I have a friend whose, daughter is getting her first apartment. She only makes 2 times rent and they require 3 times as most do. They would accept her if her father (My friend cosigns). I have not done cosigners so I am trying to advise him well. The issue of whether or not the daughter can afford it has been discussed. My question is about the rights of the cosigner and the extent of liability. My thought is that the cosigner has no rights to enter the property but does hold financial responsibility for unpaid rent as well as damages.
A suggestion I made was to be a Co-applicant so that he has full rights to the property as well as financially. Sign a 6 months lease with the intention that the daughter gets her income up within those 6 months and can be the sole lessee after 6 months.
Please let me know your experience with cosigners and if you would have any problems with a parent being a non resident lessee so that they can monitor condition and have a little more control. Thank you.
Since we have several student rentals we run into this all the time. However, we do not have parents sign the lease as a co-tenant ... since they will not be living in the premises. What we do is have the parents as guarantors and execute a separate guarantee agreement which is attached as a schedule to the lease.
Since we have several student rentals we run into this all the time. However, we do not have parents sign the lease as a co-tenant ... since they will not be living in the premises. What we do is have the parents as guarantors and execute a separate guarantee agreement which is attached as a schedule to the lease.
Being on the lease and not just a co-signer is his best bet. Your are right. The cosigner really only is there for them to have someone to go after. They don't really get any "rights". I personally have worked too hard to get my credit where it is to jeopardize it.
Roy, with the student rentals. I imagine, the parents are not near by many times. If a parent that lived near by and wanted to be able to have a key to be able to protect their credit and your property, what path would you go down to achieve that.
My proposal could be looked at 2 ways. One that the parent is worried and needs to keep their liability to a minimum. This is scary from a landlord's perspective but relieved in knowing that with the parent with a good income anything will be paid for. 2 is that the parent will be caring daughter and the property but it might also come with extra requests for maintenance and the like. Which would also be ok with me as a good landlord who takes care of properties.
Thanks for the responses all.
As a manager who rented to students, I would never allow a non-resident parent to be on the lease with full tenant rights. Talk about a situation from haides!
What could the father do to make sure the rent gets paid, by having access to her home?
Picture yourself as this daughter trying to make it on her own. So, Dad says, sure I'll help you pay the rent, honey, but I'll be coming into your apartment whenever I feel like it, and I'll have full rights to do so.
Whoa on the control freak factor here.
I HATED dealing with parents of students. What I did, was I didn't even allow co-signers. Co-signers don't have any tenant rights, but, you have to also notify them of any notices you give the tenant. It's a pain.
I wanted responsible tenants. I'd tell them and their parents that I only deal with the person on the contract. I don't care where they get their money to pay the rent, but I will only deal with the tenant on the lease.
A co-signer is just a guarantor. Like your mortgage lender - who has no right to just come into your home whenever they feel like it.
Dad will get notified if the rent isn't being paid. Shouldn't that be enough? Why should he have the right to enter her home whenever he feels like it? That's just so wrong.
If he doesn't think she'll pay her portion of the rent, and he'll be on the hook, then tell him not to co-sign. Maybe it's time for the daughter to learn that she can't get a fancy apartment on her income. That's the lesson he should be teaching her. Yikes. Time to cut the apron strings, Dad, or just keep her at home forever.
Sue, Access to the apartment would be for the same reason a landlord has access to the apartment, to be able to check on condition. Paying rent has a limit on the liability from the parents perspective as a co-signer and from a landlord's perspective. The damages are the true variable which can far exceed any lost rent. I might be mistaken on the position of a guarantor as being liable for damages, please correct me if that is not the case. Just because a tenant of mine has the income to pay rent doesn't mean I won't stop over a couple time to inspect and that was the thought behind my proposal. This way there would be a legal position to do so where as a guarantor, you are just putting out a blank check...
I hear ya on the role of a parent and like many this situation is unique. Daughter doesn't live at home now, finishing high school shortly. Definitely not a fancy apartment, just low income... We talked a lot about doing things to help the daughter not hurt. As a parent, my role is to teach my child and once they get this age, help from me will need to be done in a fashion that is helping my child so there will be conditions to bring that about. It can definitely get extreme like you pointed out but that is not the intent here.
As for a mortgage company, they do have the right to access the property although they rarely exercise the right. I just had a discussion about that with a banker recently.
So are you the "friend?"
This would be a total control freak situation.
So, now the issue is that the daughter might damage the unit and the landlord wouldn't know that? Dad needs to go in there to be sure it's not damaged before the landlord finds out?
Maybe your mortgage company has the right to inspect, but do they have a key? The right to enter and walk into your bathroom while you're taking a shower? To walk into your bedroom where you may be with your boyfriend?
Either the kid gets a chance to be an adult, with everything that includes, or she doesn't. Dad doesn't get to treat her like she still is living in his house - at her house.
I don't know any way to make you see how weird and unreasonable this is. But it is.
I have a friend whose, daughter is getting her first apartment. She only makes 2 times rent and they require 3 times as most do. They would accept her if her father (My friend cosigns). I have not done cosigners so I am trying to advise him well. The issue of whether or not the daughter can afford it has been discussed. My question is about the rights of the cosigner and the extent of liability. My thought is that the cosigner has no rights to enter the property but does hold financial responsibility for unpaid rent as well as damages.
A suggestion I made was to be a Co-applicant so that he has full rights to the property as well as financially. Sign a 6 months lease with the intention that the daughter gets her income up within those 6 months and can be the sole lessee after 6 months.
Please let me know your experience with cosigners and if you would have any problems with a parent being a non resident lessee so that they can monitor condition and have a little more control. Thank you.
---This is not advice and I am not an attorney---
That said, my understanding is that, as a party to the contract, a co-signor has all rights that the tenants have. Since you are requiring them to take liability for the contract, they also obtain rights under the contract. That is basic contract law. You cannot have someone take liability without having rights.
I have a friend whose, daughter is getting her first apartment. She only makes 2 times rent and they require 3 times as most do. They would accept her if her father (My friend cosigns). I have not done cosigners so I am trying to advise him well. The issue of whether or not the daughter can afford it has been discussed. My question is about the rights of the cosigner and the extent of liability. My thought is that the cosigner has no rights to enter the property but does hold financial responsibility for unpaid rent as well as damages.
A suggestion I made was to be a Co-applicant so that he has full rights to the property as well as financially. Sign a 6 months lease with the intention that the daughter gets her income up within those 6 months and can be the sole lessee after 6 months.
Please let me know your experience with cosigners and if you would have any problems with a parent being a non resident lessee so that they can monitor condition and have a little more control. Thank you.
With all our contracts, we always try to get cosigners whenever possible. As a landlord, it only adds to your ability to get the rent paid. The more people you can have liable to you for the rents and taking care of the property, the better. In addition, if it's an applicant that's not fully qualified, I also structure contracts to be on a month to month period before turning into a full 12 month+ contract so I can "try before I buy". Under this arrangement, both landlord and tenant have rights to terminate in writing within the month to month period.
Best,
jon.
@Account Closed listed several of the reasons why we use a guarantee rather than have parents as a signatory to the lease. It does not matter if the parents live across the country or across the street, if they are not an occupant, they are not a signatory to the lease.
Think of it similarly to the parent was acting as a guarantor on a mortgage being placed by their child. As a guarantor they have the right to be informed about the fiscal status of the mortgage note and to open their wallet in the event their child drops the ball ... they are the backstop.
It is the same when the parent is guarantor to their child who is signatory to the lease. We agree to inform them of adverse fiscal events where their child is in arrears and provide them with evidence of any amounts they are asked to pay. We do not communicate with them about any other facets of the lease as the contract is not with them.
Sue:
A co-signor and guarantor are not the same. In your mortgage example, a co-signor appears on title while a guarantor does not. The co-signor has interest, but the guarantor is simply the backstop.
As a landlord, I would never give tenant rights 2 more people than are actually staying in the property. As a father, I would never cosign for my children's debt. They need to learn responsibility early on. If that means taking smaller steps at first, then so be it. And I consider my children to be quite financially responsible. So, I'll let them be responsible with their own money, not with mine. If I want to help, it's a gift, never a loan.
So he would prefer to be a co-signer not just a guarantor. Thanks for the insight guys.
Sue, no I am not the friend. Like I said before gifts or help can come with conditions. You are right, that the daughter can be a big girl and do it on her own, but a parent acting as guarantor is not doing it on their own either. A co-signer seems to be a wiser option. It is not to hid anything from the landlord but to have the ability to check on the property in the case that the relationship has a falling out and is needed to check on the condition of the property and actually inform the landlord if their are issues. As I also said the family dynamics at play are not my focus on this question. My friend is going to do what he wants but I just wanted to get the legal rights and responsibilities cleared up. You might see it as a control freak but that is obviously through the lense of your life experience. My parents have a key to my house and I their house. We both own and I see nothing controlling about that. I could go walk into my parents house and do a ton of stuff and them to me but why would either one of us. Just as I have the ability to enter my tenant's homes whenever I want as I have the keys but again, why would I without the proper procedures. Point being, many things can be taken to the extremes but reality rarely goes to those extremes...
Unless a co-signor or guarantor (different areas use the terms interchangeably), is a "tenant" on the lease, the co-signer does not have tenant rights.
Here's an answer to a similar question by a lawyer:
http://www.avvo.com/legal-answers/does-my-co-signe...
I think it's fine that you and your parents feel free to come and go from each others' homes. But, as I understood your original question, this is a situation where your friend is asking if he can impose himself in his daughter's apartment, whether she wants him to or not, if he's a cosigner.
That's an entirely different picture, in my opinion. Why does he need legal access? If she wants to give him a key, I see nothing wrong with that. And if she doesn't, I think she should have that right, too.
What Dad should be doing, is encouraging her to find a roommate, where they can both sign as their own adult selves. This is what adults do, who can't afford their own apartments, even in low income areas.
In my ever so humble opinion :-)
That said, my understanding is that, as a party to the contract, a co-signor has all rights that the tenants have. Since you are requiring them to take liability for the contract, they also obtain rights under the contract. That is basic contract law. You cannot have someone take liability without having rights.
A cosigner definitely takes a huge risk and on the surface, it seems like they should have tenant rights. But they don't.
A cosigner's contract is with the landlord. The cosigner is promising that the landlord can trust the tenant and asks the landlord to take a risk on the tenant, and promises that if he does and the tenant defaults, he will pay the debt. In return, the landlord takes a risk by accepting the tenant. It's like the old-fashioned "vouching" for someone.
Both sides have something to gain and something to lose. The cosigner's gain is not monetary, though, it's more of a Good Samaritan benefit with the tenant, usually helping out a loved one. Which isn't worth it to most people.
But the bargain is not for the cosigner to be a tenant, but rather that the landlord should take a risk on the tenant, and the cosigner is so sure it will be fine, that he/she promises to pay if they default.
@Account Closed
Are you an attorney?
@Account Closed
Are you an attorney?
Nope. But the law is free to look up by anyone.
@Account Closed
What, specifically, are the rights the co-signer is obtaining in the agreement for the duties they are obligating themselves to fulfill. In contract law, this is called an "exchange of promises" (aka exchange of duties) and there must be consideration.
I've explained it above. Landlord promises to take a risk on tenant, Cosigner promises to take the fall if landlord does so.
Look at it this way, what does the cosigner get if the tenant never defaults?
If you cosign for a friend to buy a car, and your friend never defaults, do you own part of the car? Did you have the right to go drive it whenever you wanted? What was in it for you?
Yes @Account Closed I agree.
If a co-signer want's rights to occupy the property, the lease agreement must be revised to provide them access. Typically most leases allow visitors to stay 15 days, otherwise tenants are in violation of the lease agreement. Any longer and the Tenant should request the Landlord to have them added as an occupant of the property.
@Account Closed
The cosignor gets the benefit of having the tenant occupy the property. They don't get occupancy rights, otherwise they would be a tenant not a co-signor on the lease. Yes, I think we're in agreement here.
@Account Closed
The cosignor gets the benefit of having the tenant occupy the property. They don't get occupancy rights, otherwise they would be a tenant not a co-signor on the lease. Yes, I think we're in agreement here.
Excellent! We love to agree :-)
Cosigning is such an enormous "favor" really, that it does seem like it should almost be illegal. And I learned in a law class that "love" is not "consideration" for the purpose of creating a contract. So, you'd think cosigning wouldn't be a legal contract. But, the cosigner is bargaining with the landlord, not the tenant. So, I guess that's how it works.
And "consideration" doesn't have to be money. It can just be a promise for a promise. Or an agreement to do something or refrain from doing something.
You won't find me cosigning anything LOL! I told my daughter she could stay with me for free and I'd even feed her and buy her shampoo, but I couldn't afford to pay her rent to live somewhere else. She's now a systems analyst and very independent. I guess she wanted to move out bad enough she figured out how to pay for it :-)
We do co-signers in our student rentals only for financial reasons. I give keys to the tenants and only if the tenant asks would I give them a key for their parent. If the request comes at move in from the parent- I only have keys for the tenants and I will say why don't you talk about that and get back to me.
The few times that has happened,-- picture it, parent asks, kid makes a face, and roommates eyes get as big as saucers-- the request never re-surfaces. To me it seems over the top for the parent to have a key unless the student wants it for a particular reason. On maintenance requests I hear from parents, not an issue, it's broke we fix it.
My thought is if people don't trust their own kids enough to co-sign for them it makes me worry about renting to those kids. Frankly, you are doing something more risky then co-signing when you let your kids drive a car in your name or go to a university where you are paying tuition or for a dorm room.
I would encourage your friend to get agreement from his daughter that if he cosigns she will meet certain conditions. He certainly has a right to expect certain behavior like illegal activity won't happen but he has to trust her when she is out of his sight. I have kids just this age and I wish they were 3 again but they are not and you have to trust but verify. You don't need a key to verify. Stop by and she lets you in.
@Account Closed
What, specifically, are the rights the co-signer is obtaining in the agreement for the duties they are obligating themselves to fulfill. In contract law, this is called an "exchange of promises" (aka exchange of duties) and there must be consideration.
Jon:
Why not simply use a guarantee? The parent would then be guaranteeing the obligations of their child - who is a signatory to the lease - and would not have a co-signor's interest.
I also have a student rental and ask the parent's to sign the lease as guarantors only. However I do not have them sign a separate agreement. @Roy N - Would you be willing to share information on your guarantee agreement?
I was hoping someone would bring up guarantor v. co-signer. A co-signor is technically just another party on the lease, a lessee with equal rights. Although that is the phrase many use is the US for college rental agreements, that not what it should mean IMO. A true guarantor agreement has the guarantor agreeing only to payment and making the LL whole, not to any tenancy or right to entry.