WHAT IS THE DIFFERENCE BETWEEN RECOURSE DEBT AND NON-RECOURSE DEBT IN COMMERCIAL REAL ESTATE?
Recourse debt can be broken down into two other debts. The first is a full recourse debt, which allows the lender to take whichever assets the lender claims, as long as it falls within the range of the debt. The second is a limited recourse debt, where only specific assets can be claimed.
Unlike recourse debt, with non-recourse loans the lender is only allowed to collect the collateral but has no right to go after the borrower’s other personal assets.
Although a recourse debt is more beneficial than a non-recourse debt for a lender, only those individuals and businesses with a good standing credit history have the opportunity to take advantage of this loan.