June 2017 - Cosigning a Lease for Your Teen: What’s the Risk?
Your teen wants to rent a house at the Jersey shore to celebrate graduation or move to an off-campus apartment next semester with roommates. Should you cosign the lease?
The answer to that is a very personal decision. Only you know your child well enough to judge the risk. Before you decide, however, understand the facts.
Common leases hold all signers “jointly and severally liable.” That means everyone who signs the lease, including cosigners, is responsible for satisfying the full terms of the lease – paying rent, making restitution for damages, etc. It’s one thing to take on this responsibility for your child, but what about the roommates? You’re responsible whether or not they hold up their end of the bargain. Do you know them – and their financial situations – well enough to take that risk?
Short of saying no to your child, there may be ways to protect your liability.
- Ask if there is an option for a ‘several liability only’ lease, which holds each signer (and their cosigner) liable only for their share of the total financial obligation.
- Inquire about the possibility of limiting the terms of the lease that you as cosigner are guaranteeing, primarily the rent. This precludes you from being liable for damages.
Cosigning a lease has no direct effect on your credit score; however, if the rent doesn’t get paid in full and on time – no matter who is to blame – you risk a black mark on your credit rating and you could expose yourself to a lawsuit as well.
While we’re on the topic, consider getting renters’ insurance. The landlord’s insurance does not cover your child’s personal possessions. Also, renters’ insurance offers added protection should someone get hurt in your child’s apartment.
And one final thought, courtesy of William Shakespeare: “It is a wise father that knows his own child.”