Learn everything about rental guarantees: when they are needed, who can provide them, what they include, and how the process works. Tips & tricks for tenants and guarantors included.
A rental guarantee is a type of assurance provided by a third party (the guarantor) to offer the landlord security for rent payments. This is often required when the tenant has insufficient creditworthiness, no steady income, or a poor credit score. A rental guarantee typically includes a guarantee agreement outlining the guarantor's obligations and risks.
Parents, friends, companies, and guarantee banks can provide a rental guarantee. The process of setting up a rental guarantee usually involves preparing and signing the guarantee agreement, managing potential payment delays, and eventually terminating the guarantee agreement.
I. Introduction
What is a rental guarantee?
A rental guarantee is a form of security provided by a third party (the guarantor) to the landlord to ensure rent payments. If the tenant fails to pay rent on time or at all, the guarantor assumes responsibility for the payment, taking the tenant's place. Rental guarantees are typically needed when the tenant lacks sufficient creditworthiness, does not have a stable income, or has a poor credit score.
Why is a rental guarantee needed?
A rental guarantee is needed to provide the landlord with security for rent payments if the tenant cannot make payments on time or at all. Several reasons might prompt a landlord to request a rental guarantee, such as:
- Tenants with insufficient creditworthiness: A tenant with low income or significant debt may be seen as risky by the landlord, and a rental guarantee can provide security for rent payments.
- Tenants without steady income: A tenant without a stable income, such as a student or self-employed individual, may appear uncertain to the landlord, making a rental guarantee a valuable safety net for rent payments.
- Tenants with a poor credit score: A tenant with a bad credit report, possibly due to past payment delays, may be viewed as unreliable, and a rental guarantee can provide the needed security for rent payments.
- Regular rent increases: In some countries, it’s common for landlords to raise rents regularly. In these cases, a rental guarantee can serve as a safety net to cover these increases.
It is important to note that the requirements and regulations for rental guarantees can vary by country and region.
II. When is a rental guarantee needed?
When is a rental guarantee useful?
A rental guarantee can be useful if the tenant has insufficient creditworthiness, no fixed income, or a poor credit report, and the landlord has concerns about the rent payment. A rental guarantee can serve as security for the landlord that the rent will be paid, even if the tenant encounters payment difficulties.
A rental guarantee can also be beneficial for the tenant if they have trouble providing a deposit. A rental guarantee can be an alternative to a deposit, allowing the tenant to rent an apartment without having to provide a large sum of money upfront.
A rental guarantee can also be sensible for the guarantor if they have a close relationship with the tenant and are confident that the tenant will be able to pay the rent. However, the guarantor also assumes risks if the tenant does not pay the rent, so it is important for the guarantor to carefully consider whether they want to provide a rental guarantee.
It is important to note that a rental guarantee always comes with obligations and risks, and it is crucial to understand the potential consequences before signing a rental guarantee. It is recommended to only take on a rental guarantee if you are absolutely sure that the rent can be paid and you are willing to take responsibility for it. Get advice from our experts at Beglaubigt.de.
How much can a rental guarantee be?
The amount of a rental guarantee can vary depending on the country and region. In Germany, for example, landlords may request a deposit of up to three months' rent. In some cases, a higher deposit may be required, such as in the case of special risks, but this must be agreed upon with the tenant and documented in the rental contract.
There are also regulations regarding the duration of the rental guarantee. In Germany, for instance, landlords can only request the deposit for the duration of the rental period and must return it within 14 days after the tenancy ends.
It is important to note that the regulations on the amount and duration of a rental guarantee can vary by country and region. Therefore, it is advisable to familiarize yourself with local legal regulations before signing a rental guarantee.
Is a rental guarantee allowed?
Whether a rental guarantee is allowed depends on the legal regulations of the respective country or state. In some countries and regions, landlords are allowed to request a rental guarantee from their tenants, while in others it is prohibited. In Germany, for example, landlords are allowed to request a rental guarantee from their tenants, but the amount of the deposit and the duration of the guarantee are restricted by law. In other countries like France, it is uncommon for landlords to request a rental guarantee. It is important to familiarize yourself with local legal regulations before signing a rental guarantee.
There are also regulations regarding the type of rental guarantee, such as the amount of the deposit and the duration of the guarantee. It is important to be aware of these regulations to ensure that the rental guarantee is legal and that you fully understand the obligations associated with it.
III. What is included in a rental guarantee?
Description of the guarantee agreement
A guarantee agreement is a written contract between the landlord, tenant, and guarantor to secure the tenant’s rent payments. It outlines the obligations of the guarantor, the conditions for rent payments, and the risks involved.
The guarantee agreement usually contains the following information:
- Names and addresses of the parties: landlord, tenant, and guarantor
- Amount and duration of the rental guarantee: the amount of the guarantee the guarantor assumes and the duration for which it applies
- Obligations of the guarantor: the guarantor's commitment to pay the rent if the tenant fails to do so, and the conditions for terminating the guarantee
- Risks for the guarantor: the risks associated with taking on the rental guarantee, which can vary depending on the country and region. Specific risks will be discussed later
- Terms for ending the rental guarantee: conditions under which the guarantee can be terminated, such as at the end of the lease or in the case of a breach of contract by the tenant
- Signatures and date: space for the signatures of the parties and the date the contract is signed
It is crucial for all parties to carefully read and understand the guarantee agreement before signing it, as it involves legal obligations and risks. It is recommended to consult a lawyer to ensure that the contract complies with all relevant laws and regulations.
Obligations of the guarantor
The obligations of the guarantor in a rental guarantee contract can vary by country and region. Some of the most common obligations include:
- Payment of rent: The guarantor commits to paying the rent if the tenant fails to do so
- Compliance with the terms of the lease: The guarantor agrees to adhere to the terms of the lease that were agreed upon between the landlord and the tenant
- Compensation for damages: The guarantor agrees to compensate the landlord for any damage caused by the tenant
- Return of the property: The guarantor commits to returning the property in good condition at the end of the lease
- Termination of the guarantee: The guarantor agrees to end the rental guarantee at the end of the lease or after the contractual terms have been fulfilled
Risks for the guarantor
The risks for the guarantor that may arise from a rental guarantee can vary by country and region. Some of the most common risks include:
- Financial risks: The guarantor steps in if the tenant doesn’t pay the rent. The guarantor must then cover the rent from their own funds, which could lead to financial difficulties
- Legal risks: The guarantor may be held liable if the tenant does not pay the rent, and the landlord may sue the guarantor. The guarantor could also be held responsible if the tenant causes damage to the property and the landlord holds the guarantor accountable
- Creditworthiness risks: A rental guarantee can impact the guarantor’s credit score, as it is considered a form of debt and may be recorded on the credit report
- Risks to relationships: If a guarantor provides a rental guarantee for a friend or family member, it may strain the relationship if there are problems with the rent and the guarantor has to step in
- Time investment: The guarantor must take the time to understand the terms of the rental guarantee agreement and weigh the risks before signing the contract.
What does a rental guarantee not cover?
A rental guarantee typically does not cover all obligations and risks associated with the rental agreement. Here are some examples of things that are usually not covered by a rental guarantee:
- Damage to the apartment: A rental guarantee usually does not cover the costs of damages to the apartment caused by the tenant during the rental period. The tenant is generally responsible for covering these damages.
- Maintenance costs: A rental guarantee typically does not cover the costs of maintenance, repairs, or upkeep of the apartment. These costs are usually the landlord's responsibility.
- Rent increases: A rental guarantee typically does not cover the costs of rent increases that may occur during the rental period. The tenant is required to pay the increased rent, even if the rental guarantee has already been agreed upon.
- Deposit: A rental guarantee is not a replacement for a deposit. A deposit is a separate amount paid by the tenant to cover potential damages to the apartment. However, a rental guarantee can serve as an alternative to a deposit if the tenant has difficulty providing one.
- Violations of house rules: A rental guarantee usually does not cover the costs of penalties or fines that may arise from violations of house rules or other building regulations.
IV. Who can assume a rental guarantee?
Who can assume a Rental Guarantee?
A rental guarantee can be provided by anyone who is willing and able to do so. Typically, friends, family members, or the tenant's employer act as the guarantor. The guarantor should be in a stable financial position and have sufficient resources to cover the rent if the tenant is unable to pay.
- Parents as guarantors
- Friends as guarantors
- Companies as guarantors
- Guarantee banks
There are also specialized companies that offer rental guarantees, though they usually have specific requirements and may charge high fees.
It’s important for a guarantor to carefully weigh the risks and obligations of a rental guarantee before assuming such a responsibility. Consulting with a lawyer beforehand is advisable.
V. How does a rental guarantee work
How is a Rental Guarantee processed?
The process of a rental guarantee varies by country and region, but generally proceeds as follows:
- The tenant and landlord agree on the necessity of a rental guarantee.
- The tenant finds a suitable guarantor who is willing to take on the rental guarantee.
- The guarantor, tenant, and landlord sign a rental guarantee agreement outlining the obligations and risks.
- The guarantor provides the agreed-upon rental guarantee to the landlord, usually in the form of a bank guarantee or a cash deposit.
- The tenant pays the agreed rent to the landlord during the rental period.
- At the end of the rental period or after the terms of the contract are fulfilled, the rental guarantee is returned, and the guarantor’s obligations end.
It’s important to note that the specific procedures and requirements can vary from country to country, and it’s advisable to familiarize yourself with local legal regulations before entering into a rental guarantee. Consulting a lawyer is also recommended to ensure that the rental guarantee agreement complies with all relevant laws and regulations.
How do I create a rental guarantee?
A rental guarantee is usually created in the form of a guarantee agreement. Here are the typical steps involved in creating a rental guarantee:
- Contacting the landlord: The first step is to contact the landlord and inform them that you would like to offer a rental guarantee.
- Agreeing on the terms: Once the landlord accepts the rental guarantee, the terms should be agreed upon. This can include the rent amount, the rental period, and the guarantor's obligations.
- Drafting the guarantee agreement: Once the terms are agreed upon, the guarantee agreement should be drafted. The contract should include the guarantor's obligations, the associated risks, and the terms for ending the rental guarantee.
- Signing the guarantee agreement: The guarantee agreement should be signed by all parties, including the guarantor, tenant, and landlord.
- Notarization of the agreement: In some countries, it is required that a guarantee agreement be notarized. In this case, all parties should bring the contract to a notary for certification.
Sample Rental Guarantee Template: Parental Guarantee
Rental Guarantee
I, _______ _________ [First and last name of the parent assuming the guarantee; both parents can, but it’s generally not necessary], residing at _________ [Street and house number, postal code, city], born on ..___, with ID number ______, hereby assume the rental guarantee for all claims of the landlord _______ _________ [First and last name of the landlord] from the rental agreement dated _________ [Date of the rental agreement] concerning the apartment at _________ [Street, house number, postal code, city], on behalf of the tenant _________ _________ [First and last name of the tenant], born on .., with ID number _________.
I commit to guarantee for all obligations arising from the mentioned rental agreement up to an amount of ______ €, equivalent to a maximum of three months' net cold rent. This rental guarantee declaration becomes void upon termination of the rental agreement.
_________ [City], _________ [Date]
_________ [Signature of guarantor]
VI. Conclusion
Summary of the key points on rental guarantees
A rental guarantee is a contract where a third party (the guarantor) assumes responsibility for paying the rent if the tenant fails to do so. This may be required by landlords if the tenant lacks sufficient creditworthiness or is unable to provide a deposit.
Key points regarding rental guarantees:
- Guarantor’s obligations: The guarantor commits to paying the rent if the tenant fails to do so, as well as adhering to the terms of the rental contract and compensating the landlord for any damage caused by the tenant.
- Guarantor’s risks: The guarantor risks having to cover the rent and may be held liable if the tenant fails to pay, potentially leading to legal action from the landlord.
- Amount of the rental guarantee: The amount varies depending on the country and region, typically covering one or several months' rent.
- Process: The guarantor, tenant, and landlord sign a rental guarantee agreement that outlines the obligations and risks. The guarantor provides the agreed-upon guarantee, and the rent is paid during the rental period.
- Sample template: There is no standard template for a rental guarantee, but it should at least include the identity of the parties, the amount of the guarantee, the guarantor's obligations, and the duration of the guarantee.
It is important for all parties to carefully read and understand the rental guarantee agreement before signing, as it involves legal obligations and risks. Consulting a lawyer is recommended to ensure that the agreement complies with all relevant laws and regulations.