What Is A Guarantor On A Lease & Do You Need One?

When renting a house, apartment, or other property, a lot of terms are thrown around. If you’re still new to the process, it can be a bit much. That’s why it can help to get a firm understanding of the terms before you sign anything. One term that appears often is guarantor. But what is a guarantor on a lease and what are the implications for your rental? That is what we will explore today.

Lease agreements are not only necessary to have, but they are incredibly important to understand. As one of the premiere Atlanta property management solutions, we understand leases inside and out, and that makes us even more adamant that everyone understand what the terms mean. Terms like lease allowance, rentable space, OLP contract, and the list goes on. Guarantor is just one of many where it helps to have a knowledgeable person explaining these sometimes confusing and legal terms.

So let’s dive into what a guarantor is. Here is what we will cover:

• What Is a Lease Guarantor? – Let’s define what it is and its context within a lease.
• Who Needs a Rent Guarantor? – We will go over the benefits and why many people need one.
• Who Should Be Your Guarantor? – If you are searching for one, what are the considerations?
• For Landlords: Consider Property Management Services – Finally, let’s address property management services and their role in the lease process.

What Is a Lease Guarantor?

First things first. What is a guarantor on a lease, and is there a difference between apartments and other types? And also, what is a personal guarantor on a lease?

To put it simply, a lease guarantor is a person who agrees to pay the rent if the tenant cannot. This can also include other terms stipulated in the contract. These additional terms might include not only the monthly rent but also move-in and move-out fees, late fines, and other charges involved with the property.

From the perspective of landlords, a guarantor provides a reasonable amount of assurance that the rent will get paid if the tenant defaults. This reduces the landlord’s exposure to risk. For prospective tenants, having a guarantor can make them a stronger candidate if they have credit issues, insufficient income, or they have no rental history.

So what is a guarantor on an apartment lease? A rental or apartment guarantor basically has the same responsibilities as a lease guarantor. The main difference is just in terminology. A “lease guarantor” is commonly used in formal lease agreements and “rental guarantor” is more general in a rental context.

Now what about a “personal guarantor” on a lease? There is a small difference overall, but in the context of leases, there is not a notable difference. A personal guarantor is a broader term that can apply to various types of financial obligations. On a lease the terms personal guarantor and lease guarantor are the same. The difference is that personal guarantor can refer to not just rental or lease agreements, but it can be used in a wide range of contexts, such as loans, business agreements, or other contracts.

Who Needs a Rent Guarantor?

Now that we have covered the question what is a guarantor on a lease, it might be helpful to go over some things when you find yourself in the position of needing one. A landlord requesting a lease guarantor is common. If you think you might be asked for one, let’s go over a few reasons why. Here are a few of the most common reasons you might be asked to add a guarantor to your lease:

• Your credit score is low or you lack sufficient credit history
• You have a limited rental history
• Your income doesn’t meet the landlord’s requirements

Who Should be Your Guarantor?

If you find yourself in this position, there are common directions to go for acquiring a guarantor. Don’t fret! We see many instances of people finding a guarantor and having success adding one to a lease. Sometimes it is young people who may not have a long history with rental property, or it may be someone just beginning to turn their credit around.

Whatever the situation, here are some common considerations when looking for a guarantor.

Know the Requirements

Before you ask someone, make sure they fulfill the requirements for a lease guarantor. What you don’t want is to ask someone, and it turns out they don’t actually fulfill the needs of your landlord. Keep in mind:

• Income – Lease guarantors should have a higher income than the tenant. A good rule of thumb is that a guarantor should make a minimum of 6 times the rental amount in gross monthly income.
• Credit Score – A good credit history is also necessary for lease guarantors. Landlords often look for a credit score of 700 or higher.
• Other Considerations – Keep in mind that landlords or property managers could have additional requirements, so make sure you inquire before you get too far into the process.

Brainstorm and Ask

Next it’s helpful to brainstorm a list of people who could be a lease guarantor for you. Keep the above requirements in mind. In most cases, this is family members or close friends. Be honest, straightforward, and cordial, whomever it might be, and don’t take it personally if someone declines.

Third-Party Services

If you are having issues finding a lease guarantor, keep in mind that there is such thing as third-party services that can help you. Make sure you do some research on companies that offer such services. They specialize in assisting renters in those types of situations. Ones to research include companies like The Guarantors, Leap Easy, and One App Guarantee.

For Landlords: Consider Property Management Services

For landlords, managing guarantor requirements for multiple properties can be a chore. These are important agreements to secure a steady rental income for your business, which require additional screening time to approve the applicant. For independent landlords, the added time and effort for these administrative tasks can become quite cumbersome.

Bay Property Management Group are experts in all things rental management such as tenant screening, rent collection, lease creation, property maintenance, and inspections. If you’re looking for property managers in Atlanta, there is no one better to call.

Let us handle the rental complexities for you. You won’t regret it! Contact us today to learn more about our property management services in Atlanta and beyond!