Should You Co-sign an Apartment Lease?

Here are items you will want to weigh carefully before you add your signature to another person’s apartment lease.

If a friend or relative asks you to co-sign on an apartment lease, should you do it?

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Of course, we all want to help friends and family in need, but you have to be careful when it comes to the commitment of legally guaranteeing another person’s apartment lease.

Here are some items you will want to weigh carefully as you consider whether to add your signature.

What it means to be a apartment lease co-signer
When you co-sign an apartment lease, you give your legal guarantee that the rent on that apartment will be paid. You are also responsible for paying any fees for damages on that apartment beyond normal wear and tear, for instance.

What happens if the rent is not paid
When you co-sign, you also co-assume the financial responsibilities of renting that apartment. If the apartment tenant cannot or does not pay the rent — and you are the apartment lease co-signer – then the responsibility falls to you to pay it. If you cannot pay the rent, you are then in default. Your failure to pay the rent will be reported to your credit agencies, which could adversely affect your credit score. There is even the possibility that the apartment management company could take you to court to get the money owed to them.

Obviously, you must make the decision to co-sign very carefully.

Know the renter
Before co-signing a loan for someone, make sure you know them very well. We are not saying you should know their favorite color or favorite Bond film; you should know their spending habits. Are they good with money? Do they have a good track record with paying bills on time? Can they afford rent each month? Ask them to show you bill statements to make sure they are not constantly getting hit with late fees. Knowing all of these details will give you a better picture of who the person will be as a renter and how likely they are to pay rent on time.

Know yourself
Ask yourself a few questions, too. Would you be able to make the payments, should your friend or family member not be able to pay the rent? How would co-signing a lease affect your relationship with that person? Would the endorsement make you worry? It’s important to consider the ramifications before making this important legal commitment.

A third person?
If your friend or family member has a roommate, you are probably better off NOT co-signing the apartment lease. No matter how much you trust the person you know, you may not be able to predict how the roommate will act or if they will pay rent on time.

When it makes sense to co-sign a lease
There are certain times when it makes sense to co-sign a lease:

• If you are able and willing to make the rent payments in the event your friend or family member cannot.
• If your friend or family member has a proven, reliable track record with money.
• If your relationship with the tenant is strong enough to withstand no matter what happens with this renting situation.

If these conditions are met, you might go ahead and co-sign the apartment lease. If you do, you will be helping your friend or family member secure an apartment and build up credit at the same time!

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