Can landlords require co-signers for rental approval?

Tenant Screening and Co-Signers in Wisconsin: A Guide for Landlords

Landlords in Wisconsin play a crucial role in maintaining safe, well-managed rental properties. One important aspect of this responsibility is tenant screening. A common question many landlords face is whether they can require a co-signer—or guarantor—as part of the rental approval process. This guide provides a detailed overview of the rules, best practices, and legal considerations surrounding the use of co-signers in Wisconsin.

---

Can Wisconsin Landlords Require Co-Signers?

Yes. Wisconsin landlords generally have the right to require a co-signer or guarantor as a condition of approving a rental application. This is a common practice, especially when:

• The prospective tenant has insufficient or poor credit.
• The tenant has little or no rental history.
• The tenant's income does not meet the landlord’s minimum requirements.
• The tenant is a student or someone with temporary financial instability.

Requiring a co-signer helps landlords mitigate the risk of non-payment or lease violations by ensuring that someone with stronger financial standing is legally responsible if the tenant defaults.

---

Legal Framework for Co-Signers in Wisconsin

1. Applicability of the Rental Laws

The Wisconsin landlord-tenant statutes do not specifically prohibit landlords from requiring co-signers. Instead, they grant landlords discretion to set reasonable rental criteria, including financial qualifications.

2. Lease and Guaranty Agreement

• The co-signer typically signs a guaranty agreement, which is a legal document that binds them to pay rent or cover damages if the tenant defaults.
• This guaranty should be clear, in writing, and ideally separate from the main lease but referenced within it.
• The scope of liability, duration, and specific obligations of the co-signer must be explicitly stated.

3. Equal Housing Opportunity Compliance

Wisconsin landlords must ensure that screening policies, including co-signer requirements, comply with the Fair Housing Act and Wisconsin's fair housing laws. This means:

• Co-signer requirements cannot discriminate based on protected classes such as race, sex, religion, national origin, familial status, or disability.
• Any screening criteria must be applied uniformly to all applicants.

4. Fair Credit Reporting and Screening

If landlords use credit reports or other consumer reports to decide whether a co-signer is needed or acceptable, they must comply with the Fair Credit Reporting Act (FCRA). This includes:

• Notifying applicants when adverse actions are taken based on credit reports.
• Obtaining written consent to check credit.
• Using accurate and up-to-date information.

---

Best Practices for Wisconsin Landlords Regarding Co-Signers

Establish Clear Screening Criteria

• Define upfront in your rental application whether a co-signer is required in particular situations.
• Communicate clearly what financial thresholds trigger a co-signer requirement (e.g., income below three times rent).
• Specify who qualifies as a co-signer (e.g., must live in the U.S., sufficient credit score, steady income).

Draft a Solid Guaranty Agreement

• Include language that outlines the co-signer’s full responsibility for rent, damages, and any legal fees if the tenant breaches the lease.
• Set the duration of the guaranty (some landlords limit it to a lease term; others require it until the lease is fully fulfilled).
• Have the co-signer provide valid identification and proof of income or assets.

Screen Co-Signers Thoroughly

• Conduct background and credit checks on both the tenant and the co-signer.
• Verify employment or income documentation.
• Consider the co-signer’s ability to fulfill the guaranty based on stable financial standing.

Maintain Equal Treatment and Documentation

• Apply co-signer requirements consistently to all applicants who meet the criteria.
• Keep detailed records of screening decisions and communication for potential disputes.
• Avoid subjective judgments that could implicate discrimination.

---

Advantages of Using Co-Signers

• Reduced financial risk: Increases the likelihood of rent collection if the tenant defaults.
• Broadened applicant pool: Allows landlords to consider tenants with lower credit scores or limited rental history.
• Enhanced lease compliance: Co-signers tend to help ensure tenants meet lease obligations.

---

Situations Where Co-Signers May Not Be Necessary

• When a tenant has a strong credit history and verified income.
• If a tenant provides a larger security deposit or a few months’ rent in advance, which may sometimes substitute for a co-signer.
• When the landlord uses rental insurance products designed to cover defaults.

---

Summary

In Wisconsin, landlords have the authority to require co-signers as part of tenant screening, particularly when an applicant does not meet standard financial criteria. This practice is legally permissible as long as landlords adhere to the state’s rental laws and fair housing regulations. By carefully setting clear co-signer policies, drafting strong guaranty agreements, and conducting thorough screenings, landlords can protect their rental investments while providing opportunities for tenants who may benefit from a co-signer.

---

Additional Resources

• Wisconsin Department of Agriculture, Trade and Consumer Protection: Landlord and Tenant Handbook
• Equal Rights Division, Wisconsin Department of Workforce Development: Fair Housing Information
• Consumer Financial Protection Bureau: Using Credit Reports in Rental Decisions

---

By implementing effective and lawful co-signer policies, Wisconsin landlords can balance risk management with fair access to rental housing.