A co-signer is a person who signs a leasing contract and agrees to become responsible for the fulfillment of the terms and conditions of the lease, including payment of rent, in case the main tenants breach such terms. This is usually a person whose income will qualify the tenant to rent the unit. (Gross income should be three times the amount of rent). In addition a co-signer must have a good credit and employment history.
A guarantor does not sign a lease but provides a signed guarantor letter, agreeing to assume responsibility for the terms of the lease (including payment of rent) if the tenant breaches the terms.
Not all landlords renting to students require co-signers or guarantors, especially in the University City area. Simply providing proof that you are a registered University of Pennsylvania student may be enough.
In Center City, many high rise buildings and many landlords strictly enforce the income qualification requirement for ALL tenants and require tenants to provide a co-signer if/when the student's gross income is less than three times the amount of rent.
A landlord does not have to accept a co-signer. If the policy of the agency is not to accept co-signers, they can enforce the policy, as long as it is applied consistently to all tenants.
For students very often the co-signers are the parents. It is important for the co-signers to read the lease carefully before committing themselves. Many leases have an automatic renewal clause. In the absence of notice the lease renews for another year, another month or another specified period of time. Often the rent may go up at the time of renewal and the co-signer may not be the one receiving the notice of rent increase. The responsibility of the co-signer(s) will, in such a case, continue with the lease, unless, terminated by co-signer through proper notice.
When several students sign a joint lease for a rooming house, the co-signers on the lease assume responsibility for the rental payment of all the tenants, not only their son's or daughter's payment. That is why, when the landlord requires co-signers, it is advisable that every tenant provide a co-signer. Tenants and co-signers are jointly and severally responsible for the lease.
When student tenants default on a lease, they may be sued and evicted but the landlord may not be able to collect from student tenants who have no employment and no income.
The credit of that tenant will be affected, that is quite true, but the landlord is interested in collecting the balances due. It is, therefore, much easier to collect the money owed from a co-signer who has employment, income and assets.