The Fallout From Cherryland - Will The Non-Recourse Carve-Out Guaranty Ever Be The Same Again?

06/12/2012

The issue is whether the insolvency of a borrower under a non-recourse loan can trigger recourse liability for itself and its “bad boy,” non-recourse carve-out guarantors.

Modern secured commercial real estate lending in the United States is generally done on a non-recourse basis, meaning that in the event of a default, the secured lender can enforce on the collateral only (with no personal recourse against the borrower). As a result, to discourage borrowers from acting to stymie secured lenders’ efforts to enforce on their collateral, secured lenders typically require a credit-worthy guarantor affiliated with the borrower to enter into non-recourse carve-out guaranties.

To read the full article, click on the PDF linked below.

Non-Recourse-Carve-Out.pdf

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