What is the liability of co-borrowers when one defaults on a promissory note and trust deed?

The principle of joint and several liability applies to co-borrowers on a promissory note and trust deed. This means that if one co-borrower defaults on the loan, the lender can seek repayment from either or both of the co-borrowers for the entire debt. Each co-borrower is individually responsible for the full amount owed, giving the lender the flexibility to pursue repayment from either party.

This arrangement emphasizes that while co-borrowers may have entered into the loan agreement together, the financial obligations do not divide equally among them in the eyes of the lender. Instead, the lender may choose to recover the full loan amount from one co-borrower, regardless of the other co-borrower's ability or willingness to pay. Therefore, should one co-borrower default, the lender does not have to pursue both parties or consider their individual contributions; they can take legal action against either party for the full balance owed.

The options that do not align with this principle are misleading; indicating that only the defaulting co-borrower is liable overlooks the lender’s right to claim full repayment from either party. Similarly, stating that each co-borrower is only liable for their percentage share misrepresents the nature of their obligations