What Happens to a Lease Guarantor if the Tenant Does Not Pay Rent

Anyone who has been asked to be a lease guarantor, or who is involved in a rental agreement including this third-party role, will want to know about what actually happens in this kind of lease agreement situation.

The lease guarantor in a rental agreement is someone who vouches for the tenant. By signing onto the agreement, the lease guarantor agrees to pay all unpaid rents and other financial obligations on behalf of the tenant. The lease guarantor is most likely to be the parent or guardian of the tenant.

Nonpayment Situations

The answer to the above question of what happens with unpaid rents is relatively simple. The landlord who has not secured payment from the tenant will go looking for payment from the lease guarantor. Some details apply that the lease guarantor may want to know about.

According to standard state rental laws, the details of a lease agreement determine the specific time frame and protocols for rent collection from a lease guarantor. Often, the lease will include a specific requirement for the landlord to successfully contact the tenant. If the rent is not paid a certain stated number of days after this contact, the landlord can bill the lease guarantor.

Understandably, this kind of situation can get tricky. A landlord may end up trying unsuccessfully to contact either the tenant or the lease guarantor, or the lease guarantor may not be able to contact the tenant to talk repayment strategy and try to resolve the situation. In general, having a third party involved doesn’t make a whole lot of sense for rental agreement.

The main reason a tenant might seek a lease guarantor is when he or she does not meet the technical qualifications to rent space. The tenant might well be able to pay the rent on a monthly basis, but lower income or insufficient or bad credit might cause a landlord or rental company to reject an application. Sometimes, in close negotiation with either the landlord or the rental company representative, the tenant can set up a contract with a lease guarantor to get around credit and income requirements.

Long-Term Situations

If the rent remains unpaid long-term, the lease guarantor will still be the debtor. Although landlords may ultimately be able to effectively send unpaid rent amounts to a collection agency, unpaid rent situations frequently have to go through local courts in order to establish what is owed. Lease guarantors can be responsible for additional amounts for damages to the space. If the lease guarantor dies, the debts are binding on his or her estate.

The high standards for qualifying as a lease guarantor, along with the complexity of the agreement and the risk, make most consumers think twice about standing in for a child or other family member. The best chance at a successful agreement is when a responsible child can outline the terms of this kind of deal to his or her parents. In many cases, the success of a lease guarantor agreement boils down to good communication, or, alternately, holding an amount of money in informal “escrow” to make sure the rent is paid month to month. In any case, it’s best to do some research and a little soul searching before signing on as a lease guarantor to any rental agreement.