Specialist conveyancing articles to inform you about conveyancing for a house or a flat; whether you already own your own home or if you are buying one. These are free to read and written by specialists in this area.

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Joint and Several Liability Definition

Joint and several liability definition is when more than one person is liable to pay a debt or perform some obligation but where each person is liable by themselves to pay back the entire amount in question to a third party or perform the required obligation for the third party.  

In simpler terms under joint and several liability you and your partner in business might owe somebody money but your creditor can claim the entire amount from either of you. Similarly, it means that if two of you take out a mortgage, your lender can go after either of you for full repayment of any outstanding money owed.

Concerns about a mortgage that you are jointly and severally liable for? Get advice from our Joint Ownership experts: call 0333 344 3234

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Your creditor can sue all of you or each person separately

If joint and severally liable, each person involved with the repayment of a liability remains responsible for any unpaid amount while it is unpaid. So your creditor can look to collect the total payment  due from ANY of the joint or several debtors. Yes, that means that you can be pursued by a lender for mortgage repayments which should have been made by other joint owners even if you've managed pay your own share of the repayments on time.

To illustrate, if Peter and Tom are jointly and severally liable to pay £100 to a bank, the bank might choose to claim £50 each from Peter and Tom but could choose to pursue the entire £100 from Peter alone. This might happen in real life, for example, if Tom disappeared without trace or became bankrupt but Peter remained solvent and was able to be found.

Now Peter might feel he had a strong case to claim £50 from Tom after he’d paid the £100 to the bank but this would be a separate claim that he'd have to pursue himself. As Peter has paid the £100 owed to the bank, which both he and Tom were jointly and severally liable for,the law views the bank's joint and several claim as satisfied.

If I become a joint owner, how might this affect me?

Everyone whose name appears on a mortgage deed is jointly and severally liable to repay the mortgage loan to the lender. What happens after this, regarding if one of you gets into debt, may be different and is linked to whether you are joint tenants or tenants in common.

Joint Tenants

Joint tenants is the normal legal state of affairs for married people buying a home together. In the eyes of the law, the two spouses essentially count as one and should one of the spouses die then ownership of the deceased spouse's property passes entirely to the surviving spouse. Where debts are concerned, both spouses are jointly and severally liable, meaning that a creditor can pursue either spouse for repayment of a debt even if that debt was created by one spouse alone. In the worst situations, when one spouse literally 'gambles the house away', creditors can pursue either spouse for full repayment of the entire debt.

Tenants in common

Unmarried people generally take up joint ownership as tenants in common. This means if one of the joint owners dies, the deceased's property does not automatically pass to another joint owner or owners unless it is clearly stipulated in a will. It also means that if one of the joint owners runs up a debt, the other joint owners cannot be pursued for repayment of it.

People who correctly fulfil their obligations when sharing a household as tenants in common therefore generally have their interests better protected than if they were joint tenants.

What can I do to protect myself from falling foul of joint and several liability?

You cannot avoid being jointly and severally liable to the lender for the mortgage but you can get a legally binding agreement allowing you to sue a joint owner if you paid money on their behalf and they do not repay you. You can't do this without such an agreement.

We designed our Basic Deed of Trust for joint owners buying as tenants in common. It not only sets out clearly each sharer’s beneficial interest in a property but also ensures that a creditor (such as a loan company) can't pursue debts beyond suing the person or people who created them in the first place. This does not change the liability of all signatories to the mortgage to pay back the full loan to the lender.

Additionally, should any sharer die, then the deed of trust ensures that the deceased's share in the property passes to a person that the deceased nominated in their will, i.e. that they independently nominated, and does not, as in the case with joint tenancy, pass to another sharer or sharers.
[Written with thanks in particular to UK Practical Law, Drukker Solicitors (London) and Wikipedia.]

Want a legal document to protect you when you jointly own a property and have a joint and several liability to a mortgage lender?

*Joint Ownership Specialists - Fixed Fee – No Sale No Fee – On all Mortgage Lender Panels

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