There are times when a tenant needs a co-signer. Perhaps the tenant is a young person who has not yet established a rent or employment record. Or the tenant’s credit record is not good. Sometimes a tenant, through frugal spending habits, can actually pay the required rent, but doesn’t meet the basic income requirements of the industry. Most professional landlords require that a tenant’s yearly rent not exceed 30% of his/her gross income, i.e., salary before any deductions for taxes, etc. Thus, to qualify for an apartment renting for $6,000 per year, a tenant must have $20,000 gross income.
If, by any chance, a tenant has significant savings, he or she can probably negotiate a year’s lease by paying a significant amount of rent in advance. For most people however, the most feasible procedure is to seek a co-signer. A landlord does not have to accept a co-signer, but many do.
A co-signer, to be acceptable, usually has to meet all the qualifications of a tenant who would normally qualify for the apartment: good credit and employment record and sufficient income. It helps to have a co-signer who lives in Maryland, though some landlords will accept co-signers who live out of state.
Co-signing a lease is a serious responsibility that should not be taken lightly. Tenants seeking a co-signer should not underestimate the risk that they are asking someone to assume. If a tenant cannot really afford or can’t budget his/her money properly and defaults on the lease, then most landlords will seek payment from the co-signer even if they have to take him/her to court. Simply because a co-signer does not reside in the property does not mean that he or she cannot be held accountable for the rent.
Furthermore, a co-signer must know whether he or she is responsible for only the first year of the lease or for renewals thereafter-- as is usually the case. If tenants have been paying their rent on time during the first year, and should their incomes improve enough to have the apartments on their own, then before their current leases renew, they should seek to have non-co-signed leases for the future. If the tenants are unwilling to do this, and the co-signer wants to be relieved of future potential liability, then the co-signer should send a written notice to the landlord, before the lease renews, that at the end of the current lease he or she will no longer be a co-signer.
Sometimes, especially in the case of students, there are three co-signers-- perhaps one from Maryland and two from out of state. The Maryland co-signer and the Maryland tenant should be aware that the landlord can sue one or all of the co-signers, and it is easier to sue locally than out of state. If the Maryland co-signer has income and assets enough, he/she may be the only one sued (and then he/she would have to sue the other co-signers).
So, using a co-signer may enable you to rent the apartment you really want. However, if you are a tenant seeking a co-signer, you need to fully realize the risk you are asking another person to take for you. Instead of asking someone to take this risk for you, you may want to consider seeking more modest accommodations where the landlord does not require a co-signer until you have rectified your credit or have a better employment record and income.