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We used an institutional guarantor for our NYC apartment, and one roommate can’t pay her share of the rent. What now?

Ideally, your roommate has savings to dip into or someone who can front her the money until she find a new gig.

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Question:

My two roommates and I used an institutional guarantor when we rented an apartment in NYC, and one just lost her job and can no longer pay her share of the rent. What happens now? Will our own credit ratings be affected?

Answer:

Because your institutional guarantor guaranteed your entire lease, not just your roommate’s portion, all three of you could face possible eviction if your entire monthly rent isn’t paid. What’s more, failure to pay could also affect your credit score and ability to rent apartments in the future, says Jeffrey Geller, vice chairman and chief operating officer of Insurent Lease Guaranty, an institutional guarantor (and Brick Underground sponsor). 

Don’t start panicking (or packing) just yet. Instead, if your roommate can’t borrow money to pay the rent or is unable or unwilling to move out immediately, it’s time for you and roommates to come to grips with reality and make a plan that offers some protection to all three of you.  

If feasible, for example, you and your employed roommate could offer to cover your roommate’s rent for a defined period of time like a month or two, and agree in writing that if your roommate can’t pay her share of the rent at the end of that time, she will find (or allow you to find) another roommate to take her place with your landlord’s approval.   


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This scenario is likely the best way to protect yourselves, since you’re all on the lease together and thus on the hook for the rent no matter the circumstances. 

The worst-case scenario, which the three of you should try everything in your power to avoid, is eviction. When your rent is two months past due, expect to receive a three-day demand letter from your landlord. Eviction proceedings begin in Housing Court if payment is not made at that point, and can take between two and 10 months.

Once you’re evicted, your institutional guarantor will pay the back rent, plus rent through the end of the lease term if the apartment isn’t re-rented, and then seek repayment from you and your roommates. 

And, if you rent another apartment in New York City, you may have "a major problem,” Geller says. Not only could you wind up on the dreaded tenant blacklist, but an eviction stays on your credit report for at least seven years.