I have been told that linking to a penalised site can penalise your site aswell (i have also seen the evidence of this).

My question is: If one of my subpages links to the site, is it that sub page that gets penalised or is it the whole site?

BTW i do not link to any penalised sites

How do you know that none of sites you link to are penalized? Do you check them every day? How do you do it?

As about your question: your subpage gets penalized and all pages on your site that this page links to gets penalized also. Then there goes chain reaction and all your site falls off.

I only link to site with PR and my reciprocal links checker also tells me what pr the site linking to me is. But no, you are right, i dont check it everyday, more like once a week so there is the chance one could slip in there for a few days.

However, i am thinking of just trading with any and every site as it looks like some of my competitors are doing this with some good results so it would be helpful to know if linking to a penalised site effects my subpage or my whole site?

Thanks

It will affect the whole site but it is an easy one to recover from. Dropping the bad links usually sees a recovery.
However this is only for the minor trangression of the odd bad link here and there. There is the case of one SEO company and a certain software program who's sites have been removed from Google. There are untold links to these by many sites, they are unlikely to be seriously affected if at all by those link. Most sites that get seriously affected by dubious outbound links know exactly what they did to earn the penalty, as some investigation usually shows. Getting penalised for being part of a link farm is a different situation entirely.

If what you are telling is true then forums like wt and sitepoint will always remain penalized beacuase anyone can put a link on them without much of a problem.

That's the point I was attempting to make.
The odd link to bad sites (by Google standards) isn't going to be much of a problem, if at all.
It maybe the cumulative effects of "bad" links that cause the appearance of a penalty. So the more you have the more you suffer.
Of course this may not be the case at all, but the Google guidelines do say

from Google guidelines
Don't participate in link schemes designed to increase your site's ranking or PageRank. In particular, avoid links to web spammers or "bad neighborhoods" on the web as your own ranking may be affected adversely by those links.

so it may be safe to assume that there is a distinct possibility.

Originally Posted by shabbirbhimani

If what you are telling is true then forums like wt and sitepoint will always remain penalized beacuase anyone can put a link on them without much of a problem.

Wrong. You cannot control sites who link TO YOU that's why incoming bad links don't count. You will only get penalized if YOUR site links to bad site, that's what we are talking about here.

Originally Posted by mtishetsky

Wrong. You cannot control sites who link TO YOU that's why incoming bad links don't count. You will only get penalized if YOUR site links to bad site, that's what we are talking about here.

I believe shabbirbhimani meant that by allowing people to link to sites in forums such as this one, the actual forum where the link is placed will be affected, not the site being linked to.

I can see that Google will allow the odd few bad links but it wouldn't be hard to set up a few accounts and leave hundreds of these links on a forum. Has anyone ever seen evidence of forum owners using this tactic to penalise their competition? It could go some way to prove the theory.

This could also explain google's use of the rel="nofollow" and the fact that Google recommends that blog owners add it to the forum code so all links have it automatically added.