In a nonrecourse loan, a lender fundamentally agrees to limit its recourse to specified assets rather than to the general assets of the borrower or the guarantors. Nonrecourse carve-outs are contractually created exceptions to the general nonrecourse nature of the financing. They allow the lender to pursue claims against a borrower’s or guarantor’s general assets rather than strictly the collateral for the loan.

These carve-outs need to be structured into the contractual terms of the loan documents or the guaranty, and will vary somewhat depending on the structure of the transaction and the bargaining leverage of the parties.