co signer on loan, primary signer is deceased

UPDATED: Sep 30, 2022

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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