Can the spouse be held liable if the other spouse co-signs amortgage for their child?

If husband wants to co-sign for a mortgage loan for his son (from ex-wife) because he doesn’t have enough income, can the the current wife be held liable? She does not agree to this transaction, does not want any ownership and does not want to be liable. What needs she to do?

Asked on December 3, 2011 under Real Estate Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Good question. If one spouse signs a document a a co-signer for another person, the other spouse would not be personally liable under the contract for the simple reason that he or she did not sign the loan agreement.

However, in the event of a default on the loan where one spouse was a co-signer, the lender can sue the one spouse who signed the loan as a co-obligor and obtain a judgment against that spouse where one-half of the marital property would be subject to levy and wage garnishment in the event of a judgment. Not good for the spouse that did not sign the loan. Even worse for the spouse that did.

Given the facts of the question, serious discussions should be made between the two spouses before the loan by the one spouse is signed as a co-obligor.


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