A guarantor is similar to a lease co-signer because they are jointly liable for fulfilling the required lease payments, but a guarantor is not expected or eligible to actually reside in the apartment along with the primary lessee. So what does a guarantor actually guarantee for a New York City apartment?
Applicant Requirements
We talked about guarantors in part of our rental guide on how to afford the landlord income requirements. If you don’t make the usual 40x monthly income, or can’t document it, you might opt to find a relative to be a guarantor. Just remember there are three tricky requirements:
Income
The guarantor must make 80x the monthly income – they need to be twice as rich. That’s obvious, they also need to afford their own housing in addition to yours.
Distance
The guarantor must be within the tri-state area. Some landlords will accept a guarantor further away, and some may not care at all. However, the landlord wants to be able to sue and collect from the guarantor. In fact, the actual most significant guarantee is that you will be shamed and embarrassed if collections agents begin hounding your respectable, older relative.
Relationship
Finally, to prove you are actually a close relative or friend of this guarantor, the landlord puts them through all the same documentation requirements as you. That means your aunt or parents need to disclose their financials, something they probably haven’t done even to you!
Will A Collections Agent Call And Harass My Guarantor?
Yes, when your guarantor signs and any dispute arises where you fail to pay, the landlord can send the debt into collections. They might start off calling you, offering to set up payment plans, or just outright demand that you pay because they feel you have the means.
Once they see there is a juicier target, your guarantor will also begin receiving the calls. Collections agents perform best when they can recover a full payment, which is quite rare. Some people out of pride and ego will refuse to pay and “eat the hit” on their credit score.
But now imagine your parents or relatives are calling you, asking if everything is ok, and wondering why or how you got yourself into this jam? Even worse, your guarantor might even just pay it all off to stop the hassle (and good luck ever getting them to sign with you again).
Who Would You Guarantee?
Who would you be willing to guarantee? Your cousins? Your siblings? To be honest, I would hesitate even if it is my own children. But that’s because I would tell them to find a smaller place, and perhaps we can co-buy it together rather than rent. We would want a co-op or condo with an excellent rental yield relative to the price – the kind you find on RealtyHop!
Editor’s Note: We updated this article to enhance readability.
