When does Non-Recourse become Full-Recourse?

It is unfortunately, a fact of business.  There's always somebody's business out there willing to take your market
share and stop your cash flow cow in it tracks!

This time the economic shift wasn't based on competition, it wasn't a better concept or sales pitch.  It was an
equal opportunity cloud that burst it's dollar absorption rain thruout the world.  There is nowhere to hide.


Many businesses are facing the realization that their products and services are needed.  But, sadly not as
needed as int he past.  

Many businesses purchased Real Estate as a way to lower their overall corporate tax liabilities.  Now in
retrospect the price of the monthly mortgage is an expense they can't refinance and sadly can't continue to pay.

So where does a businessman go next?


Strategic Default?  This is one method that needs to be discussed in further detail.  

When this method is chosen, the business no longer works for it's self.  Benefits are now shared by the lender
and the business.  Owner's must in effect emerge from any agreements made as good or better in their
operations.  During this post default period, owners are well advised to check their mortgage documents
carefully.

Borrowers can  trigger recourse and lenders do have the abilities to trigger full recourse of the loan including
the extent of it's losses.

Acts include allowing waste of the property, negligence, criminal acts, transfer of business interests, fraud and
misappropriation of rents. Filing for Bankruptcy or breach of provisions can also trigger activity.  Failure to apply
insurance proceeds to restore or repair property, Misuse of escrows or deposits, failure to maintain grounds or
perform to lease provisions, distributions to investors after default from cash accounts will also need to be
approved. Failure to obey law.  Failure to notify the lender of changes/concessions to leases because of rent
restructuring or rent relief made by the business.

bottomline, read your loan documents carefully.  Ask questions, get the answers?  Profect your business from
cash breaking issurres.
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                              The 1st Commercial Funding Team
1st Commercial Funding