Non-Recourse Loan

A non-recourse loan limits lender recovery solely to collateral property with no personal liability for borrower, except for fraud, misrepresentation, or other bad-boy carve-outs.

Non-Recourse StructureProtection
Lender claimLimited to property collateral only
Borrower liabilityZero personal exposure (except carve-outs)
Default scenarioLender forecloses, takes property, cannot pursue borrower
Deficiency judgmentNot available to lender
Bad-boy carve-outsFraud, environmental, misappropriation trigger recourse
Cost premium50 to 100 basis points higher than recourse loans
Typical Carve-OutsGP Liability Triggered
Fraud or misrepresentationFull recourse
Unauthorized transfersFull recourse
Misappropriation of rentsFull recourse
Environmental violationsFull recourse if caused by borrower
Voluntary bankruptcyFull recourse
Filing mechanic's liensFull recourse


Related Terms

Limited Recourse LoanLender ProtectionBorrower LiabilityBad Boy Carve-Outs

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