Non Recourse Commercial Loans
Non recourse commercial loans are typically structured with a single-purpose owning entity that holds title to the property in order to create an asset free of other liabilities and complications. Despite what you may think, non-recourse loans don’t have rates higher than commercial loans personally guaranteed by the owners, they’re just structured differently. Very often, non-recourse commercial loans have superior rates and terms compared to recourse loans offered by local banks.
Clopton Capital is a nationwide provider of non recourse commercial loans. We offer customized non-recourse commercial loan solutions for all types of commercial real estate transaction types. These loans are not personally guaranteed by the property owner, which eliminates personal repayment risk for commercial property investors.
Contact us to discuss our non recourse commercial loans
To understand more about this type of loan, contact one of our commercial mortgage lenders by calling 866-647-1650 or using our Contact Us form.
Clopton Capital is a nationwide commercial real estate capital company and mortgage banking firm. We specialize in commercial mortgages, commercial bridge loans, and real estate private equity for transaction sizes ranges from $1 to $40 million. The commercial mortgage lenders at our company bring long lasting relationships with capital providers that give our clients deep insight and superior execution.
Difference Between Recourse and Non Recourse Commercial Loans
The most basic difference between a recourse and a non recourse commercial loan, it that in a non recourse loan, the borrower does not sign a personal guarantee in addition to signing a property as collateral. In any loan, in the event of a default, any lender has the protection of taking back any asset that was pledged as collateral of the loan. For instance, if a commercial mortgage is secured against an apartment building, then in the event of default the commercial mortgage lender would foreclose on the property and take it back. However, the distinction happens when the lender goes to sell that property in order to recoup their loan principal. Let’s say a lender is still owed $2 million at the time of foreclosure and is able to sell the property for only $1.5 million, a $500k deficit. In a recourse loan, the lender would be then able to go after the borrower who personally guaranteed the mortgage for the difference, in a non recourse loan they would not. In any non-recourse loan, there are still instances where a personal guarantee could be triggered, which are called recourse carve-outs or bad-boy carve outs. These are typically instances of fraud, theft, misrepresentation, etc.