Q:

I cosigned a home loan for my son. Will my wife or other heirs be responsible for the debt if he defaults after my death?

– Carl

A:

A home loan is split into two parts — the promissory note where the borrowers promise to repay the loan, and the mortgage that uses the home as collateral to make sure the loan is repaid.

Cosigning a mortgage loan is the worst of both worlds. You have a personal obligation to repay the bank but lack any control of the home used as collateral.

While I understand the desire to help a child, cosigning loans is best avoided. If it is unavoidable, a local attorney can help you draft a contract that may ease the pain if things go wrong.

When you cosign a mortgage loan, the signers are “joint and severally liable” for the payment. This means that everyone is liable for the entire debt.

The lender can collect from all the signers or just one of them. The bank can foreclose the home, sue the individual borrowers for repayment of the loan, or do both. This means that the deepest pocket usually gets picked first.

Debt cannot be inherited or passed to a surviving spouse, but your estate would be on the hook. If your wife or heirs are beneficiaries of your estate, their claim to your probate assets would be behind that of your creditors, including the loan you cosigned.

Your son should repay your trust and kindness by refinancing the loan in his name alone when he is able.

Perhaps the only saving grace is that if a lender collects from one of the joint and several borrowers, that borrower can seek “contribution” or reimbursement from the other borrowers. This means that, depending on the facts, if your son’s lender looks to you to repay the loan, you can look to your son to get the money back. ■

Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. He practices real estate, business litigation and contract law from his office in Sunrise, Fla. He is the chairman of the Real Estate Section of the Broward County Bar Association and is a co-host of the weekly radio show Legal News and Review. He frequently consults on general real estate matters and trends in Florida with various companies across the nation. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @Garysingerlaw.