Co-Signer Rights

What rights to the property does the co signer have?

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Bill's Answer: Answered by Mark Cappel

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.

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Comments (76)

Amy J.
Columbus, MS  |  April 12, 2014
My daughter and her fiancé recently parted ways. Prior to this decision she traded her vehicle in on a new car but needed her boyfriend to co sign on the loan. The loan listed her (first) OR him (last). She made all payments on the car and on time. Recently her Ex remarried and has been harassing her non stop to have his name removed from the loan and title. Yesterday while she was at work the Ex came with a spare key and confiscated the car and all of her contents within. He then placed a call to her and let her know that he had the car and the loan in their name had been paid off and refinanced with another company into his name only. After calling the police we understand that he was within his rights to do this since the title and loan listed OR between their names. My question is this. Since the car was purchased for my daughter and she has faithfully paid every note and insurance payment and he has not, is she entitled through a civil suit to be reimbursed for all the money has paid? Only two years left and she would have this car paid off.
April 13, 2014
Your daughter should consult with an attorney ASAP. It certainly seems that her ex acted in bad faith. That may not prevent him from doing what he did, as far as the lien-holder is concerned, but she seems to have strong grounds to sue him.
Samatha J.
Maple Grove, MN  |  April 10, 2014
My husband and I bought a car and we make payments on the vehicle together. We recently separated and it is his vehicle so he took the car and left me with the bill. He has always been the bread winner of the family and now doesn't support me at all. I do not plan on filing for divorce yet. Can I take the car and sell it since my name is the first borrower or do I need him on board?
April 10, 2014
Co-owners listed on the title have an equal right to possess a vehicle. Which loan co-signer's name appears first on the loan contract is probably not significant legally.

Look at the vehicle's title. If it is titled as "John Doe OR Mary Doe" then either John or Mary can sell the vehicle by themselves. If it is titled as "John Doe AND Mary Doe" then both owners must sign the title to sell the vehicle.
Indira J.
Lakewood, CO  |  April 07, 2014
My dad co signed a car for me almost a year ago I've made every payment on time but now that I want to move out he's threatening me that if I wanna leave the car stays and if I want the car I have to stay he also took a spare key from me and said he would call the cops if I leave. Both our names show up on the registration. My question is what can I do or does he really have a say in any of it. Also can he refinance the car to his name with out my permission.
April 08, 2014
Under the law, both co-owners have equal rights to possess the co-owned property. It is unlikely one co-owner could convince the local police to arrest the other co-owner of a vehicle for auto theft since both have equal rights to the vehicle.

Regarding a refinance, exactly how is the vehicle titled? If it is titled "John Doe OR Mary Doe" then either owner can sell or refinance the vehicle. If it is titled, "John Doe AND Mary Doe" then both owners need to sign the title.
Nathan N.
Snow Camp, NC  |  April 01, 2014
I am the co buyer of a car that was claimed in a bankruptcy about 5 years ago. The buyer filed bankruptcy and now he is threatening a civil suit against me. Because he agreed to pay for it in bankruptcy. I was never contacted by loan holder nor his lawyers the entire time of his bankruptcy.
Denise S.
Vineland City, NJ  |  March 05, 2014
I am the buyer on a car loan, my now ex-husband is the co-buyer. The car is only titled in his name. Am I still responsible for paying for a car that legally I don't own?
March 06, 2014
If you are on the loan, then you are financially responsible for the payments. Also, your credit rating is affected by how the payments are made (in a timely manner or not). Ideally, this issue should have been dealt with during your divorce settlement.
Sherl R.
Honolulu, HI  |  March 02, 2014
co-sign a car for my on back in 2007 and it was repo and the payment with to collection but today my bank took out 4000 out of my account for that car loan , can they do that?? is there anything i can do to get my money back?
March 10, 2014
Talk to a lawyer who has consumer law experience in your state to learn if the bank's actions were proper. If you cannot afford a lawyer, call your county bar association and ask for the names of the organizations that provide no-cost legal services to people with low or no income in your area. Make an appointment with one of the organizations, and bring all of the documents and letters you have regarding the debt to your meeting. The lawyer you meet will advise you accordingly.
John M.
Arlington, TN  |  February 15, 2014
My grandfather gave my uncle a piece of land for him to put a trailer on. My grandfather co-signed the trailer. My grandfather has paid every bill except like one. Now my uncle has claimed the house and moved in the house with my grandfather. FYI after a while my uncle moved to Florida and my grandfather moved into the house. Who owns the house?
February 18, 2014
I don't have enough information to offer an observation. Both parties should consult with lawyers who have real property or contracts experience about their rights to occupy the land and its dwellings.
Brandon J.
Fort Worth, TX  |  February 10, 2014
I signed on a loan with a friend and he balked on the payments for the last year. He is responsible for half of the loan payments, but hasn't made any. How can I get him to pay his part?
February 11, 2014
Consult with a lawyer who has contracts experience. Ask the lawyer to draft a letter to your friend that explains his responsibilities to make his part of the loan payments. The letter should gently but clearly state you do not wish to pursue legal action against him, but may be forced to do so if he fails to honor your agreement.
Katie L.
Philadelphia, PA  |  February 09, 2014
My grandfather cosigned for a auto lease for my father. My father lost his job in September. My father told my grandfather he was paying the note with his UC benefits, he lied. My grandfather never received any statements or bills that my father missed his payment in September, November, and December when the car was repossessed. Doesn't my grandfather have a right since he is liable for the loan to get a notice of the late payments or defaulted payments on this loan to defend his credit. The creditor first admitted they never sent a notice and confirmed they had the correct address on file for my grandfather. Then the next day they said they did not have his address on file and that they sold the car that morning. This is negatively impacting my grandfather's otherwise perfect credit, what is his legal recourse? What are his rights? He never said he wouldn't pay the back payments, he would have, had he known????
February 10, 2014
Suggest to your grandfather he consult with a lawyer in his state who has consumer law experience. The lender may have sold the repossessed vehicle improperly when it failed to notify your grandfather, a co-owner of the vehicle, of the repossession. However, I hasten to add the repo notification rules vary from state to state, and your grandfather's state may not have such a notification rule.
Lizzie U.
Morrison, TN  |  February 09, 2014
My husband co-signed on his mother's mortgage when she refinanced a few years ago. She makes all of her payments on time, but the debt on his credit is keeping us from buying our own house because of his debt-to-income ratio. Is there any way he could get his name off of the loan so that we can buy our own house?
February 10, 2014
Two options:
  1. Ask your husband's mother to refinance in her name alone.
  2. Prove to your loan's underwriter the mother-in-law is making all of the payments without the assistance of your husband. You can do this by showing recent bank statements for your husband and his mother that his is neither making payments to his mother's lender, nor is he supporting her with a monthly payment.

The situation you described is not uncommon, so the underwriter should be able to wrap his or her brain around the co-signed refinance. If this lender still turns you down, then continue shopping for a lender who does. In other words, the situation you described can be overcome by providing additional information.

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