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The Vulnerability of Non-Recourse Loans and Guarantees  


Author:  Mark R.  Owens.


Source: Volume 26, Number 01, September/October 2012 , pp.53-60(8)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

The rapid rate of commercial real estate defaults and foreclosures has resulted in increased enforcement litigation, which is leading to close review and scrutiny of complex commercial mortgage-backed security loan documents and various provisions. This article focuses on “bad boy” or “full recourse” provisions. Such provisions, if triggered, result in the loan most likely becoming full recourse as to the borrower and guarantors enabling the lender to collect a deficiency claim and/or damages after the real estate and personal property is sold.

Keywords: commercial mortgage-backed securities; non-recourse loan; non-recourse borrower; non-recourse guarantor; bad boy clause; full recourse clause; 51382 Gratiot Avenue Holdings, LLC v. Chesterfield Development Company, LLC; Wells Fargo Gank, NA v. Cherry

Affiliations:  1: Barnes & Thornburg LLP.

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