Personal Liability

Obligation that exposes (or potentially exposes) one's personal assets. Corporate Stockholders generally avoid personal liability since they can lose only their investment in the corporation. The same holds true for Limited Partners. However, General Partners incur personal liability.

An individual's responsibility for a debt. Most mortgage loans on real estate are recourse (i.e., the lender can look to the property and the borrower for repayment). Contrast Nonrecourse, Exculpatory Clause.
Example: Paul, a person and not a corporation, borrowed $100,000 against land, thereby incurring personal liability for the debt (except when an Exculpatory Clause is included in the mortgage loan) in nearly all states. Paul failed to make payments, so the lender Foreclosed and sold the property for $70,000. Paul still owes $30,000 plus the lender's legal expenses as a personal liability.