Can I put parents on the lease?

Question

I had a young expecting couple view a SFR of mine yesterday.  They both have jobs that have been or could be affected by Covid, as they are just at the income level that is 3x the rent amount while working... so I’m a little nervous what will happen if the Covid situation impacts their employment.  The young woman’s mother accompanied them during the viewing yesterday and has offered to “back” them when I voiced my concerns related to their finances.  Can I put the mother, in addition to the young expecting couple, on the lease... thinking that if they don’t pay, she will?

Matt Ziegler · Answer

Yes you can, depending on how your lease is worded, and your local laws.

Add Mom on as an additional guarantor

Dave Spooner · Answer

@Heather Schmidtknecht I definitely agree with @Matt Ziegler. Adding the tenant's mother on as a lease guarantor would definitely act as a safety net for you, in case your tenants ever default on their rent payment. Here's a helpful article if you're looking into lease guarantors - https://innago.com/requiring-lease-guarantor/ I hope this helps!

Kenneth Garrett · Answer

@Heather Schmidtknecht

I have had mom and dad co-sign on the lease.  The are guaranteeing the payment as a guarantor.  Mom and dad actually made payments for a recently divorced mom for an entire year.  You will need to screen mom and dad as well.

Anthony Wick · Answer

@Heather Schmidtknecht. Yep. I've done it with a 20 year old who was expecting, and her and her boyfriend wanted to move in. She literally had zero credit score. No loans, no credit cards, nothing. They made enough money, but without a credit score, her grandmother offered to be a co-signor. I made it very clear on what the financial responsibilities were with being a co-signor. Rent and damages.

And, of course, Nathan is correct on what the mothers responsibility and rights are. Financial responsibility. She is not a tenant, and you should not discuss anything with her except if the tenant doesn't pay rent.

Nathan Gesner · Answer

I agree with @Wesley W. I only allow cosigners or guarantors with college students. They tend to be reliable because they're usually already paying for Junior to get an education and housing. I make the parents sign a separate Cosigner Agreement that explicitly states they are accepting financial responsibility but they have no rights to the property, nor are they allowed to contact me about anything except financial matters. I don't want helicopter mom calling me on a Saturday to report her son's refrigerator went out and she just filled it with her homemade Gezpacho or that Junior is being bullied by his roommate, Karen.

Wesley W. · Answer

@Brandon Turner mentions this in his book on managing rental properties.  Better to have the parents offer a "performance guarantee" rather than add them to the lease.  Having them on the lease means you will have to deal with their micro-management of your business with regards to their child.

Something like the doc below.  (as always, check with your attorney for adherence to local laws)

-------------------

LEASE GUARANTY AGREEMENT

THIS LEASE GUARANTY IS HEREBY MADE BETWEEN  _______________________ (“Landlord”) AND ___________________ (“Tenant”) AND  _____________________ (“Guarantor”)

Tenant has leased from Landlord the rental unit located at  _____________________________________

__________________________ (“Premises”).  Landlord and Tenant has signed a Lease Agreement specifying the terms and conditions of this rental on ___________________________________.

Guarantor guarantees to Landlord the full performance of the Lease Agreement by the Tenant.  Guarantor agrees to be jointly and severally liable with Tenant for Tenant’s obligations arising out of the above referenced Lease Agreement, including but not limited to unpaid rent, property damage and cleaning and repair costs that exceed Tenant’s security deposit.  Guarantor further agrees to waive all notices about any default by Tenant, including nonpayment of rent.  (For example, if Tenant fails to pay rent on time or damages the Premises, Landlord has no duty to warn or notify Guarantor, and may demand that Guarantor pay for these obligations immediately.)  All matters concerning this tenancy will be addressed through the Tenant, not the Guarantor.

This Guaranty shall remain in full force and effect and will not be changed by any extensions or renewals of the Lease Agreement.  Guarantor shall remain liable under the terms of this Agreement for the performance of the Tenant, unless Landlord relieves Guarantor by express written termination of this Agreement.

Owner and Guarantor agree to waive trial by jury in any action or proceeding brought against each other on any matter arising out of the Lease Agreement or this guaranty.

If Landlord and Guarantor are involved in any legal proceedings arising out of this Agreement, the prevailing party shall recover reasonable attorney fees, court costs and any costs reasonably necessary to collect a judgment.

Guarantor agrees to pay a performance guarantee deposit in the amount of $___________ (refundable after Tenant legally vacates the unit and after all obligations under the Lease and this guaranty have been met).

ALL OTHER TERMS AND CONDITIONS OF THE ABOVE REFERENCED LEASE AGREEMENT SHALL REMAIN THE SAME.

Can I put parents on the lease?

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