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The Moneyist: My wife agreed to be guarantor for her son’s rental without telling me. His car was repossessed for nonpayment of his loan. What should I do?

Dear Quentin,

About four days ago, I received an email from my wife’s bank that someone had requested her login username via a password reset. When I asked my wife about it she said she had forgotten her username, and she was trying to get my stepson access to her online portal so he could download some of her bank statements. She further explained that he was doing that in order to give them to a rental-property company because they would not rent to him due to a lack of credit history, and she told me that she had signed paperwork making her a guarantor of his lease.

We live in a community-property state that also allows by law creditors to make fairly ironclad guarantee agreements, based on everything I’ve read on the subject. Aside from her not telling me about the rental agreement beforehand or asking my permission for her to sign the document, we found out about 48 hours later that my stepson had his vehicle repossessed after missing three months of payments.

The apartment in question is $200 a month more than where my stepson currently lives. My stepson apparently does not have credit history even though he rented there for the last eight years.

The apartment in question is $200 a month more than where my stepson currently lives. My stepson apparently does not have credit history even though he rented there for the last eight years, due to a “handshake” agreement with the property owner, who also happens to have been his employer during that time.

I do not wish to try to force my wife or stepson to ask the rental company to release her from the four-day-old guarantee agreement, even if she would consider doing that — which she won’t at this point — as this would not only possibly put my stepson and his family out on the street, it would cause a lot of relationship problems for my wife and me.

Is there anything I can do to protect our finances/assets in a worst-case scenario where the rental company asks my wife to take over his rental payments? This would not necessarily damage our finances, but it would cause tremendous financial stress for both of us.

P.S. I should probably add that my wife is not a native English speaker, and not a great one at that, and my state requires rental agents who “suspect” that a potential guarantor does not speak English very well provide the agreements in their language. I would like to know if there are any ways that guarantor agreements can be invalid if my stepson does default on his rent payments later. At least we could fight the rental company in court to invalidate the agreement.

Husband & Father

Dear Husband,

Two things: First, waiting until your stepson defaults on his loan before breaking the rental agreement would likely be regarded as opportunistic. Second, you and your wife should be monitoring your stepson’s finances, and ensuring that he is fulfilling his own obligations — he should not have access to your wife’s accounts. The onus is on your stepson to honor this agreement, build a credit history, and know what is at stake if he fails to meet his obligations.

Most lawyers worth their salt will advise you to avoid legal action whenever possible. It is often protracted and expensive, and comes with no guarantee of success. You seem torn between finding ways of breaking this contract, and accepting it because you don’t want to cause any discord in your relationship. A lawyer could also advise you on your options, and whether the language issue is actually a valid loophole in your state. 

Here are some reasons rental agreements could be invalid: key information is missing (the period of the tenancy, the deposit and monthly rent, the presence of materials like asbestos); the apartment is uninhabitable and does not meet city health and/or building code standards; your stepson is called for active military duty; the terms of the lease were changed without your stepson’s knowledge or consent; and/or the lease contains an early-termination clause.

As Joel S. Winston, a litigation lawyer at Winston Law Firm, LLC, told Credit.com: Don’t fabricate reasons to get out of a lease. More often than not, they won’t work. However, some rules apply in most states. “The warranty of habitability is accepted law in most every jurisdiction in America,” he said. “In some states, the warranty has been established by decades of case law. But in other states, the warranty has been expressly established by legislation.”

The time has come to sit down with your wife and stepson, and together use this as an opportunity to talk about personal responsibility, budgeting and what went wrong with the car payments — is your stepson living beyond his means? — as well as put together a plan to avoid any nonpayment of rent. Separately, have a conversation with your wife that such decisions should not be made unilaterally. You are, after all, a team.

There have been enough behind-the-scenes machinations. It’s time to talk about making financial decisions as a family and preempting any future default.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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