The long and short of real estate investing is buy low, sell high. Or conversely, whatever goes up must come down, or does it? In volatile realty markets there are...
Non Recourse Commercial Loans Litigation Nation
Can a Non Recourse Commercial Loan Protect the Individual?
Is the term “ full non-recourse” a iron clad guarantee of no personal litigation or “ recourse”. The real estate laws from state to state will have definitive regulations as to the status of non recourse, buy you need to talk to an experienced property attorney about your specific “bad boy carve-out” questions.
Add to that the “moving target” of real estate disclosures, personal liability and the fact that almost anyone can sue another individual in the USA and again, you need to talk to an attorney.
Getting a non recourse commercial real estate loan can be advisable as it does offer a layer of protection between you and your corporation, LLC or partnership entity. The main point is to not fall back on your laurels once you have a non-recourse commercial loan set in place. There may be avenues in which the lender can still proceed with a lawsuit. Much of this surrounds the filing of fraudulent or questionable documentation.
Getting things like the real estate disclosure information right is a basic tenet of “smart real estate investing”. If you sell or are sold a property and the real estate disclosure documents reveal a discrepancy in the information you may be personally liable.
What this means in some cases is that even though a seller is unaware of the disclosure discrepancies, a lawsuit beyond the scope of a limited liability company can be breached.
One such lawsuit involved a California luxury real estate property where the new buyer found issues in the NHD report. In California the natural hazard disclosure statement is a mandated code for every commercial or residential sale in the state. If an “expanded comprehensive report” reveals further property issues a court can find the individuals of an LLC in breech of contract.
Full non recourse commercial loans might not have 100% of the protection the investor wants, But in this age of the “litigation nation” it is one of the best options to cover yourself around.
We provide non recourse commercial loans for investment deed trusts, investment companies, groups and or private individuals. Contact us today for further details in all of our full non recourse bridge lending programs.