rental Properties. To get more tips on successful landlording and crucial elements to include in your leases, be sure to check out the full book.]

Do you allow cosigners on your leases? Why or why not?

Let me know with a comment!

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
Read more
    Christian Bors Real Estate Agent from Mechanicsburg, PA
    Replied about 4 years ago
    I would like to add if the co signer has a spouse, make sure BOTH sign the addendum. If you go to court and the judge gives you a judgement, assets held in joint names will be protected. For example, say the co signer owns real estate and you want to record a lien, if the property was deeded in both names, you would not be able to. Co signers are generally a great idea. I try to get them as frequent as possible
    Donal Murphy Investor from Bronx, New York
    Replied about 4 years ago
    Wouldn’t a background check reveal what assets the cosigner has available?
    CHRISTINE GALLARDO Investor from El Paso, Texas
    Replied about 4 years ago
    Co signing information was very helpful, so much i did not realize.
    Katie Rogers from Santa Barbara, California
    Replied about 4 years ago
    Since 77% of residents in my town rent, finding a cosigner who owns property is probably not happening.
    G Marks from Midlothian, Virginia
    Replied over 2 years ago
    Do you have the cosigner(s) sign the lease and be listed as an occupant ? OR sign the lease and spell out they are not occupants and then reference the addendum ? Need to have this straight if you wind up in front of a judge for a judgement and make sure it sticks on the cosigner. Thanks