LAYING DOWN THE LAW
Christopher J. Charles, Esq. and David F. Kotter
Are Nonrecourse Loans Feasible?
At first blush, asking a lender for nonrecourse financing seems like someone asking for your first-born child – weird and awkward. But in today’s economic and real estate climate, under the right conditions, nonrecourse loans can make sense.
Practically speaking, most commercial loans are essentially “full recourse,” which means that because many lenders insist on personal guaranties, the guarantors are personally liable for the loan balance – meaning if the borrower defaults, the lender can sue the guarantor (and the borrower in some cases) for the unpaid balance, plus interest, and attorneys’ fees. And the lender can pursue collection against the guarantor’s non-exempt assets, which typically includes bank accounts, wages, stocks, bonds, automobiles, and of course, real estate. Read More