Ask the Advisor – How should I handle nonrecourse loan carveouts?
Abstract: In this issue, “Ask the Advisor” addresses nonrecourse loans, in which the lender agrees that the borrower won’t be held personally liable on the loan. Theoretically, that means the lender’s only “recourse” in the case of default lies in the collateral (generally real estate). But the lender may include specific carveouts — or exceptions — that will nullify that restriction. Nevertheless, it’s possible for borrowers to minimize personal liability for violations through savvy negotiating.