When multiple borrowers sign a note, how is the obligation to pay typically structured?

When multiple borrowers sign a note, their obligation to pay is typically structured as "jointly and severally." This means that each borrower is individually responsible for the entire debt, as well as collectively responsible with the other borrowers.

This structure has significant implications for lenders and borrowers alike. If one borrower defaults, the lender can seek repayment from any or all of the borrowers without needing to pursue each one separately. This provides greater security for the lender, as they have multiple avenues to recoup the owed amount. Additionally, the borrowers have the responsibility to settle the entire obligation, which could lead to one borrower paying more than their proportional share if another borrower defaults.

Understanding this process is crucial for anyone involved in real estate transactions or financing, as it highlights the level of liability each borrower assumes when entering into a financial agreement together.