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My best friend owns her own business and makes $35K a year and has been saving her money to buy a house. She has $30,000 cash saved up, but she does not qualify for a $325K loan. I would like to cosign on the loan for her (I make 70K a year) but I am married and not sure of the legal ramifications of just my cosigning without my husband's consent. My second concern is what would happen if I were to get a divorce from my husband, how would this affect my best friend becuase if I co sign on her house would her house be considered an asset to me becuase I co signed on the loan. Thank you!
Optional Information: State/Country of Question: California Already Tried: Nothing. I am just curious before I offer to co sign the loan for my friend.
Hi there....Let me see if I can help you out.
If you simply co-sign on her note, you would be liable for the note, but would have no ownership in the house. If you are going to co-sign on the note, you should buy the house with her so that you are part-owner of the home.
You will want to be sure that you are also entitled to all notices...as well as a right to cure any defaults...in the event your friend fails to make any loan payments.
You will also want a separate written agreement with your best friend regarding her obligation to pay you in the event you are forced to make any payments as a co-signer. Whether or not you decide to be an owner initially, you will want her obligation to you to be secured by her interest in the property.
Now, to your issue with your husband. Should the lender have to pursue you for payment, the lender can go after you and your marital assets...so at least you should enter into some agreement with your husband that should your marital assets be used to pay any portion of this loan, that you will agree that such payments will come from your share of any divorce property.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
If I do co sign and buy the property as part owner would that property then be considered my asset and would my husband have a right to the value of that property in a divorce proceeding in the state of California? I just don't want my co ownership of my best friends property to be a part of a divorce property/asset. The last thing I would want is for my best friend to lose her property because I got a divorce. Plus I don't want to have to pay my husband for something that we as a couple did not buy together. Thank you for you help!
No problem...Happy to help...I understand your concerns.
Here's what I recommend....
If you simply are trying to help out your friend and as long as she makes all the payments, don't care if you have any ownership of the house...even though you have the risk if she doesn't pay...I would recommend you not take an ownership at this time...rather just document your agreement with her regarding her obligations to you if you do have to pay. If you do this, I would, if possible, enter into an agreement with your husband where he agrees that in the event of a divorce that any ownership interest in the house and any liability with respect to the house are specifically yours and will come from your share of any marital property and that he specifically waives any present, past or future right in the house.
If you want an ownership in the house...then in theory you really should make half the payments and then share in the upside and downside of the house....then you would want to partition specific marital assets with your husband so that your ownership interest in the house as well as the payments you make are done so with your separate property.
Experience: Attorney/Developer