Leasing 101
Guarantor 101

Guarantor 101

Since Housing Scout is a company that deals primarily with students and young people in the Austin area, this is a question that comes up again and again. I get asked, “Juan, do I need a guarantor? And if so, why do I need one? What are the liabilities? Will I get sued if my roommate trashes the apartment and bails on me?

Slow down. One question at a time! I will try to address everything you need to know in this post. Let’s begin with what a guarantor is.

A guarantor is defined as “one who gives a guaranty”–a formal promise to pay a debt.

A guarantor assumes financial responsibility over the debt if something happens and you cannot fulfill your financial obligation. The guarantor is a co-signor, essentially. They pledge their own money and assets so that you are able to qualify for something you would otherwise be unable to afford–in this case a lease in Austin.

For most college students and young adults, parents assume this responsibility.

Thanks, Dad!

Thanks, Dad!

So, now that we understand what a guarantor is, let’s address some common questions.

Do I need a guarantor? 

Probably. In order to qualify for an apartment in Austin you generally need to have a monthly income that is at least three times the monthly rent amount. So, for example, if you live in a 1 bedroom apartment for $1000/month, you would need to make at least $3000 per month in income.

This must be proven, usually by showing pay stubs or bank statements. In some cases, I have seen places accept letters from employers as proof of income (usually for those in the service industry). If you are unable to prove this amount of income, you will need to find a guarantor for your lease.

What if I do not have a guarantor? 

If you do not qualify based on income and are unable to find a guarantor, contact us at (512)900-7963 and we will help you with your situation. We commonly help people with all sorts of financial trouble find suitable places to live. Don’t fret!

Does the guarantor have to be a parent? 

Every apartment complex and landlord is different. Most landlords do not require a relative to be a guarantor. Some stricter landlords might require a family relation, but it wouldn’t necessarily have to be a parent. This is less common, though.

I, personally, have never come across this issue. But, in most cases, the guarantors are the parents regardless.

What are the liabilities of my guarantor? 

This is an important one. By guaranteeing your lease, the guarantor is verifying that they will be liable for the entire rent for the entire duration of the lease, plus any damages caused by the tenants. If you don’t pay your rent, your guarantor will be forced to do so.

Going back to the earlier example, if your rent is $1000/month for a 1 bedroom apartment and you sign for a year, your guarantor would assume responsibility for (potentially) $12,000 of rent, as well as any damages. (What a nice person!)

Always make sure your guarantor understands that they will have to pick up your rent if you are unable to pay.

Is my guarantor liable for my roommate? 

Good question! So, this question actually has two answers; neither of which are difficult to understand.

In some of the big complexes, the rooms are leased individually. For those, no. Your lease is only for your room, and so any one else in your unit would not be covered by your guarantor. They would presumably have their own for their own lease.

For anywhere else, which is most places in Austin, guarantors are responsible for the entire rent amount.So, if you and your roommate live in a $1800/month 2×2, both you and your roommate’s guarantor will have to guarantee the full $1800/month.

Even though this seems bad, it is usually a good thing. Having two guarantors spreads out the risk and holds the tenants equally accountable.

What if I am a foreigner? 

If you are an international resident and do not have enough income to qualify without a guarantor, you will not be able to use a guarantor that is out of country. Alternatively, you must provide documentation from a country or state entity that ensures your financial security. For students, this document is called an I-20. In addition, you will need to provide a copy of your I-94. More information can be found here. 

Comments

comments

Share this Story

Related Posts

About Juan Gargiulo

Juan Gargiulo

Juan is a writer and licensed real estate agent. He graduated in 2013 with a B.A. in Government from the University of Texas at Austin, where he was a brother in Phi Delta Theta and competed as an amateur boxer and grappler. Follow him on twitter @juanpgargiulo and check out his website at juanpablogargiulo.com