non-recourse

  

Definition

Situation where an obligation is entered into, or a transaction is conducted, under the stipulation that it is without recourse to the borrower, endorser, or seller. That is, he or she is not personally liable (beyond the specific collateral pledged, if any) to the lender, holder, or buyer for any default, loss, or defect. Presence or absence of recourse determines whether a sale is actually a sale for accounting purposes (hence non-taxable) or is a transfer of ownership (hence taxable). See also recourse, sans recourse and with recourse.

Use non-recourse in a sentence

  • The transaction was created to be non-recourse so the terms of the transaction are clear and finite and expected to end soon.

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  • You should always know everything that is in a non-recourse deal before you ever decide to sign on the bottom line.

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  • John was the primary key principal on a non-recourse loan. Since it was non recourse, he was not liable if the loan did not perform.

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