co signer on loan, primary signer is deceased
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co signer on loan, primary signer is deceased
I am a co signer on a personal loan. The primary signer has recently deceased. Her home was used as security. The money from personal loan was used to purchased a restaurant 9 yrs ago. A little over 4 yrs ago I signed over my rights to the restaurant to this family. I have legal paperwork stating they would be responsible for loan pymt. I know I am still on the loan until paid off. The family is now stating they will let house go to foreclosure and not pay the loan. What happen to me? Am I responsible now? If house goes in foreclosure will that money be used for loan?
Asked on April 18, 2016 under Business Law, Florida
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
1) A co-signor is potentially as liable on the loan as the main signor. The lender has the choice of whether to sue one, the other, or both. A dead person cannot be sued; her estate, however, could potentially be held liable for the debt, but it is probably more likely that the lender will choose to seek the money from you--there are less procedural issues and it is more straightforward for the lender.
2) If this lender is the one who is foreclosing on the house, because it was used as security, then any amounts they realize from foreclosing and selling it (after taking out the expenses of foreclosure and sale) will be applied vs. the amounts owed from the loan. If the loan is paid off in full by that, you will be in the clear; but if there is a balance due (i.e. the proceeds from the house are not enough to fully pay the loan), then they can sue you for the balance.
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