Obtaining an apartment when you are young can be a great way to build your credit. However, there are certain risks associated with being a cosigner to an apartment lease. When you become a cosigner for an apartment, you agree to become secondarily liable for the rent obligations under the lease contract. Hence, you may become responsible for the financial obligations of the lease if the primary tenant defaults on his lease obligations.
When you cosign for an apartment lease, you are essentially providing an assurance that the tenant will fulfill the terms and conditions of the lease contract. In addition to being responsible for the monthly rent, the tenant is also responsible for potential late fees and court fees. The tenant must comply with other terms of the agreement, such as monthly maintenance and basic upkeep of the unit. As a guarantor, you are providing an assurance to the landlord that the tenant will comply with any additional rules and regulations. By signing as a cosigner, you guarantee that a potential subtenant will also perform the tenant’s requirements under the contract.
There are tenant obligations that extend beyond the lease term. The tenant may incur an unsettled debt obligation, which can be the result of an eviction or tenant holdover beyond the lease term. If the tenant terminates the lease early without establishing an agreement to terminate the lease with the landlord, the landlord can sue the tenant and the cosigner for the remaining amount of the lease term or until the landlord finds a new tenant.
If the tenant causes damages to the property in violation of the contract terms, the landlord may sue you for money damages in court, in the event the tenant does not pay for the damages. The landlord also has the right to pursue a default judgment against the tenant for outstanding rent payments. The court can also enter a default judgment against the cosigner. However, the landlord must first seek remuneration from the individual who is primarily responsible for the contract obligations prior to bringing any claims against the cosigner.
When you sign your name to become a guarantor or cosigner for an apartment lease, the contract may include an indemnity provision, requiring you to satisfy the tenant’s obligations for any claims, liabilities or damages immediately. An indemnity provision may require you to indemnify the landlord for any associated tenant costs arising out of the lease contract, where the tenant has failed to pay.
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