Can landlords require co-signers for rental approval?

Tenant Screening and Co-Signer Requirements for Landlords in New Hampshire

When managing rental properties in New Hampshire, landlords have a vested interest in ensuring their tenants are financially reliable and capable of meeting lease obligations. One common method used to mitigate risk is requiring a co-signer or guarantor. Understanding whether and how landlords can require co-signers under New Hampshire law is important for maintaining compliant and effective tenant screening practices.

Can Landlords Require Co-Signers in New Hampshire?

Yes, landlords in New Hampshire can require a co-signer or guarantor as part of the tenant screening and approval process. This practice is common when prospective tenants do not fully meet the landlord’s standard financial or creditworthiness criteria, such as low income relative to rent, limited credit history, or previous eviction records. A co-signer acts as a secondary party who agrees to be responsible for the financial obligations of the lease if the primary tenant defaults.

Key Points Regarding Co-Signers in New Hampshire:

• Permissible Practice: There is no statute in New Hampshire that prohibits landlords from requiring a co-signer.
• Written Agreement: Any agreement involving a co-signer should be detailed in writing, clearly defining the responsibilities and obligations of the co-signer.
• Screening Co-Signers: Landlords have the right to screen co-signers, including checking credit history, income, and references, just as with primary tenants.
• Equal Treatment: While landlords may require a co-signer, they must apply this requirement consistently to avoid claims of discrimination under federal and state fair housing laws.

Why Require a Co-Signer?

Landlords may find it prudent to require a co-signer if the applicant:

• Has insufficient or poor credit history.
• Has a limited or irregular income.
• Has recently become employed or is a student.
• Has little to no rental history.
• Has past eviction or lease violation issues.

By involving a co-signer who has credible financial standing, landlords can reduce the risk of unpaid rent or property damage costs.

Legal Considerations in New Hampshire

Compliance with Fair Housing Laws

Landlords must ensure that the requirement of a co-signer is applied fairly and non-discriminatorily. Under the New Hampshire Law Against Discrimination, along with federal statutes, it is unlawful to impose co-signer requirements based on race, color, religion, sex, sexual orientation, familial status, disability, national origin, or other protected classes.

Consumer Reporting and Privacy

If landlords use consumer credit reports to evaluate tenants or co-signers, they must comply with the federal Fair Credit Reporting Act (FCRA). This includes obtaining written consent before checking credit and providing necessary notices if an application is denied based on credit information.

Clarity in Lease and Co-Signer Agreements

To avoid disputes, landlords should:

• Include language in the lease or a separate guarantor agreement that explicitly states the co-signer’s obligations.
• Clarify that the co-signer is jointly liable for rent and any damages.
• Ensure both primary tenant and co-signer sign the agreements.

Practical Tips for Landlords in New Hampshire

• Develop Clear Screening Criteria: Establish and document consistent standards that determine when a co-signer is required.
• Use a Written Guaranty Form: Have a standardized co-signer or guaranty form to formalize the co-signer’s responsibility.
• Verify Co-Signer Financial Stability: Screen co-signers thoroughly to confirm their capacity to cover rent if necessary.
• Communicate Transparently: Inform applicants early in the process about the possibility of needing a co-signer.
• Keep Records: Maintain all screening documents and signed agreements in case of future disputes.

Conclusion

In New Hampshire, landlords are fully permitted to require co-signers as part of their tenant screening process when appropriate. This requirement should be used judiciously, applied consistently, and supported by clear, written agreements. By doing so, landlords can effectively manage lease risk while complying with state and federal laws, fostering a professional and transparent rental application process.