The Importance of Understanding Joint Equity Laws

When you apply for a loan, you are applying for interest rates, capital/principle, and agreeing to repay any debts incurred from the agreement. If you are taking out an equity loan on a joint application, then you need to know where you stand and understand the laws. Joint loans are tricky, since if during the course of repayments one party decides to toss you out of your home, you will need legal help to maintain your rights.

Each party is obligated under the law to provide a “court order” before asking one or the other to leave the home. Not one party under the joint agreement is permitted to sell the home, unless they first discuss the sale to the other party and both parties agree. Furthermore, the law states on mortgage and equity joint packages that neither party involved can apply for equity loans on the home, unless both parties agree.

It is wise to discuss all options, potential situations, and other details with a qualified solicitor before signing an agreement. Since the joint equity loans and other loans stipulate that both parties in a joint contract have “equal rights to the whole property,” it makes sense to cover your tracks.

If you are married, the laws apply to both parties. If you both sign a Will Testament and one of you state in the Will that the home goes to the party outlined in the Will, and that party is not a member of the contracted agreement, then you should know that if one party dies during the loan term, that the other party automatically takes possession of the home, regardless of that is outlined in a Will. However, if you have “common joint” mortgage equity loan, then the law is different. Therefore, make sure you know what you are getting into when applying for home equity loans, especially on joint contracts.