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Simple English definitions for legal terms

nonrecourse

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A quick definition of nonrecourse:

Nonrecourse: Nonrecourse is a type of debt where the lender can only take the collateral to pay back the loan, and not the borrower's personal assets. This means that if the collateral is not enough to pay back the loan, the lender cannot ask the borrower to pay the difference. To know if a loan is recourse or nonrecourse, we look at the language in the loan agreement. Sometimes it doesn't matter if the loan is recourse or nonrecourse for tax purposes.

A more thorough explanation:

Definition: Nonrecourse is a type of debt where the lender can only use the collateral to pay off the loan, and cannot go after the borrower's personal assets. This is different from a recourse loan, where the lender can go after the borrower's personal assets if the collateral is not enough to pay off the loan.

For example, if someone takes out a nonrecourse loan to buy a car, and they can't make the payments, the lender can only take the car to pay off the loan. They can't go after the borrower's bank account or other assets.

To determine whether a loan is recourse or nonrecourse, courts will look at the language of the loan agreement. If the agreement says that the lender can go after the borrower's personal assets, it's a recourse loan. If it says that the lender can only use the collateral, it's a nonrecourse loan.

It's important to note that whether a loan is recourse or nonrecourse can affect how it's treated for tax purposes. For example, if someone sells a property and the buyer assumes their nonrecourse mortgage, they may still have to pay taxes on the sale. But if the mortgage is a recourse loan, they may not have to pay taxes on the sale.

Example: John takes out a nonrecourse loan to buy a house. He can't make the payments, and the lender forecloses on the house. The lender can only sell the house to pay off the loan. They can't go after John's bank account or other assets.

Example: Sarah takes out a recourse loan to buy a car. She can't make the payments, and the lender repossesses the car. The car is sold, but it doesn't cover the full amount of the loan. The lender can go after Sarah's bank account or other assets to get the rest of the money.

Explanation: These examples illustrate the difference between a nonrecourse loan and a recourse loan. In the first example, the lender can only use the collateral (the house) to pay off the loan. In the second example, the lender can go after the borrower's personal assets if the collateral (the car) is not enough to pay off the loan.

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Dkk
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SEO is big money
2016 pushed the conservative party into populism irreversibly
Dkk
19:43
Maybe, but if this is populism, then every election is populist.
19:43
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Dkk
19:43
Indeed!
19:48
wasp, i think people are hopeful for a gov who at least attempts to care about the common man
MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
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