On a population-adjusted basis, the federal housing agency said that starts are at the lowest level since 1996 — putting them a hair shy of a 30-year low. Regarding this, Lei says that a subtrade of Syncra ran into financial trouble in July 2024 and Keltic advanced $200,000 to the subtrade through Syncra. The amount was supposed to be paid back by March 2025, but Keltic was still owed $120,000 as of July 2025. “Under these two stringent conditions, Shape would only agree to fund the project again but only to a maximum amount of $65mil,” said Lei. “This would leave the project incomplete if Shape commits to fund only up to $65mil as at that time both parties know that Keltic would need another $30mil in order to complete the building.” Metro Vancouver has seen numerous insolvencies the past few years, but most of them have been residential projects and many of them have yet to reach the construction phase.

Although it was not announced until late-January, Lei tells STOREYS that Masimo backed out of the agreement on December 31, 2024. However, Masimo and SHAPE reached an agreement that would see Masimo provide $3.6 million in compensation as a settlement, on top of the $21 million deposit paid in 2022 that they were forfeiting. Echoing Moffat, Foch says people just want to get to the bottom of what happened to the housing market and what could make it turn around. “I think it’s created fear. And so people do research and want to get educated in trying to quell that fear a little bit,” he says.

Conversely, a start-up with no proven track record might face hurdles, regardless of how innovative their project might seem non recourse loan definition on paper. Lenders should also have clear exit strategies in case the project encounters difficulties. It’s essential to consider what options are available if the borrower defaults.

Recourse loans allow lenders to go after additional assets, deposit accounts, and sources of income if the borrower defaults, unlike non-recourse loans. This means that while recourse loans are less risky for lenders, they are riskier for borrowers because they have greater liability. In short, while non-recourse loans provide some level of protection to borrowers, they do not completely absolve them of potential legal action in the event of default.

• The first and least common is balance sheet lending, where the loan stays in-house.
• While non recourse loans do not make sense for every borrower, the extra protections can be attractive if you’re concerned about worst-case scenarios when taking on debt.
• Although it was not announced until late-January, Lei tells STOREYS that Masimo backed out of the agreement on December 31, 2024.
• Non-recourse commercial mortgage loans tend to have higher interest rates than their recourse counterparts, and are also generally only available to borrowers that have a very strong financial profile.

Security Requirements

The lender on the project is SHAPE Capital Corp, which is the real estate lending arm of SHAPE Properties, the developer behind The Amazing Brentwood and The City of Lougheed master-planned communities in Burnaby. On August 25, SHAPE filed a receivership application in the Supreme Court of British Columbia looking to appoint a Receiver over the Nexus project, claiming they were owed approximately $62 million, as first reported by STOREYS on September 2. – Project finance loans are for specific projects such as building a new power plant or a highway. The loan repayment is linked to the project’s success, and the lender usually has a stake in the project. If in case, the borrower fails to pay back the amount, the lender can take possession of the security. However, they cannot go after the borrower’s assets to recover any additional amount owed.

What’s the Current Status of Recourse and Non-Recourse Financing?

While non-recourse financing can provide a level of protection for lenders, it is not without its own set of risks and considerations. In this section, we’ll delve into some of the key factors that lenders should be mindful of when considering non-recourse financing. While non recourse lending is still relatively rare compared to standard recourse loans, this unique type of financing offers distinct benefits for certain borrowers who qualify.

Why Commercial Real Estate is a Great Investment Asset

Non-recourse financing can take different forms depending on the nature of the project or venture. Some common examples include non-recourse mortgages, where the property being purchased serves as collateral, and non-recourse project financing, where the project’s future cash flows or assets secure the loan. Recourse loans and non-recourse loans are both fairly common in the commercial real estate world. If you’re in the business, you need to have a good idea of what each one is and how it works. Here’s a quick rundown of these two types of commercial real estate loans. While non-recourse loans limit the lender’s recourse to the pledged real estate collateral in the event of default, it does not mean that the borrower is completely off the hook.

Nonrecourse liabilities: Overview, definition, and example

The longer-term loan allows a property owner to maximize their cash flow while reducing their risk profile. Non-recourse loans are typically secured by collateral such as real estate. Unlike recourse loans, if a borrower defaults, the lender can’t hold the individual personally liable for the unpaid debts.

It’s important for businesses and individuals to understand the implications of nonrecourse liabilities, as they provide clear boundaries on liability and risk. A non-recourse loan is a type of loan where the borrower is not personally liable if they default on their loan. Instead, the lender may only repossess and sell the property in order to recoup their losses.

• The feds have targeted 500,000 new housing units a year and Ontario has set a target of 1.5 homes between 2023 and 2031.
• Non-recourse financing can take different forms depending on the nature of the project or venture.
• When it comes to borrowing money, it’s essential to know the terms of the loan agreement.
• Lei says that the $3.6 million went to SHAPE, which originally committed to lending $85 million towards Nexus, but immediately slashed the commitment down to $65 million after the settlement with Masimo.
• “Under these two stringent conditions, Shape would only agree to fund the project again but only to a maximum amount of $65mil,” said Lei.

If the borrower cannot pay the loan, the lender can stop the pledge/bond, but they cannot go after the borrower’s assets to recover any additional amount owed. When it comes to borrowing money, it’s essential to know the terms of the loan agreement. One key distinction is that a borrower should know the contrast of a “recourse vs nonrecourse loan”. These terms show the level of consequences that a borrower has to pay in case of not paying the loan in time. Whether it’s a real estate development or an infrastructure project, the collateral should be robust and have intrinsic value.

Commercial Real Estate Software for QuickBooks Users

Just be aware you’ll pay for them with higher rates and a more selective application process. In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they’ve taken collateral (home, credit cards). Lenders have the right to garnish wages or levy accounts in order to collect what is owed. Nonrecourse loans typically have lower loan limits since the lender has less protection in the event of failure of payments. Recourse loans usually have lower interest rates since the lender has more protection in default. Nonrecourse loans may have higher interest rates because of the higher risk to the lender.

Non-recourse financing is a type of loan arrangement where the lender’s sole recourse for repayment is the collateral provided by the borrower. In simpler terms, if the borrower defaults on the loan, the lender can only lay claim to the specified collateral and cannot pursue any further legal action against the borrower’s other assets. This arrangement provides borrowers with a level of protection and limits their personal liability.