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Ask Dave

Should I Co-Sign a Loan With My Dad?

Dave has a better idea for Michael than to co-sign on a loan with his father ... a much better idea.

QUESTION: Michael in Texas says his father wants to get another home equity loan. The bank is asking for Michael's signature because he is on the deed. Dave reviews whether Michael would be held responsible for the loan if he signs the paperwork.

Dave's ANSWER: You shouldn't be liable for a default of any kind. They are just asking you to place a lien on a property that you own, so it shouldn't create any liability for you.

Here’s a better idea: Just do a quit-claim deed and deed him your portion back. I don't want anything to do with this, and I don't think it's what you ought to do. I don’t want to sign some stuff with any bank. Just give your portion back, and a quit-claim deed costs about 20 bucks. You just quit claiming your portion.

This is a stupid idea to start with. The property should have never been in the kids' names to start with. It's a bad estate planning idea.