Joint Liability – Everything You Need to Know

Joint liability is an important concept when it comes to financial obligations. It involves the delegation of responsibility for paying debts in a situation where multiple parties are sharing a service such as a utility bill or a tenancy agreement. It can have severe consequences when people enter into agreements without full knowledge of how the law works.

Below you will find a clear description of what joint liability is, situations where it might be applicable, the effect it could have on your credit history, and what steps and other advice might be useful going forward. When it comes to taking charge of your finances, knowledge of the law and of your own responsibilities can be key to a successful future.

What is Joint Liability?

Joint liability means that when several parties enter into a financial agreement, any one of those parties can be held accountable for the entire obligation. In practice, this could mean one individual is taken to court to be sued for the full amount of a debt that is owed by several people. This concept affects both individuals and businesses, so it may apply to a business partner, a husband and wife, or a housemate.

If a debt is successfully recovered from one party, then a potential course of action for them would be to try and recoup the money from the other parties through legal action.

The term ‘several liability’ is related to joint liability but refers to the concept of each party only being responsible for specific obligations and not assuming any responsibility on behalf of the others.

When Might Joint Liability Be Applicable?

When sharing accommodation with others it may often be the case that you sign a joint tenancy agreement. In this case, each individual is equally responsible for paying the total rent and if one or more was unable to pay, any of you could be liable for the whole amount.

Similarly, if you live in shared accommodation there may be joint liability when it comes to paying council tax. The council can pursue any one of the parties listed on the council tax bill for payment, in the event that the bill is not paid. This will be different if you live in a House in Multiple Occupation (HMO) where the landlord is responsible for paying the council tax bill, rather than the tenants.

When it comes to utility bills, things are more complex, often bills like gas, electric or telephone will be in the name of a particular individual and that person will be held responsible for the payment. In this case, if it is clear that the bill was being paid on behalf of others, they may be held responsible, otherwise it will fall upon the individual named on the bill to pursue the money.

If your partner is made bankrupt they will no longer be liable for any joint debts that the two of you held, however, you will still be liable for the full amount of these debts. You will keep any assets that you own individually, but may face losing joint assets like your house.

One aspect of joint liability that may be relevant to students or other young people renting a house is that fact that guarantors – e.g. a parent or other relative who ‘guarantees’ the tenancy, may be liable for the rent of all parties. It is important to review the tenancy agreement properly as parents may assume they are only liable for the rent payments of their daughter or son.

How Might Joint Liability Affect My Credit Score?

Debts or county court judgements arising from joint liability could be reflected in your credit history and even if you were managing your finances competently and paying what you owe, these debts or judgements may still end up negatively impacting your credit score. The most important thing to do before taking on any financial obligations in partnership with other people, whether that is in a living situation, in a relationship, or in a business, is to clearly establish the potential liability for yourself.

It may be the case that taking certain steps early on can help prevent difficulties later, helping you and the other parties involved to reduce risk and avoid problems in the relationship.

Further Steps and Advice

If you are considering renting shared accommodation, or if you already do and are having problems, it would be worth reading this section from the Citizen’s Advice Bureau on what your options are.

If you are concerned about how financial choices may have affected your credit report, you can access your Equifax Credit Report & Score free for 30 days and then for £14.95 a month afterwards.