Hi, Michelle here. I am the LandlordsNY “Legal Expert”. My goal is to post in the blog all of the questions I get from LandlordsNY members (keeping the member anonymous) and my answers thereto, when I think that such questions and answers would be of interest to other people. Let me know if this is helpful. These questions are excellent, keep them coming.
Question: “Is it legally sufficient to have a guarantor sign a guaranty form only, or is it more binding to have them co-sign on the lease agreement as well?”
Answer: You are mixing apples and oranges. A lease and a guaranty are two very separate legal documents, with different purposes. The lease governs the relationship between landlord and tenant. The guaranty is just that, a guaranty of payment, most usually by a third party -- an extra person, who is not going to live in the apartment but who is on the hook legally for paying the rent if the tenant does not. The simple answer to your question, therefore, is that having a guarantor also sign the lease doesn’t make the guaranty a better guaranty. In fact…the irony is that if the guarantor signs the lease personally, then you don’t even need a guaranty because then the guarantor is on the hook personally via the lease – which is the whole purpose of a guaranty! That may be the direct answer to your question, but next I will ask and answer the question I think you are really asking, or really should be asking.
Typically, the tenant signs the lease and the guarantor signs the guaranty. What does this mean for you, as landlord?
In that case, if the tenant does not pay, then you can sue the guarantor for the money. You cannot, however, sue the guarantor in Housing Court as part of the summary nonpayment proceeding against the tenant. You need to sue the guarantor separately in a regular lawsuit. This is more of a hassle. A lawsuit against a guarantor in regular court takes more time and costs more money than a Housing Court matter.
If the guarantor is also a tenant, then you can sue the tenant in Housing Court. If there is more than one tenant and the lease is properly drawn, then the tenants will be jointly and severally liable, and you can sue any of the tenants for all of the rent. This sounds good right? Not so fast! This is where you need to think. More tenants on a lease might not be what you, as landlord, want. If this is a Rent Stabilized situation, then you potentially have more Rent Stabilized tenants. If there are more people on the lease, then there are more people who can take landlord to court for warranty of habitability allegations.
You must think about whether you want more tenants on the lease, or whether all you want is a guarantor. I am kind of assuming that all you want is a guarantor. If that is the case – then a guaranty does the trick.
Thank you for this question. Finally, I am obligated to say that this answer is for general informational purposes only, does not constitute legal advice, and does not create an attorney and client relationship between us or between you and LandlordsNY.
Let me know if you need anything else.
Michelle Maratto Itkowitz
26 Broadway, 21st Floor
New York, New York 10004