California Real Estate Practice Exam

Three general partners borrowed money and agreed to be liable for the repayment either individually or collectively. They signed the security instrument:

1. Jointly

2. Jointly and severally

3. Singly

4. Singularly

The correct answer is: Jointly

In this scenario, the correct choice is that the partners signed the security instrument "jointly and severally." This phrase means that each partner is liable for the entire obligation, as well as being collectively liable. In practical terms, if one partner fails to pay, the lender can pursue any of the partners individually for the full amount owed. This provides more security for the lender compared to a situation where the partners are only jointly liable, which would mean the lender can only seek repayment from all partners collectively. The other options do not fully capture the nature of their liability. For instance, if they signed solely "jointly," it would imply that they are collectively responsible, but not individually, which could limit the lender's options. "Singly" and "singularly" suggest individual arrangements that do not reflect the combined liability inherent in a partnership agreement. Therefore, "jointly and severally" accurately describes the legal arrangement and the extent of liability that the partners assumed when they signed the security instrument.