joint and several guarantee<\/a>, the guarantor may be called upon as soon as the first rent payment is missed.<\/p>\nA joint guarantor is preferable for the landlord for the simple reason that the situation will be easier to manage.<\/p>\n
Since the 1ster<\/sup> Last January, the amendments regarding surety bonds took effect. A surety bond is now defined as a contract under which a surety undertakes to pay the debtor\u2019s debt to the creditor in the event of the debtor\u2019s default. The specific maximum amount of the surety bond must also be specified in the contract.<\/p>\nAnother point to note is that the term of the security deposit may be fixed or indefinite.<\/p>\n
This solution is simple and free, with no additional costs or procedures, but it does have some drawbacks: it cannot be 100% guaranteed, and if the tenant or their guarantor fails to meet their payment obligations, you will be forced to take legal action against them, which will result in costs that you will be responsible for.<\/p>\n
Enforcing a security deposit isn\u2019t always the most efficient or quickest option\u2014after all, it involves going through the courts and dealing with their delays\u2026 That\u2019s why some landlords prefer to purchase insurance against unpaid rent.<\/p>\n
The Unpaid Rent Guarantee (GLI)<\/h2>\n
Rent Default Insurance is a way to protect yourself against a tenant\u2019s potential failure to pay rent. Note that it cannot be combined with a security deposit unless the tenant is a student or an apprentice. It costs, on average, between 2% and 5% of the monthly rent and is deductible from rental income when the landlord files under the actual income tax system.<\/p>\n
The amounts of compensation to which this coverage entitles the policyholder may vary from one insurer to another and may be subject to a deductible. Unpaid rent insurance is capped at approximately 90,000 euros and is sometimes limited in duration (12 to 36 months).<\/p>\n
GLI coverage protects against risks that may affect the landlord:<\/p>\n
\n- The collection of unpaid rent, including utilities and taxes, provides a safety net. The coverage must be effective in the event of a problem, given that the contract comes at a cost.<\/li>\n
- Legal and procedural costs in the event of a dispute, which is a relief for the property owner<\/li>\n
- Costs of repairing the dwelling in the event of property damage<\/li>\n<\/ul>\n
This insurance offers tax advantages, as the premiums are deductible from property taxes.<\/p>\n
Eligibility for rent default insurance also varies depending on the type of tenant: for those with permanent employment contracts, the rent must not exceed 37% of their monthly income, and for those with fixed-term contracts or temporary workers, this rate drops to 33%. If a tenant is already living in the rental unit, the policyholder must prove that there have been no prior payment issues.<\/p>\n
There are only a few drawbacks to consider:<\/p>\n
\n- The selection of tenant applications, which must meet strict criteria to be approved by the insurer. Tenants must have a reliable and creditworthy profile and must demonstrate a monthly income that is more than three times the amount of the rent, including utilities.
The tenant must have a stable employment contract. Therefore, the tenant must be either:<\/li>\n<\/ul>\n\n- On a permanent contract,<\/strong>\u00a0outside the probationary period;<\/li>\n
- On a fixed-term contract,\u00a0<\/strong>if he has more than 8 months remaining on his contract;<\/li>\n
- A self-employed person\u00a0<\/strong>with proof of more than 2 years of continuous employment;<\/li>\n
- Retirees<\/strong>\u00a0are also accepted, students and apprentices<\/strong>\u00a0who may need a guarantor.
The housing must be\u00a0the tenant's primary residence.<\/strong><\/li>\n<\/ul>\n