Is a co-signer responsible for a loan if they were misinformed about the loan by the primary signer?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Is a co-signer responsible for a loan if they were misinformed about the loan by the primary signer?

Several years ago my brother convinced my parents to take out a mortgage on their home to help him start a business. They agreed and co-signed with my brother. Recently, my brother told my parents that the bank needed them to resign the loan papers due to some minor technicality. My parents resigned trusting him and then learned that he had extended the loan – both the amount and length. What are my parents rights in this situation? Do they have any recourse or are they stuck with this mortgage if my brother does not pay? They are 74 years old and scared to death of losing their home.

Asked on September 6, 2016 under Real Estate Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

From what you write, it was your brother who lied to (defrauded) your parents, not the bank/lender. If so, then they are bound to the loan: generally, only the bank's wrongdoing would allow them to treat the loan as void for fraud. So your parents appear to be obligated to the loan, based on your question; but if your brother lied to them to get them to sign, he committed fraud and they could sue him for compensation, such as to get from him payments they made on the new loan based on his fraud, or any other losses they incur. The problem is, their recourse is against the one who committed the wrong, which your brother, not the bank.


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 AttorneyPages.com 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.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption