Joint owner or joint member: Only one may become a borrower

Credit unions are generally only allowed to make loans to their members under both state credit union acts and the Federal Credit Union Act (FCU Act). Sometimes questions come up in the context of joint loans for members that have joint share accounts with the credit union, and who is eligible to borrow from the FCU.

Generally, membership in a FCU requires an approved membership application and payment and maintenance of at least one par value share (as well as any applicable entrance fee).  The FCU Act requires FCU members to “each subscribe to at least one share of its stock and pay the initial installment thereon and a uniform entrance fee if required by the board of directors.”

The par value of the required member share is established by each credit union in its bylaws.  Article III, Section 1 of NCUA’s model bylaws have this as a blank that can be filled in by the FCU. There is no regulatory minimum or maximum amount for credit union shares and par values are often nominal—but sometimes not.

For joint accounts, the NCUA bylaws allow two options under Article III, Section 7 – the account can jointly hold both members’ par values, or the members may be required to establish individual accounts to establish membership in the FCU. Here is the relevant excerpt:

 

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