Applicant with no income paying with trust fund

[Kevin Schultz]

I have a potential tenant just starting college who we showed a unit to yesterday. Her father was at the showing with her and he is the manager of her trust fund, which will be used to pay the rent while she’s in school. Since she has no income and will live entirely off of dad’s money and have him paying rent from the trust fund, I’d obviously like to hold him liable for paying rent if she doesn’t.

Is there a way to have a college parent co-sign for a unit or does this simply require them to be added to the lease even though not living in the property?

Thanks.

[Colleen F.]

You can have him sign as a guarantor which is exactly what it says, it guarantees the payment.  Yes, co-sign is a possibility but a guarantor signature might be best for your situation.

[Anthony Wick]

@Kevin Schultz

You’re already on it. Simply have a co-signor page in your lease making it clear he is financially responsible as well.

[Nathan Gesner]

Agree you should use him as a guarantor or cosigner on the lease.

You should have a process for screening a guarantor/cosigner and you should have a separate agreement for them to sign since they are financially responsible but not actually occupying the unit. I recommend you start educating yourself on this process if you intend to use it in the future.

Another option is to simply tell people that occupants must qualify on their own without the use of a guarantor or cosigner. They are not a protected class so it's completely legal and will reduce your work/headaches.

[Patricia Steiner]

As a former wealth banker, I have a different answer for you...you don't need Dad personally; you need Dad as Manager of the Trust to sign the lease in that capacity.  You'll want to obtain documentation on the Trust (Proof of Funds available for full payment of lease, who is authorized to sign on behalf of the Trust, and for what purpose can withdrawals from the Trust be made).  Since payment will come from the Trust, you will verify funds, get the Tenant to sign, and the Trust is your co-signer/guarantor.  Dad will sign as "(Name of Trust), By (his name) as Manager.

Since Dad may not have rights to those funds personally, it's important that he signs as the Trust Manager - or you will need to screen him as a co-signer without considering the trust funds.

Again, know this from former life as a banker - unfortunately, not from being a "Trust Fund Baby," dang it.

Congrats on your new tenant...

[Jonathan Greene]

I would just have him co-sign the lease. These scenarios are great in my opinion because you know where the money is going to come from. I would, as was said, either qualify him or the trust entity, but I don't mind college students with co-signing parents as tenants. You always know there is a layer of financial safety there.