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.
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?
Susan:
It's a really simple little agreement. Let me see how I put things in the file space here on BP. I'll post here once I have put it on-line.
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.
This made me laugh. You should worry about renting to any kids who have parents that won't co-sign. It means they really don't know their kids. Or they don't have any money. I know so (too) many parents who don't trust their kids enough not to trash the place but they will gladly co-sign. To their credit, they do expect to pay when **** happens. I'm guessing you're not a Boomer parent of a college age child? Or perhaps you don't own rentals in a party school town? I live in Santa Barbara. There is a whole world of parents out there that will do (and pay!) whatever it takes to get their kids through college. It's funny. And it's sad.
@Colleen F. I see you do have college age kids! Hopefully "trust but verify" doesn't apply to your kids, just other people's kids. :)
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?
Susan:
It's a really simple little agreement. Let me see how I put things in the file space here on BP. I'll post here once I have put it on-line.
You can find our guarantee here.
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.
I think it's too difficult and unfair to hold a 19 year old responsible for "illegal activities" at a property. This so much easier said than done. The legal drinking age in practically every state is 21. Forget partying. There is wine at dinner parties of tons of young adults under 21 in and out of college. I know. My youngest is 20. She's a foodie and a chef, she works at a high-end sushi restaurant. Does anyone think she isn't drinking wine or saki or beer? In total moderation, of course, but still.....an illegal activity.
What happens when kids under 18 or 21 show up at the house at a college party? Who is checking ID?
I could go on. I think "illegal activity" is a really tricky definition. We want to know and trust the judgment of our college-aged kids and tenants. Not make them promise there will be no illegal activity.
We moved out of state for work and I had to cosign for my daughter's apartment to stay locally for college at the time. The landlord required any college student to have a parent cosign, so both roommates had to comply. I made sure I was listed on the lease as an occupant as I told both girls and the roommate's mom that if there were any problems whatsoever with their paying rent on time or damaging the unit, I would fly back there and personally move in as my name, my credit, and my money are on the line if they don't pay or they damage things. I don't consider having a way to protect my interests if things go badly as being a control freak or not trusting my daughter. If I didn't trust her, I wouldn't even consider co-signing in any capacity. There is just no way I'd co-sign for anyone, even my daughter, if it means I'm exposed to all the risk but have no rights to step in if they are not living up to their end of the deal. I never asked for a key and never saw the place after we moved her in. I just wanted the right to gain access if they screwed things up.
@Account Closed I am the parent of two of these high school/college age kids and the owner of college age rentals at URI which in fact has its own share of partying although we didn't buy in the party zone. I also was an adolescent nurse in a couple different environments including psych hospitals with dependency units and have seen a lot. However, I am not a lawyer so to be correct I probably should have said for example...illegal activity... but in reality Illegal activity in many forms is what you would be asking that they don't do to protect your interests. Are you going to stop it all no, but set expectations. What is your tolerance and what is the legal tolerance in your area. We have the orange sticker system for the students if the cops are called basically you are stickered and fined when you don't break it up, have too many people, or are partying late. Underage drinking when this happens is one of the citations issued. Those are the properties that are damaged most often. I clearly state to the tenants I want no stickers on my door. I also don't tolerate growing in the house and drinking in the streets. I don't police the bottles that collect on the shelf above the kitchen and I am sure underage drinking happens but that is my tolerance of the illegal (and the tenants are not my kids).
For my own kids trust but verify does apply. For them I ask also are they safe. Is it just a little wine vs. drinking senseless. All I was trying to say initially is the biggest protection in this situation is not your rights as a cosigner or having a key but having the conversation about expectations and an understanding on both sides.
My parents would not co-sign for me in college, but I became the house manager and worked with the landlord on keeping the place occupied and maintained. After college, I helped the landlord fix and sell the house. This was an example of a serious college student being trusted by a home owner, and the situation was great for all. But, the situation can be good or can get bad. Do you trust the tenant living in the property? Use some discernment in the tenants' character. Everything is dependent on who is occupying the premises (whether the place gets trashed from partiers or maintained from serious students). You must have discernment!
A lease is an extension of credit, you don't pay rents in arrears but damages and indemnification covenants are contingent obligations that are created and paid in the event of past due rents or other financial looses suffered by a landlord. An endorser or guarantor is obligated to cover financial losses, there are not property rights unless such an arrangement is made between the parties.
"Co-signing" is really slang, you either endorse an obligation or guarantee it, an endorser may have recourse and be entitled to an equitable standing. Example: If for some reason other collateral was sold to cover a loss and more was received from the sale than was due the vendor the endorser may be entitled to additional funds to the extent or their loss. A guarantor simply guarantees payment, nothing more and before any guarantee might be enforced the vendor must exhaust all prudent collection efforts from the maker of that obligation before making demands. A guarantor has no equitable standing unless specifically agreed to otherwise.
Reality: I had parents guarantee payments of rents and damages, including costs of collection and court costs, they do that by signing the lease as a "Guarantor" that does not make them a tenant.
Do the parents get a key, heck yes, if they want one and are local, that is with the kid's permission which is never unreasonably denied (LOL). Why? Because mom drops by and collects the dirty clothes to wash when the kid is at school or work, dad may drop off a check, or a care package. I've had parents clean the place up. Do they have legal possession...? No, but they have permission to enter. Just like the plumber does. BTW, anyone that picks up a key from me signs for it!
Same thing goes for elderly tenants and their kids, the adult child may or may not guarantee the lease, but they get a key and permission because I don't do health and welfare checks, the kids can or the cops or paramedics can.
A co-borrower is on title to property financed, a guarantor or endorser or obligor is not. a co-tenant has tenant's rights, the others do not unless otherwise agreed.
You can spice up your guarantee by having them sign in severance, meaning they guarantee any part owing separately or collectively, in whole or in part upon demand, see your attorney.
I'll stop, but consideration depends on the type of contract, unilateral or bi-lateral as to the obligations of the parties. I probably had 100 students over the years and never had any issues having parents guarantee the losses. As to parents, state law governs emancipation of a minor, they may not be going to school living in an apartment being under 18 or 21, so, yes, parents have the right to lower the boom if needed, and sometimes we do. :)
Would anyone be willing to post the language or contract addendums that they use for cosigners and guarantors to their leases?
Would anyone be willing to post the language or contract addendums that they use for cosigners and guarantors to their leases?
Nick:
If you look further up the thread, I did post our guarantee.