business partners are cosigning a contract

Co-signing a Contract

If you co-sign a contract for a friend or relative, you must pay if they don’t.

Co-signing a Contract

You may be asked to co-sign if a friend or relative wants to buy a product or apply for a loan, but has bad credit or no credit at all.  Think twice before you co-sign for someone else. If you co-sign, you are responsible for the entire debt. This means that you will have to pay the full amount if the other person doesn’t pay, even if you did not receive the goods or services. If the other person does not pay the loan, you can be sued and your wages and property may be taken. The lender does not have to try to collect from the other person before going after you. You may also have to pay late fees and collection costs.  If the loan is not paid on time, it will go on your credit report.

Written notice

Before you co-sign for someone other than your spouse, the seller must give you a written notice telling you that you are responsible for paying the loan if the other person doesn’t pay. If the finance company required a co-signer, they must give the co-signer a written notice of delinquency before repossessing the vehicle.

Other languages

If the transaction is conducted in a language other than English, the written contract and the notice you are given should also be in that language.

Civil Code 2983.35 (a), 1632(b)

County of Los Angeles Department of Consumer and Business Affairs. Last change: Apr. 14, 2011

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