Co-Signer Rights

What rights to the property does the co signer have?

What rights to the property does the co signer have?

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Highlights

  • A secured loan is tied to the item purchased with the borrowed money.
  • The title gives the borrower, lender, and co-signer the rights to the security.
  • The real question is, 'Does the co-signer's name appear of the title?'

A lender will require a borrower to find a willing co-signer if it is worried about the borrower's ability to repay a loan. The co-signer takes responsibility for repaying the loan if the primary borrower does not. If the lender cannot collect from the borrower, the co-signer must repay the loan plus late fees, interest, or other charges the lender adds.

Loans are secured or unsecured. A secured loan is tied to the item purchased with the borrowed money, customarily. In the legal trade, the item in question is referred to as the security. Vehicle loans and property mortgages are common examples of secured loans. A credit card is a common example of an unsecured loan.

A vehicle or house may be purchased with borrowed money, but it is not the loan that gives the borrower or lender the right to possess the security. A title determines who has ownership rights to the vehicle or home.

For a vehicle purchased with a loan, the title will list the name of the lender. If the borrower defaults on the loan, the title (among other legal documents) will give the lender the right to repossess the vehicle. If a vehicle contains only the name of the primary borrower and the lender, then the co-signer (if any) has no rights to the vehicle. If the co-signer is listed on the vehicle's title, then he or she has the legal right to possess the vehicle.

For real property, the concept is the same as a vehicle loan, but details differ. However, the central point is the same — if the co-signer is listed on a real property's title, then he or she has some interest in that property. Rights to a property can be complex, and take half a semester to teach in law school, so it is beyond the scope of this answer to discuss an owner's possible rights to a property.

Your Question About Co-Signer Rights

You asked what rights a co-signer has to a security. The real question is, "Does the co-signer's name appear of the title?" If yes, then the co-signer has a right to the security. If the co-signer's name does not appear on the title, then the co-signer has no right to the security.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

18 Comments

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  • MS
    Apr, 2013
    Mark
    My grandmother cosigned for a truck that i've been pay on for the past year. the notes are current and up to date and we're both registered on it, but i'm the primary signer on the loan. we're having family issues and i have an opportunity to work out of state with family that she doesn't get along with. can she legally take the truck from me if i went to work out of state? because shes threatening to have me stopped if i cross the state line with it saying its "stolen."
    0 Votes

    • BA
      Apr, 2013
      Bill
      I can't give you legal advice, as only an attorney can properly do so, but I will share a few thoughts with you.

      I don't believe that stolen car charges would have merit for a person on title. However, the difficulty I think you will encounter is that your new state will most likely require you to register the car in that state and require both people currently on title to sign. Without your grandmother assenting, it doesn't appear you'll be able to register the car.

      I recommend that you contact the Department of Motor Vehicles in the state to which you wish to move, to find out exactly what their rules require.
      0 Votes

  • MS
    Feb, 2013
    Mary
    My 23 year old son is ready to buy a house. The banks says his credit is good, but since he has been on his current job less than 2 years, they want me to Co-Sign for 1 year. They have a standard co-sign form and added a line "this guanrantee agreement shall terminate on _______" (where we fill in the end date at closing. Will this work for relieving us of obligations after that date? Could they demand we pay the full loan amount during the year even if payments are made on time? Thanks for your help!
    0 Votes

    • BA
      Feb, 2013
      Bill
      I can't comment on a contract I have not read. Take the form you mentioned to a lawyer in your state who has contracts or real property law experience. He or she will read the contract, and will advise you what rights and liabilities you and the lender have.
      0 Votes

  • SS
    Apr, 2012
    Shivan
    I co-signed a loan with my GF with Sallie Mae, I'm the only one making payments on the loan, and yes we're still together. My question is, Does Sallie Mae has any legal rights to apply the payment toward her other accounts that I'm not the co-signer for? She has at least 1 or 2 other loans with Sallie Mae. Every month I make payments on time, and about several times a year, when I look up the sallie mae account it shows that I made a payments that does not match my bank statement. It's lower the actual amount. I have setup where the payment goes to the co-signer payment center and put on the payment (through the bank) for the amount to go toward the co-signer loan only, and this keeps happening.
    0 Votes

    • BA
      Apr, 2012
      Bill
      The precise answer to your question depends on the contract between Sallie Mae, yourself and the main borrower. Only a lawyer who has reviewed the documentation could give you a legal opinion. I am not a lawyer, but common sense would dictate that payments you make as a co-borrower should be earmarked to the account that you are signing for, and any extra funds should be applied to that account. I recommend that you write the servicer a letter outlining the payments you made to the loan and the amounts credited to that account. Demand that any discrepancy be applied to the loan you co-signed for, and not another loan. In addition, speak to a supervisor or a complaint department, regarding your problem.
      0 Votes

  • SS
    Mar, 2012
    Shelby
    My daughter is facing a unique situation regarding a Car Title Loan in the state of Texas. The vehicle in question is titled to her boyfriend's aunt (not to her and not to her boyfriend). He went for a title loan and asked for the loan to be in both his name and my daughter's name - the car title loan store agreed and granted a $1000 loan on the car to him with her as the "co-signer". They broke up before the loan was due, and now she is being harassed by the loan store because he 1. has possession of the car, 2. the loan store did not obtain the actual title from him but took a copy of the title instead, 3. he has defaulted. A. Can a car title loan store LEGALLY put her name on the loan to begin with (they were not married, and the title does not have her name on it)? B. What would be the purpose of having a co-signer to begin with - considering these places do not loan based on credit but rather on collateral. C. Can the title loan store LEGALLY pursue collections against my daughter? D. What recourse is there for my daughter?
    0 Votes

    • BA
      Apr, 2012
      Bill
      On the face of it, if your daughter signed a loan document as a co-borrower, then she is legally responsible for the payment of the loan, and can be sued for non-payment. The lender may ask for additional guarantees, which the borrower may or may not agree to. Since I am not a lawyer, I cannot give legal advice. I recommend that you speak with a lawyer, who can review the loan documents and give your a legal opinion.
      0 Votes

  • AB
    Mar, 2012
    Andy
    Thank you for this article! What about in the case of everyday items without titles purchased on a credit card? Let's say a couple applies jointly for a credit card, then separate, then the ex-husband charges $1000 buying everyday items at target and doesn't pay the bills. If the ex-wife pays off the debts, is she entitled to the items from Target? Thanks!
    0 Votes

    • BA
      Mar, 2012
      Bill
      It is prudent to close any joint accounts upon separation. I recommend that you speak with your divorce lawyer regarding the division of property.
      0 Votes