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

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    Thelma McGaddye,
    Oct, 2020

    If I co-sign on a car loan, and the borrower gets behind and decides to extend the loan. Can the borrower do it without the co-signer authority? If the loan is extended, then the terms have changed and the co-signer hasn't agreed with the new terms.

    • 35x35
      Daniel,
      Oct, 2020

      Thelma, please understand that I am not a lawyer and nothng I share is to be taken as legal advice.

      I agree that the terms of the contract can't be altered without consent of the parties that signed it. Unless the original contract allows for the terms to be altered under certain circumstances, it seems improper to me. 

      A key question about this, however, is whether the change puts you in a better position or not. You, as a co-signer, want the person you co-signed for to make every payment, so you are not held financially responsible to make it and no late payment appears on your credit report. 

      It would be interesting to get a lawyer's opinion about your responsibility if the other person doesn't make the payments as agreed on the new terms. It seems you could have good cause to say that you are not bound by the agreement.

  • B
    Brittany Carney,
    Oct, 2020

    My boyfriend co signed on my car. We broke up and he did extensive damage to the car. Can I press charges on him? I make the payments for this loan.

    • 35x35
      Daniel,
      Oct, 2020

      Brittany, I am not a lawyer, so the information I share is not to be taken as legal advice.

      There are two separate areas to address. One is the potential crime your ex committed in damaging your property, the other is the financial harm that you suffered due to his actions.

      Delay is not your ally in documenting and pursuing either area. You could speak to the police about what he did. Consider your actions carefully and discuss it with someone whose judgment and wisdom you trust.  It is legitimate to involve the police, but weigh how likely it is that your action will provoke a violent response.

      You can pursue financial redress through a lawsuit. You would file in either  small claims court or in a higher court. The proper venue is dependent on the amount of the damages he caused.

  • L
    Lora OMalley,
    Oct, 2020

    I just got a ATV side by side Saturday! I had my boyfriend co sign for me! Now I have cosigned in the past for my son on a vehicle & I’m not on the title! I put 7,000.00 dollars down on a $13,000 ATV and they had both of us sign the title! I was freaking out cuz this is a boyfriend & he’s a cosigner. Why would he be on the title?! She said that’s the way it’s down! Can u plz give me more info on this cause this is not right! Thanks.

    • 35x35
      Daniel,
      Oct, 2020

      Lora, I am not a lawyer, so the information I share is not to be taken as legal advice.

      I think the horse has left the barn. Your question and concerns are legitimate, but the agreement is signed and I don't think you can get out of it. Your bf is part owner of the ATV. Depending on how he is listed on title, either both of you will need to sign something to transfer title (if there is an "and" between your names) or just one person can do so once the car is paid off (if there is an "or" between your names). 

      The lender can say that they only make loans with a co-signer on the title, I believe. You could choose to shop for a different lender. It is hard to think that the ATV purchase was so crucial that you couldn't delay to address this, but what is done is done and it is easy to get excited when making a big purchase. Likely being pushed by the salesperson to sign and get the deal done is probably a factor in you signing with open questions.

      I suggest you write an agreement with your bf that makes it clear that you will retain ownership. If he is willing to sign something to that effect, that should address the matter. You could approach it by saying that you will forfeit equity in the ATV to him if you miss payments and he is forced to make them or see his credit score damaged.

  • K
    Kenneth Kaplan,
    Sep, 2020

    I have a promblem, my ex is the main borrower ,I had to be the co sighner, on the title it say her name or my name on title she now wants her name off the car ,for credit reasons or she will sell it, she has a lawyer and is putting it in her trust ,the lawyer mailing me paper work to pay to reregister the car with her name off the loan ,we r both on loan and title what can or should I do I need proffessional help on this matter please had the car 10 months on time payments no promblem she wants off

    • 35x35
      Betsalel,
      Sep, 2020

      I am not a lawyer, so I can't give you legal advice. You need to speak with an attorney to get legal advice. I will share a few thoughts with you.

      If you wish to remove someone from a loan, then you need to speak to the lender. If you qualify, they can restructure the loan, or issue you a new one. This will allow you to remove your ex from the title and the loan.

  • E
    Elicia,
    Sep, 2020

    Me and my ex husband bought a car together and now we are getting a divorce. He is a co-signer on the vehicle and would like to get something else. Can he trade in the vehicle and will it release me from the car loan?

    • 35x35
      Betsalel,
      Sep, 2020

       I can't give you legal advice or tell you what your liability will be. You need to speak with an attorney to get legal advice. I will share a few thoughts with you.

      The first question is, how much equity is in the car? If there is enough to pay off the loan, then there should be no problem because, at the time of the trade-in, the dealership would pay off the old lender.

      If both of you are on the title, then it would depend on the language on the title. If it is "and," then both need to sign to sell a car. If it is "or," then only one needs to sign the agreement. 

      So, your first step is to establish if there is enough equity in the car to trade in and release you from the loan. If there isn't sufficient equity, make the proper arrangement with your ex to see that the loan is paid off before any change in title is completed.

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