Realty Bites

What does a guarantor actually do, anyway?

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We often receive emails from readers asking for help in navigating their own real estate crises. In Realty Bites, we try to get them answers.


What are my rights and responsibilities as a guarantor in New York City?


New York landlords have stringent requirements that often take newcomers by surprise. Namely, that a renter must have an annual income of at least 40 times the monthly rent in order to qualify. If an applicant can't manage this—and many first-time renters can't—they'll need a guarantor, someone who agrees to be responsible for the rent in the event the tenant defaults. As you might guess, guarantors are frequently the parents of renters.

Agreeing to be a guarantor means taking on a huge amount of fiscal responsibility, so don't enter into this lightly (or do it for just anyone). Under most standard agreements, a guarantor is responsible for the entirety of an apartment's rent if the tenants stop paying, and the landlord is well within their rights to take you to court (and damage your credit) in order to get that money.

It's also no walk in the park to even get approved. In general, while renters need an annual income of 40 times the apartment's monthly rent in order to qualify, landlords demand that guarantors—who presumably also have their own housing costs to cover—make 80 times as much. You'll also have to provide all the same documents that a renter would for a standard application, like bank statements and tax returns. On top of that, many landlords will only consider a guarantor who lives in the tri-state area (and therefore is easier to track down should things go awry).

So, that covers your responsibilities. But what about your rights? Once you've signed on, you're pretty much on the hook for any missed rent, and the landlord doesn't even have to tell you when they first start missing checks. With that in mind, your best bet is to take steps ahead of time to make sure you're protected. If there are roommates involved, make sure it's a group you're comfortable guaranteeing: again, if one of them flakes, you're not just on the hook for your kid, but everyone they live with, as well. On the off-chance the landlord has allowed for multiple guarantors, have an attorney draw up a contract between all of you determining the protocol if one or more of the roommates default on rent. It also can't hurt to make a polite request that the landlord notify you if missed payments occur, allowing you to nip any problems in the bud before they spiral into anything bigger and more expensive.

If all this sounds a little daunting, you could also look into institutional guarantors like Insurent Lease Guaranty (FYI: a Brick sponsor). Often, even first-time renters can qualify on their own, as Insurent only requires an annual income of 27.5 times the rent (or 50 times the annual rent in savings), and this can be the combined income or savings of several roommates. "We frequently get parents who are on the hook with roommates," says Insurent managing director Charles Schoneau. "It's definitely worth seeing if your kid can qualify. If they have roommates and they all work, it's likely they will." 

*** This story first posted April 22, 2015, and was updated on March 31, 2016.