Re: Jointly owned home as collateral

You are asking two different questions. The first relates to disclosure of the co-owned mortgage as a liability. Your liability on the vacation home mortgage may result from a promissory note. If that is the case and the promissory note is pursuant to a conventional loan, you will find a paragraph which states that you are jointly liable for the full amount of the promissory note. The translation is that you are liable to the lender for the full amount of the note. This being the case, it is a matter which must be disclosed. Should your business fail and you be forced to resort to bankruptcy, failure to disclose the note may allow the business lender to step through the bankruptcy on grounds of fraud even though your intent was not to hide a debt, but to protect an asset.

Your second question relates to protection of the asset. Choosing not to disclose the asset on the application may not protect you down the road. The liabilty for the mortgage, if it is to an insitutional lender (as opposed to a private mortgage to the seller), is going to show up in your credit report. The mortgage and the deed are also matters of public record, available through a search to the land records office in the county where the property is located.

If you wish to protect the property against a possible business failure, I suggest you contact a real estate attorney in the county in which the property is located to discuss the differences between holding title as tenants in common or as joint tenants, or placing the property into a partnership pending marriage (after which the property may be held as tenants by the entireties) Each has its up and down side,and tis attendant cost, and should be jointly chosen to provide the protection you need.