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An alternative to the problem of obtaining a guarantee for rent: how to process private guarantees and how much they cost - Infobae
Source:
www.infobae.com
August 08, 2024
This is a vital tool that simplifies the process for both tenants and landlords, ensuring rent is collected, even in the event of non-compliance.
By Jose Luis Cieri
When making a rental contract, several requirements are required, including a guarantee. The traditional ones are the owners' guarantees, but nowadays there are private guarantees for rent.
In the real estate market, with the increase in supply following the DNU that repealed the Rental Law, the need to present two physical guarantors remains a significant barrier for many tenants. This requirement is added to a series of requirements that complicate the rental process.
Traditionally, when signing a contract, several guarantees are required, the most common being the owners' guarantees, usually two. But not all tenants have someone who offers this security and in this context, the alternative of private bonds or surety bonds is growing.
This instrument offers tenants the possibility of guaranteeing the contract without having to bother third parties. For owners, it provides coverage against risks such as non-payment of rent, services or expenses, ensuring that they will receive the corresponding payment even in the event of non-compliance by the tenant.
Oscar Lema , president of Finaer, told Infobae that after twelve years of existence, “the advantages of bonds over traditional guarantees are several and benefit all those involved. For the tenant, they guarantee the rental contract with their own elements; for the owner, they ensure that they will always collect the rent, even if the tenant defaults. And for the real estate agency, the benefit lies in the satisfaction of both clients.”
In the absence of a landlord's guarantee, a convenient solution for tenants is a deposit. This mechanism acts as a guarantee to cover the tenant's non-payment or any other obligation stipulated in the contract.
The costs for the tenant are 6% of the total contract as a fee, which is paid once and can be paid in up to 6 interest-free installments. For the owner, there is no cost.
Private surety bonds have become a comprehensive solution that benefits all parties involved in the lease agreement (Illustrative Image Infobae)
If a tenant or family agrees to a 2-year contract paying $400,000 per month, the total cost of the contract will be $9,600,000; this means that the 6% corresponding to the deposit would be $576,000, which the tenant pays at the beginning of the agreement.
Lema explained: “Protection for the owner includes the security of collecting rent, expenses and taxes, even in the event of non-compliance by the tenant. This is done upon simple request, without the need for formal notifications or legal action. If legal action is required, this is the responsibility of the company until the property is returned to the owner.”
With the elements requested by the companies that issue the bonds, the resolution is obtained in a maximum of 24 hours.
The cost of the deposit, paid by the tenant, varies depending on the rental value and the insurer.
Alejandro Bennazar , former president and currently director of institutional relations of the Argentine Real Estate Chamber, said that “culturally it was quite difficult for them to be accepted, but after the Rental Law (now repealed), the few properties that remained on offer were resolved by these alternatives, as they were much more dynamic for all parties.”
“Income verification provides additional security to landlords, who can trust that the tenant will be able to meet the agreed payments,” added Bennazar.
In a context of increased rental housing supply (in the Buenos Aires Metropolitan Area, AMBA, it has recovered to historic record levels reaching a total of 20,700 properties ), private guarantees provide a solution. For the tenant family, it speeds up the process for all those involved, making the properties on offer rent more quickly.
For tenants, it makes the rental process easier by not having to search for documents or third-party signatures (Illustrative Image Infobae)
“We, as real estate agents, have noticed a growing acceptance and preference for this system due to its effectiveness and speed on the part of both parties who sign a new agreement,” said Bennazar.
For owners:
For tenants:
The disadvantages of obtaining a private bond are minimal; the signer will have to spend extra money to pay the real estate commission (if it is in the province of Buenos Aires, in CABA the tenant does not pay). In addition, there are moving and other additional expenses, since the cost of the bond represents 6%, but it avoids the hassle of getting two physical guarantors.
www.buysellba.com
Source:
Una alternativa al problema de conseguir garantía para alquilar: cómo tramitar garantías privadas y cuánto cuestan
Se trata de una herramienta vital que simplifica el proceso tanto para inquilinos como para propietarios, asegurando el cobro del alquiler, incluso en caso de incumplimiento
www.infobae.com
August 08, 2024
This is a vital tool that simplifies the process for both tenants and landlords, ensuring rent is collected, even in the event of non-compliance.
By Jose Luis Cieri
When making a rental contract, several requirements are required, including a guarantee. The traditional ones are the owners' guarantees, but nowadays there are private guarantees for rent.
In the real estate market, with the increase in supply following the DNU that repealed the Rental Law, the need to present two physical guarantors remains a significant barrier for many tenants. This requirement is added to a series of requirements that complicate the rental process.
Traditionally, when signing a contract, several guarantees are required, the most common being the owners' guarantees, usually two. But not all tenants have someone who offers this security and in this context, the alternative of private bonds or surety bonds is growing.
This instrument offers tenants the possibility of guaranteeing the contract without having to bother third parties. For owners, it provides coverage against risks such as non-payment of rent, services or expenses, ensuring that they will receive the corresponding payment even in the event of non-compliance by the tenant.
Oscar Lema , president of Finaer, told Infobae that after twelve years of existence, “the advantages of bonds over traditional guarantees are several and benefit all those involved. For the tenant, they guarantee the rental contract with their own elements; for the owner, they ensure that they will always collect the rent, even if the tenant defaults. And for the real estate agency, the benefit lies in the satisfaction of both clients.”
In the absence of a landlord's guarantee, a convenient solution for tenants is a deposit. This mechanism acts as a guarantee to cover the tenant's non-payment or any other obligation stipulated in the contract.
Requirements and cost
The only requirement for the insurer to obtain a deposit for a rental contract is a simple demonstration of income, ensuring that it is genuine, sufficient and permanent.The costs for the tenant are 6% of the total contract as a fee, which is paid once and can be paid in up to 6 interest-free installments. For the owner, there is no cost.
Private surety bonds have become a comprehensive solution that benefits all parties involved in the lease agreement (Illustrative Image Infobae)
If a tenant or family agrees to a 2-year contract paying $400,000 per month, the total cost of the contract will be $9,600,000; this means that the 6% corresponding to the deposit would be $576,000, which the tenant pays at the beginning of the agreement.
Evaluation and approval process
The screening process is based on verifying the validity of the elements provided by the tenant, ensuring that they are sufficient for the agreed rental amount, and reviewing the applicant's background.Lema explained: “Protection for the owner includes the security of collecting rent, expenses and taxes, even in the event of non-compliance by the tenant. This is done upon simple request, without the need for formal notifications or legal action. If legal action is required, this is the responsibility of the company until the property is returned to the owner.”
With the elements requested by the companies that issue the bonds, the resolution is obtained in a maximum of 24 hours.
Accepted
This type of guarantee is generally accepted by the entire real estate market. “Until 2012, the only way to guarantee rental contracts was through guarantees from family members or friends. Now, the deposit as a tool to guarantee rental contracts has been so successful that today almost the entire real estate market accepts this system,” added Lema.The cost of the deposit, paid by the tenant, varies depending on the rental value and the insurer.
Alejandro Bennazar , former president and currently director of institutional relations of the Argentine Real Estate Chamber, said that “culturally it was quite difficult for them to be accepted, but after the Rental Law (now repealed), the few properties that remained on offer were resolved by these alternatives, as they were much more dynamic for all parties.”
“Income verification provides additional security to landlords, who can trust that the tenant will be able to meet the agreed payments,” added Bennazar.
In a context of increased rental housing supply (in the Buenos Aires Metropolitan Area, AMBA, it has recovered to historic record levels reaching a total of 20,700 properties ), private guarantees provide a solution. For the tenant family, it speeds up the process for all those involved, making the properties on offer rent more quickly.
For tenants, it makes the rental process easier by not having to search for documents or third-party signatures (Illustrative Image Infobae)
“We, as real estate agents, have noticed a growing acceptance and preference for this system due to its effectiveness and speed on the part of both parties who sign a new agreement,” said Bennazar.
Advantages and disadvantages
The advantages are detailed below:For owners:
- Guaranteed payment even if the tenant stops paying.
- Less financial risk by ensuring payments through the insurer.
- Fast collections, since claims to insurance companies take only a few days, faster than a legal process.
For tenants:
- Convenience of resolving the warranty issue in a single procedure.
- Simpler rental process by not having to search for documents or third-party signatures.
- Compliance with the contract strengthens your qualification as a tenant, which can be useful for future rentals.
- Avoid improper charges.
The disadvantages of obtaining a private bond are minimal; the signer will have to spend extra money to pay the real estate commission (if it is in the province of Buenos Aires, in CABA the tenant does not pay). In addition, there are moving and other additional expenses, since the cost of the bond represents 6%, but it avoids the hassle of getting two physical guarantors.
www.buysellba.com
