What is a Lease Guarantor?

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If you don’t have a long or strong credit history, you might find it difficult to secure a rental apartment. Landlords want to know that you have enough money to cover the cost of rent and that you are a trustworthy and reliable tenant. 

Adding a lease guarantor can improve your chances of getting an apartment. A lease guarantor is someone, typically a family member or close friend, who takes on legal responsibility to cover any missed rent payments. A guarantor acts as an additional level of reassurance to the landlord that the rent won’t go unpaid. 

How Does it Work?

Not everyone needs a lease guarantor to rent an apartment. However, thanks to the high cost of rent in many cities, it’s not uncommon for a landlord to request one. 

If you have a steady job, a good credit score, and you can demonstrate that you are a reliable tenant who can afford to pay rent, you might not need to provide a guarantor. 

On the other hand, if you’re a first-time renter who has just graduated from high school or college with limited credit history or work experience, a landlord might want a guarantor included in your application. 

If a guarantor is requested, they will have to sign the lease agreement, as well as a guarantor agreement that outlines the details of their responsibility and when they will have to pay.  

Why Would I Need a Lease Guarantor?

Your landlord has the right to ask for a guarantor as part of the tenant application process, but they must have the same requirements for all tenants. According to the Human Rights Commission, the landlord can’t request a guarantor as a way to discriminate against certain groups, such as recent immigrants or those receiving social assistance. 

There are a few reasons a landlord might require a lease guarantor as part of your application, including: 

• Limited credit history or bad credit. Most landlords want to review your credit history to help them determine if you can afford the rent and if you are likely to pay it. 

• Limited employment history. If you haven’t worked at a job for a very long time or if you’ve bounced around between several jobs in a short period of time, your landlord might want the reassurance of a guarantor. 

• No prior rental history. If you’re a first-time renter with no rental history, it’s difficult for your landlord to get a sense of how you will act as a renter.  

• Bad references. If you have a rental history but it comes with a bad reference, your landlord might feel more comfortable renting to you with a guarantor. 

• Low income. A landlord might also request a guarantor if the rent accounts for a large portion of your income (over 30%-35%).

What Are The Requirements For a Lease Guarantor?

To act as a lease guarantor in Canada, the individual must be a Canadian resident. While the specific requirements may vary between provinces, most landlords want to run a credit check to confirm the guarantor has a good credit score. The landlord will also want to confirm that the guarantor has an income high enough to cover the additional rent or any other costs they are agreeing to cover. 

How Do I Find a Lease Guarantor?

While a guarantor is often a family member or close friend, anyone can act as a guarantor on your behalf, assuming they meet the requirements. When selecting a lease guarantor, you want to look for someone with a strong employment history and who is financially responsible. They will need to provide proof of their credit score and payment history. 

When you ask someone to act as your lease guarantor, make sure they are aware of the risk and responsibility they are taking on. You should also think about what will happen if you fail to make a rental payment and your guarantor is called upon. While your guarantor has ultimately agreed to take on legal responsibility for your unpaid rent, sticking someone with this responsibility can ruin a relationship. Make sure you understand what you are asking someone to do.  

What to Do If You Can't Find a Lease Guarantor?

If you don’t have a friend or family member willing or able to act as a guarantor, there are other options. There are lease guarantee companies that essentially take on the role of lease guarantor. These companies provide assurance to the landlord that they will cover the cost of a damage deposit or missed rent. In exchange, the tenant pays the company a fee.

The benefit of using a lease guarantee company is that it can help you become a more competitive application in a hot rental market. The downside is if you are someone who pays your rent every month without fail, you still have to pay the guarantor company for its service and you won’t get your money back. 

If you don’t feel comfortable using a lease guarantee company, consider looking for a less expensive apartment, one that doesn’t require a guarantor. If you aren’t bound to a specific location, consider moving to an area with a lower cost of living.

You can also look to your network for alternative and more informal living options. Do you have a friend or family member that is interested in renting you a room or an apartment? Do you have a friend that will have you move in as a roommate? 

Not being able to find a guarantor may limit the rentals you can apply for, but it’s not the end of the road. With a bit of creativity, networking, and patience, eventually you will secure an apartment.

Are Co-signer and Guarantors the Same?

Co-signers and guarantors are not the same. A co-signer is an individual who signs the lease agreement with you and has the right to live in the apartment. You and a roommate might decide to co-sign a lease agreement and share the cost of rent. In this case, if one of you misses your portion of the rent payment, you’re both responsible for paying it back. A missed payment can also show up on both of your credit reports.

A guarantor doesn’t sign the lease agreement as another roommate. Instead, they are taking on the legal responsibility to pay your bill if you default. Since a guarantor isn’t considered a tenant, they can’t live in the rental with you. 

Both a co-signer and guarantor can help boost your chances of getting an apartment if you are struggling to get accepted on your own. You might want a co-signer if you are looking to split the cost of rent, and you’re open to a roommate. However, if they fail to pay their portion, remember that you are on the hook. 

If you’re not looking for a roommate, but need extra help during the application process, you might want to consider a guarantor. They take on the legal responsibility to pay your bill but have no intention of living with you.

The Bottom Line

If you’re struggling to find a rental due to limited credit or employment history, a lease guarantor might help you improve your chances. Before your guarantor signs any agreement, it’s important that you both understand the risks and responsibilities of this commitment. If you don’t have a family member or friend who is willing or able to act as a guarantor, there are other options. You can look into a third-party lease guarantor company or consider living with a roommate who will cosign a lease agreement.