Q: My wife and I have agreed to sign on as lease guarantors, or co-signers, for a friend’s rental. The original mix of tenants has changed, and now she’s living with people who have terrible records as tenants and are not considerate of the property … which means we may be called upon to cover damage.
We wouldn’t have become guarantors had these roommates been there from the beginning. Is there anything we can do if we are asked to pay? –Robin and Richard
A: Your unease is understandable, and there may be a legal answer for you — depending on how the lease guarantee is written and how a judge might view the problem.
Let’s start with what you agreed to do: to cover the financial shortcomings of your friend and her roommates at the time. Like any guarantor, you assessed the risk that you’d be called upon, by evaluating the financial stability and good-tenant histories of your friend and the others, and based on that risk, you made your decision.
Now, however, the people whom you’ve agreed to cover for have changed, and the risk you’re facing has gone up. How does that affect your promise to the landlord?
If you were operating in the world of high finance, you might have a shot.
For example, suppose you agreed to be a guarantor for a bank loan — such as a mortgage — to a third party, the homeowner. The bank, as has not been uncommon these days, mismanages the loan, thereby increasing the risk that you had originally agreed to assume.
If the mismanagement results in calling upon you to cover the borrower’s default, you might be able to resist it by arguing that because the mistakes of the lender heightened the risk, you should not be held to the original promise. Barring any language in your guarantee agreement in which you agreed to waive, or give up, this defense, you might prevail.
You might try applying this logic if and when your friend’s new roommates cause damage that requires you to step up. You’ll argue that by approving tenants with such poor rental histories, the landlord increased the risk that you originally accepted.
In the future, consider looking carefully at the language of a co-signer clause. With a few well-chosen phrases, you can avoid the problem you now face. Make sure that the clause specifies that you will be on the hook only as long as the entire, current group of tenants remains.
Once someone leaves, your risk goes up (fewer people to handle the rent), and that alone should end your obligation. You can always sign up again if an acceptable (to you) replacement is found.
Don’t expect landlords to be happy with these conditions — they’d like you to remain a willing guarantor no matter who lives there. But unless you insist on guaranteeing only the tenants whom you’ve had a chance to assess, you leave yourself wide open to be paying for the misdeeds of strangers.
Q: One of my tenants says she needs to break the lease and move because her car was broken into while parked on the street in front of the building. She also says she "just doesn’t feel safe." Do I have to let her out of the lease? –Bill D.
A: Tenants may legally break their leases for a number of reasons, starting with the landlord’s failure to provide fit and habitable housing, through lack of essential repairs, for example.
Repeated privacy intrusions can also justify a move, as can the failure to maintain a property in which tenants can live in peace and quiet. Along those lines, landlords whose own tenants commit crimes with impunity are practically inviting residents to leave.
But although landlords must take steps to rid their properties of residents who break the law, they are hardly expected to police the streets. The first question for you is, could you have prevented this crime? If you have reasonable security and lighting for the building and don’t allow loitering in front, you’ve probably done all that you can do as far as making the street safe.
However, you’ll want to think back to the advertisements you posted for this rental, and to the conversations you had with the tenant before she signed the lease. In either, did you represent that your property and the neighborhood were safe?
If you did — if you said, for example, that it was crime-free, or extremely safe, or that the tenant would have nothing to fear — you might have set up an expectation that the tenant was justified in relying on.
That you couldn’t deliver on these promises is beside the point: Once you assure the applicant that something important is true, but it turns out not to be true, that applicant can argue that she was misled on a "deal breaker" point. That might give her the legal right to break the lease.