Ask Bill your personal finance question

Co-Signer Rights

What rights to the property does the co signer have?

What rights to the property does the co signer have?

Read full question
Bill's Answer
4.0
/5.0
(18 Votes)

Updated: Oct 21, 2014

Bills.com | Find Learn Save
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

86 Comments

Recent Best
1500 characters remaining
  • DK
    Jun, 2014
    Devi
    My husbands friend co-signed for my husbands car as he doesnt have enough credit. My husband paid every premiums and paid off the loan for the car. His friend doesnt spend even a single penny for the car he just co-signed for it thats all. But his friends name is also included in the title. How to take his name out of the title. we need the title only in my husbands name
    0 Votes

    • BA
      Jun, 2014
      Bill
      There should be no problem transferring title, if your husband's friend agrees. Contact your state's DMV to get the proper form.
      0 Votes

  • MW
    Jun, 2014
    Michelle
    Hi, thanks for reading and I apologize for the convoluted story. I agreed to become co-signer for a car lease in FL for my fiance following his bankruptcy, to help my future husband build credit. 7 months later he broke off the engagement and agreed verbally to remove my name from the loan. He owed me several thousands of dollars, most of which he paid back (at 0% interest after several years), with the exception of $1000. We agreed I would return my engagement ring to the jeweler to sell, and I'd take my part of the money once the ring sold and refund him the rest of what he paid for it- anything extra would be kept by the jeweler who'd sold him the ring at less than cost due to her association with me. For 3 months, he came up with excuses and stated it was impossible to remove someone's name from a loan, until I got the loan rep, he and I on the phone, to explain his 3 options to do so. He said he'd pick one. I followed up with him several times and he texted that none of those options worked and he now refused to remove me from the loan. I replied that for every month following his initial promise to remove himself, I would deduct $100 for the service of being his cosignor and would wait to return his money as a guarantee to pay any fees if he skipped a payment until lease ended. The ring has sold and I will be getting the funds in a week. Can I deduct these $100/mo although this was a verbal discussion with no paperwork involved? I still remain cosigner. Thx.
    0 Votes

    • BA
      Jun, 2014
      Bill
      The law sees spoken and written contracts as the same. The difficulty with a spoken contract is proving what was said and what the parties agreed to. That's why the cliche, "Get it in writing" is so popular.

      Consider depositing the money from the ring's sale into a separate savings account in your name. Explain you will release the funds owed your ex-fiance when he refinances the vehicle in his name.
      0 Votes

  • ES
    Jun, 2014
    elizabeth
    New jersey resident here. Me and my ex boyfriend purchased a car together. His name is first on the loan as primary borrower and i am secondary. The payments are current. My name is SOLELY on the title, registration, and insurance. He doesn't even have a drivers license. Before we split, we both singed a promissory note stating that I would continue to make the payments on the vehicle and if the payments were not met than the vehicle would be repossessed. Now that we are not good terms is it possible for him to have the vehicle taken? Even if he called the Loan company out of spite and tell them he wants out of the loan? Hes being very vindictive. How do I protect my investment and livelihood?
    0 Votes

    • BA
      Jun, 2014
      Bill
      Your best option is to refinance the vehicle loan in your name alone. Based on your finances and credit history today, do you qualify for a auto loan refinance?
      0 Votes

  • SW
    May, 2014
    sharon
    If i had a co signer for furniture and i pay off the debt then turn around and buy more furniture and tell them this will be on myself only since i do not need a co signer is it legal for the said company to just add my last co signer to the contract even tho nothing was signed by her except on the first contract?
    0 Votes

    • BA
      May, 2014
      Bill
      What you described is common in furniture installment loans, and may be illegal in your state. Consult with your state attorney general's office to learn if the lender is violating your state's lending laws.
      0 Votes

  • NH
    May, 2014
    Needs
    Cosigned mortgage with brother. He left for a year and a half to live with gf. Came back and drank and partied. Had to move out with my family. He does not make payments on time and I want my name off of it. $40K left on mortgage and its preventing my family from buying their own home. He will not talk to me about it just hangs up or has his gf call. What options are out there since we can't live there and he keeps paying late?
    0 Votes

    • BA
      May, 2014
      Bill
      Read the Bills.com article How to Remove a Name From a Joint Mortgage, which explores solutions to the problem you describe in your question. After you read that page, please ask any follow-up questions you may have on that page.
      0 Votes