personal liability

personal liability

The responsibility of a person to pay a debt or other obligation.If an individual signs a promissory note, that individual usually has full personal liability for the debt. An exception is the unusual situation of a nonrecourse individual loan,in which the lender agrees to look only to the collateral for recovery in the event of default.Some states protect consumers from liability for a first mortgage loan on a personal residence,and require that the lender must be satisfied with taking the home by foreclosure,but may not sue for a deficiency.If a corporation signs a promissory note, the individual shareholders will not have personal liability unless they signed a guarantee agreement or unless the lender is successful with an alternate legal theory such as “piercing the corporate veil.”

References in periodicals archive ?
1402(a)-2(h) provides that an individual is treated as a limited partner unless he (1) has personal liability for the debts of or claims against the partnership by reason of being a partner, (2) has authority under the law of jurisdiction in which the partnership is formed to contract on behalf of the partnership or (3) participates in the partnership's trade or business for more than 500 hours during the partnership's tax year.
Personal liability is increasingly troubling for CPAs in particular because of the trend that targets CPA firms as the deep pocket for investors and federal regulators.
The court concluded that the taxpayer retained all proprietary rights in the claim and simply used a portion of the award, on receipt, to discharge her personal liability owed to the attorneys.
Contrary to the limited-liability concept in corporation law, several state legislatures (including Indiana, Michigan, New York, Pennsylvania, Tennessee and Wisconsin) have enacted statutes imposing personal liability on shareholders for wages and salaries owed by a corporation.
It is unlikely, from a state law standpoint, that the general partner would be released from personal liability by the firm's creditors for the business's recourse debts.
This personal liability exists even if the company is a corporate entity.
gives rise to personal liability under 31 USC Section 3713(b).
the default and involvency of every party to the transaction), the financing corporation would call on the limited partners to make contributions to the extent of their personal liability on the Petunia-Venture note.

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