Co-Signer Rights

A co-signer can have ownership rights but doesn't necessarily have them.

What rights to the property does the co-signer have?

What rights to the property does the co-signer have?

IN THIS ARTICLE:
  • 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 Co-signer has Full Financial Responsiblity for the Debt

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.

Co-signing for Secured and Unsecured Loans

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.

Co-signing and Financial Health

Don't co-sign without understanding the worst that can happen. Call 800-998-7497 and speak with a Money Coach about your responsibilities and whether you have ownership rights for the property tied to a loan on which you co-sign.

Co-Signing for a Vehicle Loan

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.

Does the Co-Signer Have Rights to the Security?

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

221 Comments
Recent Oldest
1500 characters remaining
  • F
    Francisco,
    Dec, 2020

    On 2015 I wanted a car but my credit wasn’t good enough for the trim I wanted. Dealership said I needed a co-signer but since my sister had better credit than me then I think ended up being the co-signer for my car. It was a lease to buy. All (Dmv paperwork was under my name as well as all the payments were made from my account and my bank) Since my credit improved then my sister wanted to get out so I refinanced the car and left it under my name only. About 2 months ago I finished paying off the vehicle so they finally sent me the pink slip and today I decided to run the carfax and it shows that the vehicle has 2 owners. Which I through out this whole time I thought I was the only owner. Now I’m really upset and would like to know if this is right or wrong and if I can fight this with the dealership ? Thank you.

    • 35x35
      Betsalel,
      Dec, 2020

      I suggest that you review your documentation with the last lender. If you refinanced the loan only in your name, the co-borrower needed to agree to the title change. The documentation on the new loan should reflect the terms of the loan and ownership.

      Also, you may want to speak to a certified tax preparer regarding changing title and tax implications. 

  • M
    Mike McCann,
    Dec, 2020

    my brother cosigned on a loan for me .the loan company deposited the loan in his account and is keeping the loan for himself is this legal

    • 35x35
      Betsalel,
      Dec, 2020

      To answer your question, one would need to look at the application form and the loan agreement. Was there a provision for dispursing the funds into his account? How did they receive his account details? I suggest that first, you check your documentation and then discuss the matter with the lender and/or a local attorney.

  • J
    Jacen,
    Nov, 2020

    I co-signed a car with my sister. She bought a 2018 jeep and then about 6 months later she traded the car in for a newer vehicle without my knowledge. Am i a co-signer for the new vehicle when though i did not know or sign anything regarding the new car?

    • 35x35
      Daniel,
      Nov, 2020

      Jacen, I am not a lawyer, so my response is not to be taken as legal advise.

      I don't see how you would be obligated to the second loan unless the agreement you signed included language specifying that. Did you call the finance company and ask about the loan? Did you ask your sister for her understanding of the financing on the new car?

      If you are told you are responsible for the debt, ask how that can be. If the proof offered is not convincing and clear, speak with a lawyer.

  • T
    Tracy,
    Nov, 2020

    Am I responsible for a toll bill on a vehicle I co-signed for. I don’t have possession of this vehicle nor do I drive it

    • 35x35
      Daniel,
      Nov, 2020

      Tracy, to my knowledge, the registererd owner(s) are liable. If you are listed on the registration, I think it could fall on you. Check with the DMV.

  • S
    Syed,
    Nov, 2020

    I co-signed a loan for an international student. Looking back, I have proof of bank's disbursement of money prior to my signature. Are banks allowed to do that? I was under the impression that the primary borrower and co-signer must sign before the bank disburses any money. The loan is delinquent at this point and impacting my credit score due to continuous missed payments by the primary borrower. Do I have a case here? How is it possible to get a check from the bank before all the required signatures are received?

    • 35x35
      Daniel,
      Nov, 2020

      Syed, I am not an attorney, so what I share is not legal advice but my thoughts.

      It certainly seems odd to give funds before paperwork is signed.  However, it probably depends on the language of the agreement you signed. I suggest you take the paperwork to an attorney to review. It also may be germane what obligation you thought you were taking on by signing. Just the way that you asked your question it seems clear you knew you were co-signing for the loan. 

      You referenced the damage to your credit score. Are they coming after you to pay the debt? That is why they had a co-signer on the loan, to have another party to pay if the primary borrower doesn't. That can be more serious than the credit damage, as the unpaid debt can lead to a lawsuit, a judgment against you, followed by wage garnishment and attachment of your bank account.

      Consult with an attorney ASAP, I advise. The lawyer will tell you if a loophole was opened by the timing of the signing after the disbursement.

      Please report back on how this develops.

loading...