Bad Boy Carveouts
See Non-Recourse Carve Outs.
Frequently Asked Questions about Bad Boy Carveouts in Commercial Real Estate
What are Bad Boy Carveouts?
Bad Boy Carveouts, also known as Non-Recourse Carve Outs, are exceptions to non-recourse loan agreements. They hold borrowers personally liable if they engage in certain “bad acts,” such as fraud, misrepresentation, or bankruptcy filing without lender consent.
Where can I find more information about Bad Boy Carveouts?
For more details, see the glossary entries for “Non-Recourse Carve Outs,” “Exenciones sin recurso,” and “Garantía de excepciones sin recurso.”
Are Bad Boy Carveouts a standard part of non-recourse loans?
Yes, they are commonly included in non-recourse loans to protect the lender from borrower misconduct that could jeopardize the collateral or loan terms.
Do Bad Boy Carveouts affect the borrower’s liability?
Yes. While non-recourse loans generally limit a borrower’s liability to the pledged collateral, Bad Boy Carveouts create situations where the borrower may become personally liable for losses due to specific actions.
Are Bad Boy Carveouts enforceable?
Yes, they are enforceable and courts have generally upheld these provisions when borrowers violate the defined carveout conditions.
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