No, the minor’s signature will not be binding on the loan agreement or the security agreement until the minor reaches the age of eighteen and ratifies the agreements. However, the loan agreement will not be void, as the grandfather’s signature is binding, and you have told us that he is liable for the entire loan amount under the “joint and several” liability provisions in your loan agreement. But, as discussed below, the fact that the minor’s signature is voidable adds some risk that the security agreement and the perfection of your lien on the vehicle could be challenged — at least until the minor turns eighteen and ratifies the security agreement.

Validity of Loan Agreement

The minor’s signature will not be binding on the loan agreement until the minor reaches the age of eighteen and ratifies the agreement. However, that does not affect the validity of the grandfather’s signature.

In Illinois, the general rule is that an agreement with a minor is voidable by the minor until the minor reaches the age of majority (which is eighteen in Illinois). There are exceptions to this general rule, but from what you have told us, those exceptions would not apply in this situation. However, even if the minor voids the loan agreement, you still will be able to enforce it against the grandfather, since he is jointly liable for the entire debt under the joint and several liability terms of the agreement.

The grandfather is liable for the entire debt; however, you may wish to ensure that the minor ratifies the agreement after reaching the age of eighteen. A minor is deemed to have ratified a contract by making a payment, or even by failing to take any action to disaffirm the contract within a reasonable time after turning eighteen. We are not aware of any Illinois court decisions suggesting that a payment made by the grandfather as co-borrower would be sufficient to ratify the contract on behalf of another co-borrower.

Validity of Security Agreement

There is some risk that the security agreement could be unenforceable in the event that the minor voids it before turning eighteen. For that reason, you also should ensure that the minor ratifies the security agreement after turning eighteen.

In Illinois, if there are two individuals on a vehicle’s certificate of title, they are presumed to be joint tenants with rights of survivorship. Consequently, you should treat the vehicle as jointly owned by the grandfather and grandson, each with a one-half interest in the vehicle. Illinois courts have held that a security agreement signed by only one joint owner is not enforceable against the other joint owner in the context of real estate and other types of property. If the grandson decides to void the security agreement before turning eighteen, a court may view the security agreement as signed by only one joint owner, meaning that your institution’s security interest would reach only the grandfather’s one-half interest in the vehicle.

Another risk relates to the Uniform Commercial Code (UCC) requirement that all debtors must sign a security agreement as a prerequisite to its enforceability. If the minor voids his signature on the security agreement before turning eighteen, that could threaten its enforceability, even against the grandfather. We are aware of at least one case, from Florida, that relied on the joint and several liability provisions in a security agreement when upholding its enforceability, even after a minor cosigner disaffirmed the agreement. However, we are not aware of any Illinois cases that have used similar reasoning.

Perfecting the Vehicle Lien

Because there is some risk that the security agreement could be challenged, there also is some risk that the perfection of your vehicle lien could be challenged. Based on a conversation we had with the Illinois Secretary of State’s office, the Secretary of State is willing to notate a bank’s lien on a vehicle’s title even if one of the owners is a minor ­— but that would not alter the risk that the minor could void the security interest, at least for his one-half interest in the vehicle, until he turns eighteen and ratifies the agreement.

For resources related to our guidance, please see:

• Fletcher v. Marshall, 260 Ill.App.3d 673, 675 (2nd Dist. 1994) (“A contract of a minor is deemed ratified if the minor fails to disaffirm it within a reasonable time after attaining majority. . . Also, a minor ratifies a contract if, after becoming of age, he ‘does any distinct and decisive act clearly showing an intention to affirm [the contract].’”)

• Rubin v. Strandberg, 288 Ill. 64, 67 (1919) (“There can be no doubt that the acts of the defendant after attaining his majority, in making the monthly payments and causing the contract to be recorded, were a ratification of the contract.”)

• Vehicle Code, 625 ILCS 5/3-107.1 (“When a certificate of title is made out to 2 or more persons, it shall be presumed that the title is held as joint tenants with right of survivorship.”)

• Motz v. Central Nat. Bank, 119 Ill.App.3d 601, 608 (1st Dist. 1983) (“Furthermore, we note that in the case of joint tenants, other courts have held that the signing of a security agreement by only one of the joint tenants, without the authorization or consent of the co-tenant, affects only the interest of the signing tenant, and that the ownership rights of the non-signing co-tenant are superior to those of the secured party. We believe that the same reasoning is applicable under the Illinois Code . . . .”)

• Orange Motors of Miami, Inc. v. Miami Nat. Bank, 227 So. 2d 717, 718 (Fla. Dist. Ct. App. 1969) (In this case, both a minor an adult party signed a security interest for an auto loan, but the minor disaffirmed the agreement after reaching the age of majority. However, the court concluded that the security agreement remained valid and enforceable — because the security agreement “was specifically stated to be ‘joint and several’ and required [the adult cosigner] to perform all the obligations of the [minor] buyer. . . . we find the retain title agreement to be valid and enforceable as a matter of law.”)