Comprehensive Guide to Joint Guarantor System—Scope of Responsibility, Risks, and Alternative Options
Detailed explanation of joint guarantor responsibilities and risks in rental contracts. Expert guidance covering guarantor company options and alternative solutions.
When renting a property, many people encounter the "joint guarantor" requirement. Yet surprisingly few truly understand this system. This article explains the fundamentals of the joint guarantor system, scope of responsibility, potential risks, and alternative options from the perspective of a rental contract professional.
Joint Guarantor System Basics and Legal Framework
The joint guarantor system is a mechanism in rental contracts that designates a person to assume responsibility when the tenant fails to pay rent or fulfill restoration obligations to original condition. Unlike a regular guarantor, a joint guarantor has no right of demand, right of enquiry, or benefit of division.
This means that in practice, the landlord can bypass the tenant and demand payment directly from the joint guarantor. For example, if a tenant fails to pay rent, the landlord can legally demand the full amount from the joint guarantor without first pursuing the tenant.
The amended Civil Code, which came into effect in April 2020, made it mandatory to set a "maximum guarantee amount" (guarantor liability cap) when an individual becomes a joint guarantor. This limits the guarantor's liability and reduces the risk of unlimited responsibility.
Scope of Joint Guarantor Responsibility and Real Risks
A joint guarantor's responsibility extends far beyond unpaid rent. The main areas of responsibility include:
Rent-Related Obligations
•Unpaid rent (within the maximum guarantee amount)
•Unpaid common service fees and maintenance fees
•Renewal fees
•Late payment penalties
Restoration Obligations
•Repair costs for damage caused by tenant negligence or intent
•Removal costs for abandoned items
•Cleaning costs (if specified in the contract)
Other Obligations
•Breach of contract penalties
•Court costs (if legal action is taken)
Of particular concern is the situation where a tenant disappears or becomes unreachable. In such cases, the guarantor may be asked to handle everything from removing abandoned items to managing the eviction process. In reality, in the majority of the thousands of rent default disputes that occur annually, joint guarantors face unexpected burdens.
Benefits and Considerations of Using Guarantor Companies
In recent years, guarantor companies have rapidly become the preferred alternative to joint guarantors. Today, approximately 80% of rental contracts use guarantor companies, and in urban areas, many properties require them.
Benefits of Using a Guarantor Company
•No need to arrange a joint guarantor
•Relatively smooth application process
•No burden on family or acquaintances
•Easier for foreigners and elderly people to secure contracts
Typical Guarantor Company Fees
•Initial guarantee fee: 30–100% of monthly rent
•Renewal fee: approximately ¥10,000 annually or 10–30% of monthly rent
•Monthly fee option: approximately 1–2% of monthly rent
When selecting a guarantor company, we recommend choosing one registered with the Ministry of Land, Infrastructure, Transport and Tourism's "Rent Debt Guarantor Business Registration System." Registered companies meet certain standards for financial stability and business operations, making them safer choices.
Practical Advice When Requesting a Joint Guarantor
If you must request a joint guarantor, consider the following points:
Preparation Before Requesting
Clearly explain the contract terms, especially the maximum guarantee amount
Share detailed property information
Present your income situation and payment plan
Risk Mitigation Strategies
•Choose properties with lower maximum guarantee amounts (typically 6–12 months of rent)
•Set up automatic rent payments to reduce default risk
•Report payment status regularly
•Build up savings for emergencies
Provide a copy of the contract to your prospective guarantor and ensure they confirm their responsibilities in writing. After they agree, maintain regular communication and sustain trust.
Regulatory Changes and Future Outlook
While the 2020 Civil Code revision mandated maximum guarantee amounts, further reforms are anticipated. The Ministry of Land, Infrastructure, Transport and Tourism is considering measures to further promote guarantor company use, and the individual joint guarantor system may eventually diminish.
However, stricter guarantor company assessment standards and rising guarantee fees are also concerns. As a tenant, you'll need to focus more on managing your credit profile and securing stable income to enhance your creditworthiness.
Summary
The joint guarantor system is an inescapable element of rental contracts. It's crucial to understand the system correctly, recognize the risks, and make the best choice, including considering guarantor company options.
Especially for first-time renters, we recommend prioritizing guarantor company options over casually arranging or accepting a joint guarantor role. If a joint guarantor is unavoidable, clearly define the maximum guarantee amount and scope of responsibility, and proceed only when all parties are satisfied. This is key to avoiding future problems.
Rental housing is the foundation of your life. Remember that the guarantee-related choices you make when signing a lease significantly impact your living stability. Proceed thoughtfully.
A guide to changing or terminating your joint guarantor in a rental lease. We explain the procedures for various situations, including when your guarantor ages, your relationship deteriorates, or you're considering switching to a guarantor company.
