What to do if a co-tenant refinances or takes a home equity loan on inherited Arkansas property without your approval

Short answer: In Arkansas, a co-tenant generally cannot validly encumber or refinance the whole property without the other owners’ consent, but a co-tenant can mortgage their own share. If a co-tenant tries to refinance or take a home equity loan without your permission, you have several civil remedies (quiet title, partition, cancellation of fraudulent instruments, damages) and may have criminal remedies if fraud or forgery occurred. Act quickly: many effective remedies depend on timely steps such as recording notices and asking a court for an injunction.

Detailed answer

This answer assumes the property was inherited and that title is held by two or more people as co-owners (commonly as tenants in common unless the deed or probate documents say otherwise). Tenancy in common gives each co-owner a transferable ownership interest in the property, but it does not give one co-owner the right to encumber the entire parcel without the others’ consent.

Can a co-tenant encumber the whole property?

No. A co-tenant may only grant a mortgage or deed of trust on the interest that they own. If a co-tenant signs a mortgage using only their name, that mortgage properly attaches only to their fractional interest, not to the ownership interests of the other co-tenants. A lender that accepts a mortgage from one co-tenant without checking title risks that the mortgage covers only that borrower’s share.

However, there are two important caveats:

If the co-tenant somehow obtains title to the whole property (by a forged deed, a fraudulent conveyance, or by a valid transfer that changed ownership), the lender may have a stronger claim. If a deed is forged or improperly recorded, you can challenge it and ask a court to cancel it.
Some lenders require every person with an ownership interest to sign loan documents. If a lender knowingly or negligently took a signature obtained by fraud, the transaction can be set aside and the lender may face claims.

What happens if a lender forecloses on only the mortgaged co-tenant’s share?

A foreclosure by a lender who holds a mortgage on a single co-tenant’s interest normally results in a sale of only that co-owner’s fractional interest. The buyer at that foreclosure sale becomes a co-tenant with the remaining owners. The lender or buyer does not automatically gain the other co-tenants’ interests unless the mortgage validly encumbered the whole parcel.

Immediate steps you should consider

Request documents: Ask the co-tenant and the lender for copies of the loan, deed, and any recorded documents. Lenders often record mortgages or deeds of trust in the county recorder’s office.
Check public records: Look at the county recorder/assessor’s office to see what instruments have been recorded against the property.
File a lis pendens or ask for an injunction: If you plan to sue to cancel a deed or stop a foreclosure, a court can sometimes issue a lis pendens (notice of pending litigation) or an injunction to prevent further transfers or sales while the dispute is resolved.
Demand rescission and return of proceeds: If the loan was based on forged signatures or misrepresentation, you can demand rescission (cancel the loan) and repayment of any proceeds obtained improperly.
Consider criminal referral: If signatures were forged or documents were falsified, you can report suspected forgery/fraud to law enforcement for criminal investigation.

Civil remedies under Arkansas law

The following are common civil actions people use in Arkansas when a co-tenant encumbers inherited property without authorization:

Action to cancel or quiet title: Ask the court to declare the invalid instrument void (for example, a forged deed) and to quiet title in the rightful owners.
Action for partition: If co-owners cannot agree on continued ownership, any co-tenant can file for partition. Arkansas courts can partition the property physically (partition in kind) or, if that is not practical, order a sale and divide the proceeds. See Arkansas law on partition and related procedures linked below.
Injunctions: Seek a temporary restraining order or preliminary injunction to stop a foreclosure sale or further transfer while the court resolves the dispute.
Fraud and damages: If a co-tenant knowingly committed fraud to obtain a loan or to transfer title, you may sue for damages and for cancellation of the fraudulent instrument.

How lenders are affected

Lenders who take a mortgage from only one co-owner may find the mortgage limited to that co-owner’s share. If a lender forecloses on only that share, foreclosure typically does not eliminate the other owners’ rights. However, if a lender can show it relied in good faith on a recorded document that appeared to transfer full title, nuanced defenses and statutory rules may come into play. Careful review of recorded instruments and chain of title is essential.

Example (hypothetical)

Three siblings inherit a house as tenants in common: A owns 50%, B owns 25%, and C owns 25%. B signs a home equity loan using only B’s name, and the lender records a mortgage that appears to affect the property. In most cases, that mortgage attaches only to B’s 25% share. If the lender forecloses, it may sell B’s 25% share; the purchaser becomes a co-tenant with A and C. If B forged A’s signature on a consent form or deed, A can sue to cancel the forged instrument and seek damages for fraud. A could also ask a court to block any foreclosure sale while the dispute is pending.

Arkansas statutes and resources

Key Arkansas statutes and official resources to consult include the Arkansas Code provisions on property and partition, and on conveyances and fraud. The Arkansas General Assembly’s code library is the official source for Arkansas statutes:

Arkansas Code — Title on Property and Partition (search or browse): https://www.arkleg.state.ar.us/
County recorder/registry office (local public records) — check the county where the property sits for deeds and recorded mortgages.

Because statute section numbers and chapter headings sometimes change, your attorney will look up the most current Arkansas Code sections that apply to quiet title, partition, and fraudulent conveyances.

Helpful hints

Act fast. Recording searches and prompt court filings can stop a lender foreclosure or preserve your rights.
Get copies of all recorded documents from the county recorder’s office. The recorded instruments usually control legal rights in property disputes.
Do not sign away your interest unless you fully understand the document. If pressured, consider getting independent legal advice before signing.
If you suspect forgery or fraud, photograph or save all communications and documents, and report the matter to local law enforcement in addition to consulting an attorney.
Consider a partition action if co-ownership is no longer workable. Arkansas courts can order sale and divide proceeds according to ownership shares.
Talk to a real estate or probate attorney experienced in Arkansas property disputes to evaluate specific remedies and to prepare any necessary court filings.

Disclaimer: This article explains general legal principles under Arkansas law and is not legal advice. It does not create an attorney-client relationship. For advice tailored to your situation, contact a licensed Arkansas attorney promptly.