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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.
  • 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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  • 35x35
    Raven Craft,
    Jul, 2020

    Hi. I co-signed for someone to buy a vehicle. I just got a letter in the mail that I had three missed payments and the guy is currently in jail. How do I go about getting my vehicle back?

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      Daniel,
      Jul, 2020

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

      Co-signing for a loan doesn't automatically convey ownership rights. It is possible to co-sign, be 100% responsible for the debt and have no ownership rights. When it comes to a car, the key factor is the wording on the car title. Locate the title and see what it says. The vehicle has a lien from the lender, but the owners are listed. You could be not listed, therefore have no ownership rights. You could be listed on the title with the person for whom you co-signed with either an "and" or an "or." If "and," then you both need to sign the paperwork to convey title. If "or," then either party can act on his or her own, without the knowledge or permission of the other. I hope you are listed as an owner

      You don't say if you know where the car is. I assume that it was not repossessed by the lender, because you didn't say that the letter you received mentioned it. Does your incarcerated friend know? If hid the car, hoping to have it after he is released, I don't know what you can do to make him tell you, but you should try to get the information from him. 

      You need to figure out a strategy for more than getting the car back. You are financially responsible for the payments, whether or not you locate the car. You could end up in collections and potentially be sued for the debt if you don't catch up on the payments or work something out with the lender.

      If you find the car, are listed as an owner, and catch up on the payments, then you will still need to rebuild your credits. It must be very disturbing to find out three months down the road that your credit score took a major hit for being reported 30-days, 60-days, and 90-days late on an auto payment. Good luck getting to the bottom of this. Please report back on how things work out.

  • 35x35
    Madeleine Kopp,
    Jul, 2020

    Hi there. My moms boyfriend helped me purchase a vehicle. I am a co-signer HOWEVER I am on the title. We have had a very massive falling out and I’m worried he will try to repossess it out of spite. I have made every single payment on time for over two years. Not even a day late. Since I’m on the tile and no late payments, can he repossess it? He doesn’t know my location and I fully intend to keep paying my loans because I love my car. But I need to prepared if he’s going to come after me and what rights I have since I’m on the title. Thank you!

    • 35x35
      Daniel,
      Jul, 2020

      Madeleine, I am not a lawyer, so don't take anything I share as legal advice.

      if your ex comes and takes the car, it is not the same as repossession. Repossession is a term that is specified in most auto loans that is an option for the finance company to take the car if payments are not being made.

      If you and your ex's mom are both on title, she has an ownership claim. By fairness, you have the best case for ownership, having made the payments, but it would not be repossession or theft if she took the car.

      Continuing to make payments and avoiding your ex is the best idea that I can think of. However, check the title to see how your name and your ex's mom's names are listed. If it is an "and," then even when you pay off the car, the title will be conveyed jointly to you and your ex's mom. If it is "or" that separates your names, then you can convey the title on your own. That would also mean that if you could get a new loan just in your name, now that you have made car payments for two years, you could get her off the title. There would be no claim for her or your ex acting on her behalf to come after the car.

  • 35x35
    Mechee,
    Jun, 2020

    My son's girlfriend got him a car. The car is in her name and he is the cosigner. He has we been driving and paying on the car for a year now. They broke up. She came in the middle of the night and got the car. Does he have any rights to the car?

    • 35x35
      Daniel,
      Jun, 2020

      Mechee, I am sorry to read of your son's predicament. I am not a lawyer, so what I share is not legal advice, but my thoughts as a layperson.

      The first question is who is listed on title. A person can co-sign and not be listed on title or be listed. If he has ownership rights he could attempt to assert them by taking the car back in the middle of the night or by suing her and showing that she acted in bad faith.

      I recommend your son seek a free consultation from a local attorney.

  • 35x35
    Deshawn smith,
    Jun, 2020

    Is it illegal to cosign someone without there permission? How would I go about finding out if I was used this way?

    • 35x35
      Daniel,
      Jun, 2020

      Deshawn, I am not a lawyer, so what I share is my best information but isn't legal advice.

      A person can't lawfully sign your name to a contract without your permission. I am not sure what you are suggesting happened, whether someone posed as you in person or signed something or entered into a contract remotely. Either way it is fraudulent to do that. 

      One possible way to check is to see if an account appears on your credit report that isn't one you opened. You can get a free credit report at www.annualcreditreport.com

  • 35x35
    Billie J Juettn...,
    May, 2020

    My husband cosigned for a car for my son- in- law. The first bill came to mine and my husband's address, also in my husband's name only. I have always been under the impression that if you cosign for a loan, the statements are in the person's name whom you are cosigning for? I have a sinking feeling that my husband unknowingly signed for this loan to be only in his name.

    • 35x35
      Daniel,
      May, 2020

      Billie, I don't think that the statement is enough to be sure the status of who is on the loan. Did you ask your husband? Does he have a copy of the loan documents? Is your husband listed on the title to the car? Is your son-in-law?

      Your husband is 100% responsible for the loan, whether or not your son-in-law is on the loan or not. Reserve the sinking feeling if your son-in-law misses payments, something that you hope never happens.

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