If a borrower takes out non-recourse commercial financing, they are not personally liable if they default on their loan. Instead, the lender may only repossess and sell the property in order to recoup their losses. Non-recourse loans are the opposite of recourse loans, which allow a lender to seize and sell a borrower’s personal property.
Non-recourse commercial real estate loans have exceptions within the loan documents that essentially transfer personal liability to the Sponsor for certain "bad boy" behaviors. Or more specifically, there are personal guarantees required with non-recourse commercial mortgage loans.
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I am new to the forum, but I am a commercial mortgage broker. I have spent more than 10 years in the non-recourse portion of the commercial real estate industry. typically, non-recourse loans start at $1 million and are available to anyone, even first timers.
The current lending landscape provides additional opportunities for real estate investors. unsecured debt, and non-recourse mortgage and CLO financing. 97% of outstanding debt was comprised of.
Other types of venture capital and large-scale commercial real estate projects may additionally be considered on a case-by-case basis. Executive summaries. The best way for a commercial mortgage broker to secure a nonrecourse 100 percent LTC deal for a client is to focus on the client’s executive summary.
"Bad boy" carve-outs are used in commercial real estate non-recourse loans. Essentially, these carve-outs give the borrower the ability to not be personally "on the hook" in the event of a default on the terms of the note-thereby being non-recourse-but leave investors protected if the borrower has conducted themselves as, well, a "bad boy."
In the event of a default on a non-recourse commercial real estate loan, lenders can only recoup on the pledged loan collateral (the real estate itself). If the foreclosure sale of that real estate falls short of the unpaid loan principal, the borrower’s personal assets and liability are protected by that non-recourse loan term.
Today, a loan commitment for a typical nonrecourse commercial real estate loan often includes at least two types of carve-out guarantees: one for borrower acts that trigger full recourse liability.