News & Analysis as of September 23, 2024

Foreclosure › Non-Recourse Loans

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Foreclosure is a legal process whereby a lender seeks to force the sale of a mortgaged property in order to recover the balance of a delinquent loan. Recently, the foreclosure process has been the subject of greater legislative and judicial scrutiny after systemic abuses were uncovered during the widespread foreclosure crisis resulting from the Great Recession. less -

Scrivener’s Error in Guaranty Reformed Outside of Statute of Limitations and Held Enforceable

Morrison & Foerster LLP on 3/29/2024

In an appeal heard by the Appellate Division of the Supreme Court in the First Judicial Department of New York, the Court recently ruled that a court may reform a guaranty after the statute of limitations for a reformation of...more

Three Major Differences Between Recourse and Non-Recourse Loans

Mandelbaum Barrett PC on 11/10/2023

Borrower / Guarantor Liability Recourse – The borrower (or guarantor) is personally liable for the full amount of the loan, including any debt remaining after the collateral is foreclosed upon and sold. To satisfy the...more

Distressed Real Estate During the COVID-19 Pandemic: Deeds in Lieu of Foreclosure Involving Commercial Real Estate

Pillsbury Winthrop Shaw Pittman LLP on 8/13/2020

In a deed in lieu of foreclosure, a defaulting borrower agrees to convey the mortgaged property to the mortgage lender. But handing over the keys can raise a number of potential pitfalls. Below, we discuss some of these...more

Guarantor Provisions to Negotiate in Non-Recourse Financing

Woods Rogers on 11/12/2019

Many commercial real estate loans are “non-recourse,” which means in general terms that foreclosing on the real estate securing the loan is the lender’s sole remedy for a borrower’s failure to repay the loan. The lender is...more

Section 1111(b) Election Not Available When Collateral Is Sold Post Petition

Dechert LLP on 5/23/2017

The facts in Salamon are straightforward. Salamon (“Buyer”) purchased real property from Behrend (“Seller”) that was already subject to two liens (the “Preexisting Debt”). Instead of paying cash at closing, the Buyer executed...more

IRS Ruling Addresses LLC Eligibility for Cancellation of Debt Exception

Goulston & Storrs PC on 6/22/2015

In new CCA 201525010, the IRS addressed the issue of whether a general “exculpatory” debt of an LLC is recourse or non-recourse for purposes of classifying debt-relief as potential cancellation of debt (COD) income. Recourse...more

The Sixth Circuit, Relying upon Michigan’s Nonrecourse Mortgage Loan Act, Rejects the Enforceability of an Insolvency Covenant

Ballard Spahr LLP on 2/23/2015

Notwithstanding Michigan’s 2012 Nonrecourse Mortgage Loan Act (NMLA), which provides that solvency covenants in nonrecourse loans unenforceable, in Borman, LLC v. 18718 Borman, LLC, a third-party purchaser of a foreclosed...more

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