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Should I Allow Renters in Antioch to Use a Cosigner?

Pros and Cons of Cosigners with Renters in Antioch

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When it comes to finding renters in Antioch, you might sift through a lot of duds and deal breakers. Then, you find a standout potential tenant with a catch – they want or need to use a cosigner.

As a landlord, you might wonder if using a cosigner should be a deal breaker. Should you let it slide or tell the potential tenant goodbye?

Here at Blue Line Property Management, we are outlining the pros and cons of using cosigners.

 

What is a Cosigner for Your Rental Property?

A cosigner, also known as a guarantor, is a person who signs a lease agreement along with a tenant. This means the person is on the hook for any debts owed to you if you can’t get funds from your tenant.

The cosigner is typically a family member or a close friend. It’s also someone who understands the consequences for their own financial records if things go awry.

Even though the cosigner’s name is on the lease, they are not living in the rental property with your tenant.

 

Do Renters in Antioch Need Cosigners?

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This is a case-by-case basis. There are several circumstances when a cosigner might make sense for all parties involved.

These are a few scenarios of when possible tenants will need cosigners. These situations include:

 

No Rental History

This is a common scenario with younger renters in Antioch, including college students. With several schools near the area, you might run into students who want to live off-campus.

If this is the case, they will likely lack a rental history. A cosigner can give landlords peace of mind to sign a new lease agreement.

 

Bad Credit or No Credit

Bad credit can happen for all kinds of reasons, whether it’s medical bills, overspending on shopping sprees, or job loss.

Generally, a good tenant credit score is 670. A cosigner with good credit can help balance out the tenant’s bad credit short fallings.

 

Low-Income

Even with employment, some tenants might not be able to meet the income requirement for your rental property. A cosigner can help fill in the gap for this area. Some landlords use the 1:3 income ratio to determine if the tenant needs a cosigner. This means if the rent costs more than ⅓ of the tenant’s monthly income, a cosigner can be requested.

In addition to credit and finances, a cosigner can be held responsible for any damage the tenant may cause.

 

What Happens if Something Goes Wrong?

If there is an issue where you need to contact the cosigner, you are able to collect the debts from the cosigner under California Civil Code Section 1799.91.

The law goes as follows:

The lessor can collect on the lease from you without first trying to collect from the lessee. The lessor can use the same collection methods against you that can be used against the lessee, such as suing you, garnishing your wages, etc. If this lease is ever in default, that fact may become part of your credit record.”

After you take the action steps to collect funds from the tenant without success, you can then move on to the cosigner. The best course of action is attempting to collect payment from the most probable source.

 

The Pros and Cons of a Cosigner

Now that you understand the role of a cosigner, this is what you should consider if you want to allow one on the lease.

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Pros of a Cosigner:

  • A cosigner can help you fill vacant properties. If you are struggling to find tenants or keep rental units filled, a cosigner can be a great option.
  • The cosigner lessens the risk of renting to a person with bad credit or low income on their own. Since 84% of landlords are concerned about payment problems, a cosigner can make it more likely that you will see debts repaid to you.
  • You have a backup plan if financial or legal obligations arise with your current tenant.
  • You can help younger renters such as college students build their credit history.

 

Cons of a Cosigner:

While a cosigner can be a positive addition to a rental agreement, there are also some downsides.

  • A cosigner has no impact on a tenant’s behavior. While the cosigner might be responsible to pay for damages, they can’t control if a tenant breaks or ruins part of your property.
  • You’ll need to screen the cosigner just as you do the potential tenant. This is to ensure all of their ducks are in a row, including their financial history and employment.
  • There is no guarantee that the cosigner will pay back any debts if the tenant skips out. You may ultimately have to take the cosigner to court just as you would a tenant without a cosigner.

 

Should You Allow a Cosigner on Tenant Lease Agreements?

This is entirely up to each landlord. There is no law that states landlords must accept a cosigner on any rental agreement.

If you do want to allow a cosigner on the lease, keep the following in mind:

  • Screen the cosigner for credit, income, and employment. Ask for tax returns and recent pay stubs. Leave no stone unturned during the process.
  • Be clear to the cosigner that they are responsible for payments and/or damages that occur from the tenant.
  • Add a clause to the lease that addresses the cosigner if necessary. You may want to address an attorney for this or a professional property management company such as Blue Line Property Management.

With a cosigner lease agreement, you can address the exact expectations from the cosigner. Remember to mention any payment of legal fees and costs that the cosigner is required to pay.

 

Keep Yourself and Property Protected

Many landlords find themselves needing guidance with renters in Antioch. Chasing rent is one of the many headaches that come along with property management, but you don’t need to do it alone.

Blue Line Property Management offers an assortment of services to make your life easier. This includes finding quality tenants in 29 days or less. We also provide tenant screening to ensure all applicants meet your specific requirements. Our property management allows you to build your rental portfolio while you leave cosigning situations and other tenant responsibilities on us.

Furthermore, Blue Line Property management can also help you review any agreements that include cosigners. We can help you keep your bases covered on every aspect of the agreement.

Contact us today to learn more about property management services.