What Is a Rent Guarantor and Do You Need One?

Study Shows Renting Is Now Cheaper Than Monthly Cost Of Owning A Home In Bay Area — (Photo : Photo by Justin Sullivan/Getty Images) A sign is posted in front of an apartment building with available rentals on June 09, 2023 in San Francisco, California. According to a report by real estate company Redfin, owning a home in the San Francisco Bay Area is more expensive than renting. The report shows that owning a home in San Francisco can be as much as 139 percent more expensive than renting and even higher in San Jose where it is 165 percent more expensive. The national average for a typical home runs about 25 percent more to buy than to rent.

When entering into a rental agreement, tenants are often required to provide a variety of documents and assurances to landlords. In some cases, one such requirement may be the presence of a rent guarantor.

Understanding what a rent guarantor is and whether you need one is crucial for prospective renters. Here's what you need to know:

What Is a Rent Guarantor?

A rent guarantor, also known as a lease guarantor, is an individual who agrees to take responsibility for paying rent in the event that the tenant is unable to do so. Typically, a guarantor is a family member or close friend with a stable income and good credit history. However, this individual is not required to live at the property or have a right to occupy it.

It is important to note that while "guarantor" and "cosigner" are used interchangeably, they are not the same. In contrast to a guarantor, a cosigner is usually a roommate or the spouse of the tenant who lives in the apartment. Cosigners are also required to sign the lease and have a right to occupy the unit.

Why You May Need a Guarantor

There are several reasons why a landlord may request a rent guarantor from a tenant:

Limited Credit History: Tenants with limited or poor credit history may be perceived as higher risk by landlords. In such cases, a guarantor with a strong credit history can provide assurance to the landlord that rent will be paid on time.
Credit Issues: Similarly, a tenant with a bad credit or a bankruptcy on their credit report may be perceived as higher risk by landlords and propery managers.
Low Income: If a tenant's income does not meet the landlord's income requirements, a guarantor with a higher income may be required to ensure that rent payments are made consistently.
Student Tenants: Landlords renting to students may require a guarantor due to their limited financial history and potential instability.

This list is not all-inclusive. As such, it is recommended to ask the leasing agent about the general qualification criteria for renters before you submit an application to know if you may need a guarantor.

Can Landlords Force Tenants To Use a Rent Guarantor?

Landlords have the right to set their own rental criteria and requirements, according to the New York Times, citing real estate lawyer Nancy L. Kourland. However, if a tenant is unable or unwilling to meet the landlord's requirements, such as providing a guarantor, the landlord may choose not to rent to that tenant.