What is a Guarantor and Do You Need One?
A guarantor, also called a co-signer, is someone who is willing to guarantee your lease. The guarantor is responsible for all terms of a lease in its entirety; the guarantee cannot be limited to the interest of a single applicant in a share situation. Some landlords will accept two guarantors while others may only accept one.
If you do not meet the landlords financial or credit requirements (more on financial requirements in another post) a guarantor may be your solution. Students or individuals with no income or credit history, or anyone who does not meet the standard income requirements, will usually need a guarantor. When bad credit is the issue, whether or not a guarantor is allowed will depend on how bad the credit report is, and on how strict the management company or landlord may be. Sometimes a combination of guarantor and extra security is needed.
Who can be a guarantor?
A guarantor does not have to be a relative. Many landlords in New York require a guarantor to live in the Tri-State area: New York, New Jersey, or Connecticut. There are some landlords and management companies, however, that will accept a guarantor from outside this region. New York City is an international city and many landlords are taking this into account. This said no landlord or management company will accept a guarantor who lives in another country.
Prepare your potential guarantor by speaking with them and advising them of what they will be asked for. You might have to act quickly as their cooperation is critical for your approval. A guarantor needs to fill out an application form and provide the required documents.
Required documents for renting an apartment in New York City can seem overwhelming for many guarantors. They may turn around and declare: “We’re not looking to buy the apartment, we merely want to rent one!” However, financial documents will have to be shown, if a home is owned then proof of this will also have to be shown. And redacted information is not allowed. A detailed list is provided in these pages to help you through this process and really, most importantly to help your guarantor understand that if he or she does not provide the necessary documentation it very well can cost you the good find you’re applying for.
A delay in getting all required guarantor documents to a landlord may cost you the apartment. It is advisable for you to have these documents on-hand when applying for an apartment.
The requirements are usually good credit and double the income requirements of an applicant. If an applicant is required to show an annual income of 40-50 times the monthly rent, a guarantor is required to show an annual income of 80-100 times the monthly rent. Everything is needed in document form by the landlord.
If your guarantor is self-employed then it is necessary for him or her to get a letter from their CPA stating anticipated income for the current year; that he/she has been the guarantor’s CPA for x number of years, stating the position/business the guarantor is in; and stating the guarantor’s financial assets.
I recently worked with a young couple who just graduated from college and who I believed understood the requirements for their chosen guarantor. At the time they went to see their apartments they did not have even half of the information a landlord needed to see. Do not make this mistake. No landlord or management company wants to waste their time and frankly they will resent you if are a drain to their managerial staff.
Be prepared. Have your guarantor’s documents on hand at the time you apply for an apartment. Don’t even try applying if you don’t have everything. Charm does not rent you an apartment – documents do.