Non-Recourse Commercial Loans in Texas
Most commercial real estate loans in Texas are “full recourse” — meaning if the property fails and the sale doesn’t cover the debt, the lender can come after your personal assets (bank accounts, other properties, income) to recover the balance. Non-recourse loans limit the lender’s recovery to the property itself. Understanding when and how to access non-recourse financing is a key wealth-protection strategy for serious commercial real estate investors.
Recourse vs. Non-Recourse — The Difference
| Factor | Full Recourse | Non-Recourse |
|---|---|---|
| Personal liability | Yes — unlimited | No — property only |
| Default consequence | Foreclosure + deficiency judgment | Foreclosure only |
| Availability | All loan types | Primarily CMBS, life company, agency |
| Loan size | Any size | Usually $1M+ |
| Rate premium | None | Typically none — same pricing |
| Prepayment flexibility | Usually better | Often restrictive (defeasance, yield maintenance) |
What Loan Types Are Typically Non-Recourse?
- CMBS (Conduit) Loans — The most common source of non-recourse commercial financing. $1M+ loans on stabilized income-producing properties. Fixed rate, 5/10 year term. Significant prepayment restrictions.
- Agency Loans (Fannie/Freddie) — Non-recourse multifamily financing for 5+ unit apartment properties. Competitive rates and terms. $1M+ minimum.
- Life Company Loans — Insurance companies offer non-recourse financing on Class A commercial properties. Relationship-driven, conservative LTV, excellent rates.
Bad Boy Carve-Outs — The Exception
Even “non-recourse” loans become personally recourse in certain situations called “bad boy carve-outs.” Common bad boy triggers include:
- Intentional fraud or misrepresentation to the lender
- Voluntary bankruptcy filing
- Environmental contamination you caused
- Willful waste or destruction of the property
- Transferring the property without lender consent
These carve-outs are standard — they prevent borrowers from intentionally damaging a lender’s collateral under the protection of non-recourse. As long as you operate the property honestly, carve-outs don’t matter in practice.
When to Use Non-Recourse Financing
- When you have significant personal assets you want to protect
- When you’re buying with partners and don’t want joint personal liability
- When the property is large enough to warrant CMBS or agency financing
- When you’re building a commercial portfolio and want to isolate risk at the property level
Small Deal Non-Recourse (Under $1M)?
True non-recourse for deals under $1M is rare. Some hard money and stated income lenders offer “limited recourse” structures — personal guarantee limited to a specific amount or time period. Call us to discuss whether your deal has non-recourse options.
Call (936) 609-4398 or apply online.