Recourse vs. Non-Recourse

A recourse loan lets the lender pursue the borrower — usually via a personal guaranty from the sponsors — for any shortfall left after foreclosing on the property. A non-recourse loan limits the lender’s remedy to the collateral itself: if the property sells for less than the debt, the loss is the lender’s. Most bank CRE loans are full or partial recourse; life companies, agencies, and CMBS lenders are the traditional sources of non-recourse debt.

For borrowers, recourse is often the term worth trading rate for. A 25-basis-point rate saving means little if a market downturn puts your house and other holdings behind the guaranty. Middle grounds are common: "burn-off" guaranties that fall away once the property hits a DSCR target, or partial recourse capped at 25–50% of the loan. Nearly all "non-recourse" loans still carry bad-boy carve-outs — fraud, misapplication of rents, unauthorized transfers — that spring full personal liability, so the carve-out list deserves as much scrutiny as the headline.

Recourse posture is one of the highest-signal terms we capture in lender conversations, and it appears in the observed-terms module of the lenders that have quoted it.