Joint liability is a legal concept that bases who should be responsible for something based on ownership. Therefore, in order to understand the concept of joint liability, it is first necessary to understand the concept of joint ownership. The term joint describes a scenario where two or more people or entities act in unison. It is used to refer to a variety of different scenarios. Joint accounts, like bank or brokerage accounts, are common. Joint tenancies, where two or more parties share ownership in a real property, are also common. Annuities and insurance policies are often owned jointly. In addition, people or businesses can become involved in joint ventures, were they combine assets to create a third entity. Joint property can be held in a few different ways, some of which transfer ownership of the entire property to one of the owners upon the death of another owner. Furthermore, some state laws dictate that some marital assets be held jointly.
When property is held jointly, it makes sense that all parties would also have liability for any financial obligations that arise as a result of that property ownership. There are two types of liability that are applicable to multiple properties. With joint liability, each of the individuals involved is responsible for the full obligation that comes with the joint relationship. For example, joint property owners are each individually responsible for the full tax burden associated with the real property. Several liability breaks down the liability to the proportion of ownership of each of the joint owners.
Joint liability occurs when ever multiple parties apply for credit as co-borrowers, but can also apply where there is a presumption of community property which exists between married partners in many states. In addition, members of a general partnership acting alone can bind each other to financial obligations.