Updated 12 days ago on . Most recent reply
Co-Signer | Requirements
Do you require co-signers to live in the same location as where the co-signer is needed to fulfill the obligations of the property? I've read in some forums, online literature, that its best to require the co-signer to also live in the same county, or at a minimum, the same state as where the property is. Do you have additional requirements around the co-signer in addition to all of your usual requirements?
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@Emory Clayton, a few thoughts:
1. Yes, it is easier to potentially collect against someone who is more local. In my state an unpaid judgement can be filed in ANY county courthouse becoming a lien on anything the defendants own in the county. So, within the state DOES make it easier to potentially collect.
2. There are processes for taking a judgement from one state and enforcing it in another state, BUT that probably would only make sense for a fairly LARGE judgement.
3. Enforcing ANY judgement is often DIFFICULT and sometimes near impossible.
4. I almost never even consider a co-signer and if I do I want them to OWN REAL ESTATE because that is an asset that can be attached by a judgement lien.
5. One of the only scenarios where I would think a co-signer makes sense as a matter of normal business would be college rentals. Obviously the actual tenant probably doesn't have the income, credit, etc to qualify like a typical long term tenant would.
6. I think the first thing to think about is whether you should even bother with a co-signer and if you do, how do you think it really helps you. A co-signer is just making a promise and you can't cash a promise. So, unless you can force payment from them it them co-signing isn't of any real value.