Whether you’re buying a home with a partner, going guarantor for a family member, or signing a business loan with co-directors, you’ve probably seen the phrase ‘jointly and severally liable’ on your contract. In 2025, as lending standards tighten and legal enforcement sharpens, it’s more important than ever to know exactly what this term means—and how it can impact your finances.
What Does ‘Jointly and Severally’ Actually Mean?
In simple terms, when two or more people are jointly and severally liable for a debt or obligation, each person is responsible both together (jointly) and as individuals (severally) for the entire amount. That means a lender or creditor can pursue any one of the parties for the full debt, not just their share. If one person can’t—or won’t—pay, the others must pick up the slack.
- Joint liability means everyone is responsible as a group.
- Several liability means each person is individually responsible for the whole debt.
For example, if you and your business partner sign a $100,000 loan as ‘jointly and severally liable’, and your partner disappears, the bank can chase you for the full $100,000.
Where Does ‘Jointly and Severally’ Show Up in Australia?
This legal concept is everywhere in Australian finance and property:
- Home loans: Couples or family members buying together are usually jointly and severally liable for the mortgage. If one person loses their job or leaves, the other must keep up repayments.
- Business loans: Co-directors or business partners often sign as joint and several guarantors, especially for small business finance.
- Personal guarantees: Parents going guarantor for adult children’s home loans are often jointly and severally liable with the borrower.
- Commercial leases: Multiple tenants in a commercial property lease can be pursued individually for unpaid rent or damages.
As of 2025, with the Australian Prudential Regulation Authority (APRA) continuing to push for responsible lending and banks more aggressively pursuing defaulted loans, these arrangements are being enforced with increasing rigour.
2025 Legal and Financial Trends: Why It Matters More Now
Recent years have seen a spike in lenders invoking ‘joint and several’ clauses. With property values fluctuating and business insolvencies rising post-pandemic, banks and creditors are less likely to cut slack if one party defaults. This means:
- Guarantors face higher risks: New APRA guidance in early 2025 has prompted banks to clarify joint and several obligations in plain English, but also to enforce them strictly.
- Co-borrowers need extra caution: Family breakdowns or business disputes can leave one party holding the bag, even if they never saw a cent of the loan.
- Consumer law changes: The Australian Competition and Consumer Commission (ACCC) has called for clearer disclosure of joint and several liability in all consumer contracts, but there’s still no requirement for banks to chase all borrowers equally before enforcing the full debt on one.
Real-world example: In late 2024, an Adelaide family lost their investment property when one sibling defaulted on a joint loan. The lender claimed the entire outstanding amount from the remaining brother, who had assumed he was only responsible for ‘his half.’ The court upheld the lender’s right to pursue the full debt from any party named as jointly and severally liable.
How to Protect Yourself: Smarter Moves in 2025
If you’re entering into a joint loan, guarantee, or contract, consider these steps:
- Get everything in writing: Draw up a private agreement with co-borrowers about how repayments will be shared—and what happens if someone can’t pay.
- Review your exit strategy: Ask your lender about release clauses, refinancing, or ‘partition’ options if a co-borrower wants out.
- Seek legal advice before signing: Even as disclosure rules tighten in 2025, the ultimate liability remains. Make sure you know exactly what you’re signing up for.
- Monitor your credit: Missed payments by one party will affect all signatories’ credit scores under joint and several liability. Stay alert to any defaults.
With joint and several liability, trust is key—but documentation and awareness are your best defence.
Conclusion
Jointly and severally liable is more than just legal jargon—it’s a powerful clause that can reshape your financial future. In 2025’s more vigilant lending landscape, understanding (and planning for) these obligations is essential. Don’t let a partner’s misstep become your lifelong debt: read the fine print, clarify your responsibilities, and make sure you’re protected before you sign.
