Understand the Differences between Guarantor, Surety and Guarantee of Rent


Understand the differences between guarantor, surety bond and rental guarantee



One of the most recurring doubts of those involved in real estate rents concerns the differences between guarantor, surety bond and rental guarantee. These are the 3 main mechanisms that guarantee the owner’s protection until the end of the contract and can be adapted to each tenant profile according to their needs. But, what are the characteristics of these guarantees offered to the owner in rent agreements? Check out!

What is a guarantor?

The guarantor is basically a third party in the lease: it is neither the owner of the property nor the tenant, but is responsible for the fulfillment of those obligations assumed. To avoid contractual headaches, any cost resulting from the rental relationship (late payments, fines and renovations, for example) may be charged directly to the guarantor if it is not paid by the tenant.


Normally, guarantors must have a property of similar or higher value to that leased on their behalf. This requirement is another way of securing the lessor in case of contract fraud. Proof of income from the guarantor is also requested, which leaves the process a bit more bureaucratic.

How does the surety bond work?

How does the surety bond work?


The surety bond is a correct value for insurance carriers, as in any other type of policy: in case of loss (non-payment of rent), the company passes on the contracted amounts to the owner. In general, this insurance is part of the clauses of the rental agreement, but is usually agreed directly between the tenant and insurer.
In practice, it is a more expensive option for the renter, since he has to pay with the insurance payments, and these values ​​will not be returned at the end of the contract time. The amount reimbursed is divided into several installments in order to facilitate payment, and the history of each tenant is checked to determine the risks of non-discharge and of course the value of the policy. This is a viable option for those who do not have guarantors or cash on hand to give as a guarantee of rent.

And the rent guarantee?
The rent guarantee is one of the options that most offer the lessor protection against fraud. Also called a security deposit, this amount is deposited by the tenant in favor of the owner for the duration of the contract. The amount of the deposit may vary, but, legally, does not exceed 3 months of monthly expenses of the property – counting rent, condominium and IPTU added. It is a good option for those who want to rent a property and have a buck cash.

If, for any reason, the tenant fails to honor the contractual obligations and becomes defaulted, the landlord may withdraw the security amounts to cover his expenses. On the other hand, if there is no incident during the validity of the contract, the lessee receives the amount initially given as collateral. Usually, the amount is applied to yield basic interest. But do not deceive your customer, because, in general, this rate does not accompany even the value of inflation!
Now that it has become easier to understand the nuances of surety, surety, and rent guarantee, how about learning more about the importance of homeowners insurance? Also take advantage of the inGaia Rental – our rental management software, and manage all your contracts optimally and efficiently.


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