How to Add a Co-Signer to a Lease

As a landlord, chances are you’ve run into a frustrating qualification conundrum or two while searching for new tenants. For instance, after listing your rental and reviewing applications, you may come across a renter who seems reliable, but has income, credit, or rental history that doesn’t quite meet your standards.

In this scenario, you likely don’t want to rush into a lease agreement with a tenant who may struggle to pay rent or has a history of breaking leases. But instead of rejecting the applicant outright, you can ask for a co-signer who helps reduce your risk when taking on a less-qualified tenant.

If you’re considering requiring a co-signer, it’s important to understand the steps involved and the legal implications that affect everyone involved. In this guide, we’ll go over what a co-signer is, when to ask for one, how to add a co-signer to a lease, and how you can handle the entire process through TurboTenant.

What Is a Co-Signer?

A co-signer is a third party who signs the lease alongside your tenant. They take on full responsibility for rent and other financial obligations from day one. Often, co-signers are parents or relatives who use their creditworthiness to strengthen the renter’s application. They’re just as responsible for the financial obligations as the tenant. Because they sign the lease itself, they typically have the right to live in the unit, even if they never do.

Co-signers typically have stronger credit, higher income, and clean background checks, allowing landlords to move forward comfortably without needing to search for a new tenant.

A co-signer differs from a guarantor, who is not a tenant or occupant and only becomes liable if the tenant defaults. A co-signer shares the tenant’s obligations equally and immediately.

When Should a Landlord Require a Co-Signer?

Landlords often ask applicants for a co-signer if the tenant screening process reveals notable red flags. As a property manager, you may want to require a co-signer if an applicant has:

• Low or inconsistent income,
• A limited credit history or a poor credit score,
• A questionable rental history or eviction records, or
• No rental history, as is common with students and first-time renters

To comply with the Fair Housing Act, apply the same screening standards, including when you require a co-signer, consistently to every applicant. Inconsistent treatment of similar applicants is a common basis for discrimination claims.

So while a co-signer can reduce a landlord’s risk, their financial backing shouldn’t replace a fair screening process or guarantee a tenant will be reliable.

How to Add a Co-Signer to a Lease Agreement

Knowing how to add a co-signer is critical for staying compliant and protecting yourself if something goes wrong. Here’s how:

First, Decide if the Applicant Needs a Co-Signer

Not all applicants will need a co-signer in the first place, so start by checking whether a candidate meets your rental criteria on their own. Send a detailed pre-screener that requests basic information, like income, self-reported credit score, and employment status, so you can decide how to move forward.

If the applicant looks promising but you still have some financial doubts, ask them to consider adding a co-signer to their application. Clearly communicate the reasons you’re requesting one, as well as the standards the co-signer must meet to qualify.

Have the Co-Signer Complete a Rental Application

Both the tenant and the co-signer should complete a full rental application to verify relevant details and ensure all parties meet your screening standards. Since you’ll need to screen both the co-signer and the tenant before signing the lease, send the same rental application to both of them.

At a minimum, the co-signer must provide the same details as a regular tenant, including income and credit history. You should also request the co-signer’s housing payment history — rent or mortgage — to confirm they have a track record of meeting housing-related financial obligations. Ultimately, this information will help confirm the co-signer can actually cover the rent if the tenant falls short.

Run the Co-Signer’s Background Check

In addition to running an extensive background check on the applicant, you’ll also need to screen the co-signer. Conducting two screenings might seem like a hassle. Still, it’s the best way to confirm the co-signer is financially stable enough to support the primary tenant and meet your rental criteria.

You will need both parties’ written consent to run their reports. TurboTenant makes this easy with our tenant screening reports.

Create or Update the Lease Agreement

If the co-signer meets your criteria and you’re ready to accept the primary applicant, you’ll need to create a lease agreement that includes the co-signer as a financially responsible party. This step will typically entail either adding a lease addendum to an existing agreement or drafting an entirely new lease.

Add the co-signer directly to the lease as a signing party, and clearly outline exactly what you’re holding them responsible for. The lease should also distinguish between the co-signer and the tenant to prevent ambiguity and ensure it holds up in a legal dispute.

Send the Lease for E-Signatures

After reviewing the lease, send the agreement to both the applicant and co-signer for signatures, as all parties involved will need to sign the contract before the move-in date. Fortunately, TurboTenant’s e-signature tool makes this step easy for landlords to organize, especially if the co-signer lives far away.

Once everyone signs the lease, you’ll want to give each party a copy and keep one for your records. That way, everyone knows what they’re responsible for.

Safely Store the New/Updated Lease

Your responsibilities don’t end after everyone signs the lease and the new tenant moves into your rental unit. Next, you’ll need to store the rental application, tenant screening reports, and signed lease agreement securely so nothing falls through the cracks. These documents will protect you from legal blowback and make enforcement of the agreement cut-and-dried.

Maintaining a thorough paper trail can be invaluable in the event of a court case or legal dispute between parties. For example, if the tenant or co-signer attempts to get out of the agreement, you’ll have clear documentation to support your position and demonstrate that all terms were properly agreed upon.

What Co-Signers Are Responsible For

Co-signers are jointly responsible for the lease agreement’s financial obligations. Depending on the agreement, a co-signer’s responsibilities might include:

• Unpaid rent,
• Late fees,
• Property damage costs, or
• Any other financial damages.

Landlords should always clearly define the co-signer’s responsibilities within the rental contract. Remember, you can only enforce these terms if they’re included in the lease agreement, so avoid vague wording and make each of the co-signer’s obligations clear and well-defined.

Mistakes to Avoid When Adding a Co-Signer

A co-signer can help reduce a landlord’s risk when taking on a questionable tenant, but they won’t eliminate it.

Landlords should proceed with caution to avoid these common pitfalls:

Adding a co-signer without updating the lease: If you don’t include the co-signer in the lease agreement, you won’t be able to enforce their responsibilities or hold them legally accountable.

Skipping the screening process for relatives or parents: Just because a co-signer is related to an applicant doesn’t mean you should skip screening them. Always screen anyone who signs the lease using your standard criteria.

Not clearly explaining financial responsibility: If you don’t fully explain the co-signer’s obligations, they may later claim they weren’t informed properly or didn’t understand the terms they agreed to.

Missing required signatures on the lease: Without both the applicant’s and co-signer’s signatures, the lease may not be enforceable.

Applying inconsistent approval criteria: Using inconsistent standards for co-signers could lead to claims of fair housing violations or accusations of unfair treatment.

Confusing the co-signer’s role with the tenant’s: Be clear in the lease who occupies the unit and who’s responsible for what, so you don’t misapply lease terms.

While co-signers can improve your chances of recovering losses, landlords still need to take the right precautions to protect their rental properties.

TurboTenant Will Streamline the Co-Signing Process

Signing a lease agreement with a tenant who has an imperfect income, credit report, or rental history can be a stressful endeavor. Fortunately, adding a co-signer can give you much-needed peace of mind and help you avoid starting over with a new applicant.

To ensure the arrangement is legally enforceable, landlords must follow specific steps when adding a co-signer to a lease. To help, property management software can streamline the process with tools like:

• Online rental applications,
• Screening reports,
• State-specific lease templates,
• E-signatures, and
• Centralized accounting and bookkeeping.

Sign up for a free TurboTenant account to simplify co-signing, tenant screening, and your entire property management workflow from start to finish.

Adding a Co-Signer to a Lease Agreement FAQs

Disclaimer: This blog is for informational purposes only and is published by TurboTenant. It is not legal, financial, or tax advice. Laws and regulations for landlords vary by state and locality and may change over time. Always consult a qualified attorney, accountant, or local housing authority before making decisions related to your rental property. The publisher and authors assume no responsibility for actions taken based on the information provided.