How To Negotiate Nonrecourse Carveout Guarantees

Law360, New York (December 17, 2013, 11:24 PM EST) -- A nonrecourse carveout guarantee is a guarantee of certain acts or omissions of the borrower in connection with a secured real estate loan where the guarantor is not liable, or is only partially liable, for repayment of the principal and interest on the loan.

Traditionally, nonrecourse loans were thought of as not including any recourse against guarantors. However, as more loans were made to single-asset borrowers, lenders realized that if recourse was limited to the borrower’s real estate assets, events other than normal market conditions, such...
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