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  1. #1
    moran1 is offline Junior Member
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    loan agreement -witness not present at time of signing

    What is the name of your state (only U.S. law)? NJ

    A friend signed a loan agreement which involved almost all of the equity in her home to her father in law. The signing took place in her home and she was pressured to sign the agreement in order to prevent losing the home in foreclosure. Her husband also signed the agreement. The form used was downloaded from the internet and it was not notarized or witnessed.
    Now, a few years later,the signers are going through a divorce and the father in law wants her out of the house so he can get the money from the equity (the husband also wants her out because he will most likely not have to pay his share of the equity to his father).
    My friend was never given a copy of the agreement and never saw it after the signing. When the divorce lawyer for my friend was able to get a copy it showed that a witness signature had been added to it. That witness was not present at the time of the signing--only my friend, her husband and father in law were in the house at the time.
    My question is whether or not the agreement is valid now. My guess is the father in law had a friend sign as witness to the agreement before he handed it over to the attorneys.
  2. #2
    tranquility is offline Senior Member
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    Such a contract does not require a witness.
  3. #3
    moran1 is offline Junior Member
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    Quote Originally Posted by tranquility View Post
    Such a contract does not require a witness.
    I agree that this contract did not require a witness, but could the contract be invalid since it was altered by adding a person's signature to the witness line who did not witness the signing of the agreement?
    There is no proof that my friend willingly signed the agreement and fully understood why and what was being signed.
  4. #4
    ecmst12 is offline Senior Member
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    Her signature is on it. It might be valid. However that doesn't make FIL a party to the divorce or the decision about who gets to stay in the house. The debt is a marital debt and the house is the marital home. They will be divided during the divorce just like everything else.
  5. #5
    tranquility is offline Senior Member
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    The "contract" is no the piece of paper it's written on. You could pee on it and it would be the exact same thing.

    A contract is an agreement. I think your friend knew exactly what the agreement was, but was unaware of the eventual effects of the agreement based on later conditions.

    The "proof" she willingly signed and agreed are right on the paper--her signature. She doesn't get to claim some maybe thing as she was there. Did she sign it? Was someone holding a gun to her head? What is her claim? She signed to prevent foreclosure? So, in order to not lose the house for sure now she made an agreement where she might lose the house eventually. No one I know would sign such an agreement.

    Now, if someone were to claim the agreement was different from what was written, there might be an argument the written items were changed after it was signed. We both know that is not what happened, all you're trying to do is to find some minor error on the document to get out of it, but, it's an argument. Then all your friend would have to do is prove she signed a different agreement, the other party forged the document and got a witness to sign it after the fact to their benefit and that change hurt your friend--then she may have a case.

    I suspect the other party's claims may differ.
  6. #6
    moran1 is offline Junior Member
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    Thank you all for taking the time to respond.

    My question has been answered and I agree with the responses. The loan agreement signed is valid and the fact that a witness was not present during the signing and a person was found to sign the agreement years later and claim they did witness the signing does not matter in the eyes of the law.

    It gets more complicated but still the outcome may be the same--the agreement is still valid no matter what.

    My friend says she signed the agreement because she found out that her husband was not honest about their finances until she got calls their home was facing foreclosure. So the FIL gave them a loan to save them from foreclosure--he included the entire equity in the house which most of the money was a wedding gift and not part of the money included in the loan to prevent foreclosure. Instead of making the agreement for the money lent, he said that he would also include the money he had given them years earlier (7 yrs) that was a gift and used for a down payment on the house. It was clear the marriage was in trouble and the FIL feared that my friend would leave her husband and get 1/2 the equity in the house. The FIL did not want her to be able to get any money from the house if there was a divorce. She was told if she didn't sign the agreement to forfeit the gift used as the down payment and the loan to save the house from foreclosure that he would not save the house from foreclosure. She tells me she felt she had not choice and knew she and her husband had to save their home -they have children. Now the husband has filed for divorce and trying to force my friend and her children out of the house. They have no place to go and the husband has stopped earning a decent income and refusing to pay her money even though the court has ordered him to do so. She cant afford the mortgage payments and the house is again facing foreclosure and the husband is living a very high life (in a nice home where he has been offered it for free) off money he is getting from some other source --not traceable. My feeling is that she was setup by the FIL and husband so that in event of divorce she would not get the house or money from it. The parents are quite wealthy and do not need the money from the equity. They just want to make sure she does not get a penny from them--even for the children.

    It is a terrible situation and even though it appears she has a very good attorney--it takes so much time for the courts to act on motions, etc and she cannot make money because she cannot afford the childcare. From what I have learned here there is nothing she can do about the loan agreement. She was coerced but cannot prove it since there was no witness and being pressured or coerced doesnt seem to matter anyway. A contract is a contract. This is why it is so important for people to learn about legal contracts and not trust anyone who is pressuring them into signing an agreement--even if its a spouse or family member. Emotions and fears can make people vulnerable and easy prey for unscrupulous individuals--especially if the person trusts them.
  7. #7
    Ohiogal is offline Senior Member
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    Quote Originally Posted by tranquility View Post
    The "contract" is no the piece of paper it's written on. You could pee on it and it would be the exact same thing.

    A contract is an agreement. I think your friend knew exactly what the agreement was, but was unaware of the eventual effects of the agreement based on later conditions.

    The "proof" she willingly signed and agreed are right on the paper--her signature. She doesn't get to claim some maybe thing as she was there. Did she sign it? Was someone holding a gun to her head? What is her claim? She signed to prevent foreclosure? So, in order to not lose the house for sure now she made an agreement where she might lose the house eventually. No one I know would sign such an agreement.

    Now, if someone were to claim the agreement was different from what was written, there might be an argument the written items were changed after it was signed. We both know that is not what happened, all you're trying to do is to find some minor error on the document to get out of it, but, it's an argument. Then all your friend would have to do is prove she signed a different agreement, the other party forged the document and got a witness to sign it after the fact to their benefit and that change hurt your friend--then she may have a case.

    I suspect the other party's claims may differ.
    WRONG. The piece of paper matters due to the statute of frauds.
    Parents should remember 3 things: Love your kids more than you hate your ex; when you have children the relationship with the other parent is until death; your children determine what type of nursing home you end up in.
    Nothing stated by me should be taken as giving you legal advice or forming an attorney/client relationship.

    Attorney-GAL in Ohio.

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  8. #8
    ecmst12 is offline Senior Member
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    If what they agreed to was illegal or unconscionable, it's possible the court will invalidate it. But nothing in the legal system happens quickly. She needs to look into subsidized child care or other assistence so she can get back to work and support herself.
  9. #9
    tranquility is offline Senior Member
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    WRONG. The piece of paper matters due to the statute of frauds.
    I assume you mean the contract of and concerns the land by the statement:
    A friend signed a loan agreement which involved almost all of the equity in her home to her father in law.
    Before claiming WRONG, perhaps you should ask if the writing created a lien on the home.
  10. #10
    mistoffolees is offline Senior Member
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    Quote Originally Posted by Ohiogal View Post
    WRONG. The piece of paper matters due to the statute of frauds.
    Plus, I believe that there's a rule that real estate transactions must be in writing. That doesn't change OP's situation, but does contradict the "the agreement is the same even if it isn't written down" statement.

    Of course, from a moral perspective, I agree. If OP agreed to something, she needs to honor it - unless fraud was involved.
  11. #11
    tranquility is offline Senior Member
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    Only if there was a lien placed on the property from the writing would this LOAN concern real estate under the statute of frauds in NJ.

    Even if the agreement DID include the creation of a lien, let's pretend there was a requirement and that, in this case, we had no writing at all. (Let alone one with a purportedly false witness signature--which has nothing to do with if there was a writing.) What result?

    The money needs to be paid back. The security understanding may be unenforceable.

    I think it highly unlikely this is a statute of frauds issue. Even if it was, the result doesn't really change.

    By the way, even if the statute of frauds was implicated, nothing I wrote was wrong. The contract is not the piece of paper, and the piece of paper the contract is not has been signed by the person it is to be enforced against.

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