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Co-signer & Guaranty Policy Knowledge Base

This document outlines our company's policy and procedures regarding co-signers/guarantors for residential rental agreements.

 

🎯 Co-Signer / Guarantor Requirements

Co-signers (also called guarantors) help applicants who are close to qualifying but need additional financial strength. They are legally responsible for the full lease, exactly as if they lived in the home. Below is how our process works and what both residents and guarantors should expect.

Who Needs a Co-Signer?

A guarantor is typically used when an applicant has:

  • Limited credit history

  • Lower or borderline credit

  • Insufficient income

  • No rental history

  • Other factors that need additional support

Owners always have final say, so specific requirements may vary slightly depending on the property.

Minimum Requirements for Co-Signers

These standards are generally the same as for primary applicants:

1. Credit Requirements

Guarantors must meet the same credit standards as applicants.
(Some owners request slightly higher requirements from guarantors.)

2. Income Requirement

Guarantor income must be 4× the monthly rental rate.

3. Lease Responsibility

Guarantors:

  • Sign the lease (not just a separate form)

  • Are fully responsible for all financial obligations

  • Remain liable for the entire term, including renewals, if the resident renews

See the Guaranty Addendum (Standard Form 445-T, NC REALTORS®, page 1) for the exact legal obligations, including:

  • Immediate liability—landlord may demand payment directly from guarantor

  • Joint and several liability—if there is more than one guarantor, each is responsible for the full amount

  • Duration—covers initial term and any extensions or modifications

    Guaranty Addendum NC

How the Process Works

  1. Applicant applies normally

  2. We determine if a guarantor is required

  3. Guarantor completes a full application

  4. Guarantor provides ID and supporting income documentation

  5. Guarantor signs the lease and required addendums

  6. Lease is finalized

We cannot accept “informal” co-signers or side agreements. Everything must be formal and in writing.

Important Risks to Understand

For Guarantors

  • You’re responsible for every lease obligation: rent, damages, fees, utilities, legal charges, etc.

  • If the resident misses anything, we can require payment directly from you immediately—no need to pursue the resident first.

  • You may be liable even if roommates cause the issue.

For Residents (especially roommates)

Co-signing can create complicated relationships:

  • If one roommate’s guarantor pays for damages or delinquency, they may pursue the resident personally.

  • Parents or relatives co-signing for mixed roommate groups can become strained.

  • We strongly recommend clear agreements among all roommates before signing.

That said—we’ve surprisingly had very few problems with guarantors, despite the potential risks. Most guarantors take the responsibility seriously, and most residents never create issues.

Common Misunderstandings

“My co-signer is only covering me, not my roommates.”

Incorrect.
Co-signers back the entire lease, including all residents, unless the owner has explicitly approved otherwise (rare).

“If I move out early, my co-signer is off the hook.”

Also incorrect.
Guaranty applies for the full term as written.

“I can switch co-signers later.”

Only with full approval, re-screening, and a signed release. Not automatic and not guaranteed.

Best Practices Before Adding a Co-Signer

For Residents

  • Talk openly with your guarantor about expectations

  • Make sure all roommates agree on rent payment responsibilities

  • Understand that everyone is tied together legally

For Guarantors

  • Review the Guaranty Addendum carefully

  • Ask questions before signing

  • Ensure you are comfortable with the applicant and their roommates