What does non-recourse mean in real estate?
A non-recourse loan is a loan where the borrower(s) or guarantor(s) are NOT personally liable for repaying any outstanding balance on the loan. Non-recourse loans are typically found on longer term permanent commercial real estate loans (HUD, Fannie, Freddie, CMBS, Life Co) placed on stabilized and performing assets.
What does non-recourse mean in a contract?
A phrase meaning that one party has no legal claim against another party. It is often used in two contexts: 1. In litigation, someone without recourse against another party cannot sue that party, or at least cannot obtain adequate relief even if a lawsuit moves forward.
What does recourse mean in real estate?
A recourse is a legal agreement that gives the lender the right to pledged collateral if the borrower is unable to satisfy the debt obligation. Recourse refers to the lender’s legal right to collect.
What is a non-recourse basis?
Non-recourse finance is a type of commercial lending that entitles the lender to repayment only from the profits of the project the loan is funding and not from any other assets of the borrower.
What is a non-recourse sale?
A non-recourse sale is a transaction between a buyer and a seller where the buyer accepts liability resulting from a defect in the asset sold. The term is generally used to describe the terms of a loan agreement, but it can also refer to a lender’s sale of bad debt to a third party, such as a debt collector.
What does limited recourse mean?
Key Takeaways Limited recourse debt is debt upon which a creditor can claim certain but not all assets of the borrower if the borrower defaults. Full recourse debt allows creditors to claim any assets of the borrower to fully cover the unpaid portion of a loan.
What does no recourse to the seller mean?
Sales without recourse means that the buyer accepts the risk associated with purchasing an item. The buyer has no recourse against the seller if the asset purchased does not work as expected.
What is a non-recourse guarantor?
Under non-recourse loans, the guarantor is not generally responsible for losses the lender incurs, unless they commit certain bad acts; such as fraud, waste, damage or destruction, misapplication, misrepresentation, bankruptcy, or environmental contamination.
What are non-recourse and limited recourse liabilities in project financing?
After collateral is collected, lenders of recourse loans may go after a borrower’s other assets if they have not recouped all of their money. With a non-recourse loan, lenders can collect the collateral but may not go after the borrower’s other assets.
What is the difference between recourse and non recourse?
Non-recourse means that the lender cannot take anything else because it is not related to the loan. A recourse loan is a type of a commercial loan where a lender has a claim on assets that are not tied to the property being mortgaged. These assets can be personal, business or real estate assets.
What is a non recourse commercial real estate loan?
Other types of non recourse commercial real estate loans are partially recourse, meaning they contain provisions allowing lenders to make claims against borrowers outside of the collateral, if say for example a payment is missed.
What is non-recourse finance?
Non-Recourse Finance. What is ‘Non-Recourse Finance’. Non-recourse finance is a loan where the lender is only entitled to repayment from the profits of the project the loan is funding, not from other assets of the borrower.
What happens if a debt is non recourse?
If the debt is non-recourse, the lender may liquidate the collateral but may not attempt to collect the deficiency balance. With non-recourse debt, the creditor’s only protection against borrower default is the ability to seize the collateral and liquidate it to cover the debt owed.