Non Recourse Purchase Agreement

A Non-Recourse Purchase Agreement (NRPA) is a type of contract between a buyer and a seller that is commonly used in real estate transactions. This kind of agreement essentially means that if the buyer defaults on their payments, the seller cannot come after them for the outstanding balance owed.

This is different from a recourse agreement, which allows the seller to pursue the buyer for any unpaid amounts, even after the property has been sold. Non-recourse agreements are often used in situations where the buyer is purchasing a property that they plan to use as collateral for a loan.

One of the biggest advantages of a non-recourse agreement is that it can provide the buyer with a measure of protection against financial ruin. Since the seller cannot go after the buyer for any unpaid amounts, the buyer is not in danger of losing their personal assets or other properties in the event of a default.

Because of this added protection, non-recourse agreements are often sought after by buyers who are looking to invest in high-risk properties or who may have limited resources. For example, a buyer who is purchasing a commercial property that is still in the development phase may want to use a non-recourse agreement to protect themselves if the project is not successful.

However, it’s important to note that non-recourse agreements can also have downsides for the buyer. Because the seller is taking on the risk of the buyer defaulting on their payments, they may require a higher down payment or charge higher interest rates than they would for a recourse agreement.

Additionally, in some cases, the seller may still be able to pursue legal action against the buyer if they can prove that the buyer engaged in fraudulent behavior or was otherwise not acting in good faith.

Overall, if you are considering entering into a Non-Recourse Purchase Agreement, it’s important to weigh the potential benefits and drawbacks carefully. You may want to consult with a real estate attorney or other professionals who are experienced in these types of contracts to help you determine whether a non-recourse agreement is the right choice for your particular circumstances.