Being a co-buyer gives you the same rights and liabilities over the contract of a purchase. Either your friend or relative is buying a car or property through a third-party loan, you will also serve as a guarantor with the ability to pay the debt or installment.
But if your friend or relative is unable to continue paying the debt or installment, and you fail to comply as a co-buyer, the government can allege you as a straw buyer. So, what’s the difference between a straw buyer and a co-buyer?
What is a straw buyer?
These people are the actual buyers but use another person’s credit history or standing to be able to purchase a product that requires good financial status. People use this scheme because they can’t pass the qualifications of the purchase or the mortgage.
If the buyer didn’t continue the payment then the straw buyer, either guilty or innocent, will undergo prosecution with a criminal charge of real estate fraud.
What is the responsibility of a co-buyer?
After making the purchase, make sure that the title and deed will be under your name and the buyer’s. Professionals from kretzerfirm.com advice on making sure that any amendments or agreements concerning this transaction will be done with legal papers.
Even if the lender or seller expects you to fill in whenever the buyer slacks in payment, it doesn’t require you to make any payments unless you file an affidavit of agreement to do so.
If not, your main responsibility then is to make sure that the lender of the seller receives the payment from the buyer. You can also request duplicate copies of receipts or billing statements from the buyer.
What are the risks of being a co-buyer?
Your financial records will count the buyer’s purchase or mortgage against you as well. So, it can be difficult for you to apply for a loan or make installment purchases. The lenders or sellers will also report negative information to the credit bureaus when there are lapses or disputes on the payment.
Talk first to your closest friends or family then seek advice from a lawyer. Make sure to follow all legal processes to avoid future disputes with the buyer and the lender or seller. It is always better to ask questions and make everything clear for you before signing any papers.