Leasing an apartment can be a time-intensive proposition, particularly in situations where landlords require a variety of supporting information to ensure that you, the future tenant, do not pose a legitimate financial risk. Following employment verification, credit checks and reference evaluations, a landlord may still require that the tenant find a co-signer to support their application. Generally, this person has a more reputable financial history and acts to support an otherwise weak leasing application. In the event that the co-signer is located out of state, the landlord may choose not to allow them to attach their name to the application.
Legally, an individual residing in a different state than a prospective tenant may act as their co-signer. However, it is ultimately the decision of the landlord as to whether or not they will allow this.
The Basics of Co-Signing
As mentioned previously, the role of the co-signer is to act as a second funding source in the event that the primary applicant is unable to meet the terms of their leasing obligation. Applicants who meet or exceed the financial standards established by the landlord will not be required to find a co-signer. Those who do not, however, will most likely be forced to use co-signer or withdraw their application.
The individual who chooses to co-sign on the leasing application assumes a variety of risks and responsibilities. In the event that the primary applicant is unable to meet the terms of the loan, it will become the duty of the co-signer to pay the rest of these financial obligations. Failure to do so could negatively impact the credit score of the co-signer, even though they never actually lived in the property in question. Simply put, all of the duties assigned to the original application will be transferred to the co-signer if the original tenant is unable to fulfill them.
Out-of-State Cosigner Apartment Considerations
Because of the fact that the co-signer will carry the burden of the lease, many landlords require that these individuals reside in the same state as the primary applicant. Debt collection could be significantly more complex in situations where the co-signer is not located in the same state as the primary applicant. These logistical factors will commonly persuade landlords to implement an in-state requirement for these individuals.
That being said, this is not always the case. Given the fact that this requirement is discretionary, specific policies referring to co-signers and their current place of residence is entirely left to the landlord.
Evaluating Potential Options for Co-Signers
As a loan co-signer and landlord alike, the best way to avoid a potentially negative situation is to remain in close contact with one another. For example, a loan co-signer may ask that the landlord contact them in the event that the tenant is late on rent or fails to pay entirely. Tactics such as these will help minimize the overall risk of the primary tenant forfeiting their contractual requirement and passing them on to the co-signer.
Although a co-signer may feel some form of obligation to support a close associated with their application, it is important to remember that this should be the most objective decision possible. Acting as a co-signer carries serious financial obligations and potential consequences. If the original applicant has not displayed the degree of financial responsibility needed to inspire the necessary confidence, co-signing is not advised.
- The People's Law Library of Maryland: Co-Signers
- How to Find a Cosigner for Your Student Loans | Credible
- SmartMove: The Landlord's Guide to Cosigners
- Consumer Financial Protection Bureau. "What Is a Co-Signer?" Accessed Dec. 18, 2019.
- Santander Bank. "Personal Loans From Santander Bank." Accessed Dec. 18, 2019.
- Wells Fargo. "Personal Loans." Accessed Dec. 18, 2019.
- Consumer Financial Protection Bureau. "What Are Common Credit Report Errors That I Should Look for on My Credit Report?" Accessed Dec. 18, 2019.
- Consumer Financial Protection Bureau. "How Do I Get and Keep a Good Credit Score?" Accessed Dec. 18, 2019.
- New York State Higher Education Services Corporation. "NYHELPs Cosigner Liability and Release." Accessed Dec. 18, 2019.
Ryan Cockerham is a nationally recognized author specializing in all things innovation, business and creativity. His work has served the business, nonprofit and political community. Ryan's work has been featured at Zacks Investment Research, SFGate Home Guides, Bloomberg, HuffPost and more.