Re: “NON-RECOURSE” . . . - Posted by Brad Crouch
Posted by Brad Crouch on February 21, 2000 at 03:23:12:
I’m not a lawyer and I certainly make room for the possibility that I’m interpreting this clause incorrectly, but the thing says, “. . . non-recourse to the landlord/seller . . .”. Doesn’t this mean that the landlord/seller has no recourse? Doesn’t this put him in a tighter “box”?
And it also says, “. . . granted to the favor of the tenant/buyer . . .”. Doesn’t this mean that the landlord cannot persue any damages from the tenant/buyer (defaulted payments, trashed property)?
Here it is again. Maybe you could give me an idea where I am going wrong here.
> (B) A Second Mortgage, covering the subject property,
> for the face amount of $20,000, NON-RECOURSE to the
> Landlord/Seller, for the term hereof, granted to the
> favor of the Tenant/Buyer or its designee, in a form
> and manner suitable for public recording; . . .
If a landlord/seller gives a performance mortgage to a tenant/buyer, my understanding is that the tenant/buyer now has security on an agreement with the landlord/seller (whatever type of agreement). And that if the landlord/seller causes a lien to be attached or tries to further encumber the property, those liens/encumberances will be junior to the tenant/buyers recorded “performance” mortgage. So the position of the tenant buyer is pretty good, assuming s/he has access to funds to either start a foreclosure proceeding if necessary, or pay off the senior encumberances in the event they are the ones to start a foreclosure action.
But what are the benefits of the landlord/seller? I can think of none beside the fact that it might be the only way to get a deal done and the property “eventually” sold (maybe . . .).
It seems to me that a landlord seller would have to be the MOST motivated of motivated sellers to agree to a performance mortgage.
But other than that, I can’t see any benefits for the landlord/seller to do this. Can you shed some light?