Lease Personal Guarantee
Renting to a tenant with thin credit? A personal guarantee puts a third party, the guarantor, on the hook for the rent if your tenant defaults. It is the backstop that lets you say yes to a borderline applicant. Free in all 50 states.
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A lease personal guarantee is a promise by a third party, the guarantor, to cover your tenant's obligations if the tenant fails to pay. As the landlord, you use it to back a lease when the tenant's credit or income is thin. The guarantor is not a tenant and has no right to live there. They are the financial backstop, liable for the rent and damage the tenant leaves behind.
Key takeaways for landlords
- It backs a risky tenant: a guarantor covers the rent if the tenant cannot.
- The guarantor is not a tenant: they pay, but have no right to occupy the unit.
- Make it continuing: a guaranty that survives renewals protects you past year one.
- Screen the guarantor: their credit and income are what the promise is worth.
- Get it signed in writing: a verbal promise to guarantee rent is hard to enforce.
6 steps to write a lease personal guarantee
The whole job, start to done.
- 1
Identify the parties and the lease
Name yourself as the landlord, the tenant, and the guarantor, and identify the lease by its date and address. The guaranty should point clearly to the lease it backs.
- 2
Define what the guarantor covers
List the obligations: unpaid rent, late fees, damage beyond the deposit, and collection costs. Decide whether it is capped at an amount or covers everything the tenant owes.
- 3
Make it a continuing guaranty
State that the guaranty survives renewals, extensions, and a rollover to month-to-month. Without this, your protection ends with the first term.
- 4
Add a primary-liability clause
Say the guarantor pays on the tenant's default, without you having to sue the tenant first. This is what lets you collect quickly.
- 5
Screen and sign the guarantor
Pull the guarantor's credit and verify income with a rental application, then have them sign before move-in. A signature added later can be challenged.
- 6
Attach it to the lease
Attach the guaranty to the standard residential lease as an addendum, and keep both together. Give the guarantor a copy.
Lease Personal Guarntee
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Most popularWhat if it's not that simple?
The situations that actually trip people up.
What if the guarantor lives out of state?
That is fine, and common for a student's parent. The guaranty still binds them. Add a clause consenting to your state's courts and law, so you are not forced to sue where they live.
Does the guaranty survive a lease renewal?
Only if you made it continuing. A guaranty tied to one term ends when the lease renews. Check the wording before you rely on it in year two.
Can the guarantor cancel partway through?
Rarely, once the lease is signed in reliance on it. A continuing guaranty can sometimes be revoked for future renewals with notice, but not for the current term. Say so in the document.
What if the tenant files for bankruptcy?
The guaranty is why you required it. The tenant's bankruptcy stays collection against the tenant, not usually against the guarantor. You can still pursue the guarantor for what is owed.
Is a guaranty worth it if the guarantor has no money?
No. A guaranty is only as strong as the guarantor's assets and income. Screen them like a tenant, or the document is just paper.
How a lease personal guarantee works
A personal guarantee lets you rent to someone you would otherwise turn down. The tenant may have thin credit, no rental history, or income that is just short of your standard. The guaranty solves that by adding a second person, the guarantor, who promises to pay if the tenant does not. You get the rent either way, and the applicant gets the unit.
A guarantor is not the same as a co-signer, even though the forms often blur the two. A co-signer is a full tenant from day one, jointly liable and often able to live in the unit. A guarantor stands behind the tenant, liable only when the tenant defaults, with no right to occupy. For a backstop on a weak applicant, a guarantor is usually what you want. Commercial landlords use the same tool to back a new business through a commercial lease.
A guaranty is only as broad as its words. Spell out what the guarantor covers: unpaid rent, late fees, damage beyond the deposit, and the cost of collecting. Decide whether the guaranty is limited to a set amount or covers everything the tenant owes. The broader the language, the more the guaranty is worth to you.
The most common mistake is a guaranty that quietly ends. If the guaranty covers only the first lease term, it disappears when the tenant renews or rolls to month-to-month. Make it a continuing guaranty, one that stays in force through renewals and extensions. Otherwise your protection lapses exactly when a long-term tenant starts to slip.
A guaranty is only as good as the guarantor behind it. Screen the guarantor the way you screen a tenant: pull credit, verify income, and keep the rental application. A guarantor with no assets is a signature, not security. Get the guaranty signed before move-in, because a promise added later can be challenged for lack of consideration.
When the tenant defaults, the guaranty is what lets you turn to the guarantor. Serve the late rent notice your lease and state require, then demand payment from the guarantor. The guaranty rides with the lease, so attach it as an addendum to the standard residential lease and keep both together. Pursuing the guarantor is often faster than chasing a tenant who has already stopped paying.
What a lease personal guarantee includes
· The parties: you, the tenant, and the guarantor.
· The lease it backs: the lease, by its date and address.
· The scope of the guaranty: rent, late fees, damage, and collection costs.
· Continuing or limited: whether it survives renewals, and any dollar cap.
· A primary-liability clause: that the guarantor pays without you suing the tenant first.
· Signatures: the guarantor signs, dated, before move-in.
Guarantor vs. co-signer
People use these as if they were the same. They are not, and the difference decides who you can chase, and when.
| Guarantor | Co-signer | |
|---|---|---|
| When they pay | Only if the tenant defaults | From day one, alongside the tenant |
| Right to live there | No | Often yes, as a named tenant |
| Liability | Secondary, a backstop | Primary and joint, equal to the tenant |
| On the lease | A separate guaranty or addendum | A named tenant on the lease itself |
| Best for | A credit-risk tenant you still want | Roommates or partners sharing the unit |
| You pursue them | After the tenant defaults | Immediately, like any tenant |
Lease personal guarantee FAQ
Is a guarantor the same as a co-signer?+
Do I have to sue the tenant before the guarantor?+
Can I require a guarantor for any tenant?+
Does the guarantor need good credit?+
Does it need to be notarized?+
How long does the guaranty last?+
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