Non-Recourse Loan
Learn about non-recourse loans in Canadian real estate — what they are, how they protect borrowers, and when they’re used.
August 08, 2025
What is a Non-Recourse Loan?
A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not personally liable for any deficiency.
Why Non-Recourse Loans Matter in Real Estate
In Canadian commercial real estate, non-recourse loans limit borrower liability and protect personal assets.
Key points:
- Commonly used for income-producing properties
- Lender’s recourse is limited to the collateral property
- May include 'carve-outs' for fraud or other specific events
Understanding non-recourse loans helps borrowers evaluate risk exposure.
Example of a Non-Recourse Loan in Action
The developer obtained a non-recourse loan, ensuring the lender could only claim the property if the loan defaulted.
Key Takeaways
- Limits lender’s remedies to the collateral property
- Protects borrower’s personal assets
- Often used for stabilized income properties
- May contain exceptions for bad acts by borrower
- Important consideration in financing negotiations
Related Terms
- Recourse Loan
- Mortgage Qualification
- Loan-to-Value Ratio (LTV)
- Debt Coverage Ratio (DCR)
- Capitalization Rate
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)
