- Home
- Books and Journals
- Full Court Press
- Delaware Commercial Real Estate Finance Law and Practice
- Title
- Chapter 13 Guaranties
CHAPTER 13.09. "Bad Boy" Guaranties
Jurisdiction | United States |
13.09. "Bad Boy" Guaranties
In a non-recourse loan, the lender is agreeing to look exclusively to the collateral securing the loan and not to the credit of the borrower.106 Accordingly, the borrower is not personally liable for repayment of the loan or for any default by borrower under the loan documents. In other words, there is no right of recourse by the lender against the borrower. Moreover, neither the borrower's principal nor any other person serves as a guarantor of the loan.
Given the risks to the lender in relying exclusively on the collateral, the lender will usually look for protections from events that erode the value of the collateral or jeopardize the lender's ability to execute on the collateral. These types of events constitute exceptions to the non-recourse nature of the loan and are often referred to as "bad boy" events. Lenders will require that a creditworthy person be liable for the consequences should any of these events occur. This liability takes the form of a guaranty (usually by a principal of the borrower) of a payment obligation should any such "bad boy" event occur. The thinking behind this approach is that the guarantor will exert influence over the borrower to avoid any of these events that impair the lender's collateral position, as the guarantor has personal liability and therefore the incentive to protect against these events.
There are two general types of "bad boy" events or carve-outs from the non-recourse nature of the loan that will trigger recourse against the guarantor.107 One type is a so-called damages liability event and the other type is a so-called full recourse event. Damages liability events are those events or actions for which the guarantor is liable for damages suffered by the lender as a result of those events or actions. The guarantor will not be liable for the entire indebtedness but only for the actual damages suffered by the obligee. Typically, damages liability events are such things as the borrower's fraud or intentional misrepresentations, misapplication of insurance or condemnation proceeds, property waste, and environmental liabilities. In recent years, the scope of damages liability events has expanded to include such things as failure to repair the property, failure to comply with any leasing restrictions in the loan documents, acceptance of prepaid rents from tenants, failure to pay real estate taxes, misapplication or misappropriation of rents, failure to discharge liens (such as mechanic's...
To continue reading
Request your trial- Title
- Chapter 13 Guaranties
- CHAPTER 13.01. General
- CHAPTER 13.02. Who Can Make a Guaranty
- CHAPTER 13.03. Consideration
- CHAPTER 13.04. Acceptance
- CHAPTER 13.05. Revocation of a Guaranty
- CHAPTER 13.06. Guarantor's Defenses
- CHAPTER 13.07. Waiver of Defenses
- CHAPTER 13.08. Bankruptcy and Reinstatement of a Guaranty
- CHAPTER 13.09. "Bad Boy" Guaranties
- CHAPTER 13.10. Spousal Guaranties
Subscribers can access the reported version of this case.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see a list of all the cited cases and legislation of a document.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see a list of all the documents that have cited the case.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see the revised versions of legislation with amendments.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see any amendments made to the case.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see a visualisation of a case and its relationships to other cases. An alternative to lists of cases, the Precedent Map makes it easier to establish which ones may be of most relevance to your research and prioritise further reading. You also get a useful overview of how the case was received.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.
Subscribers are able to see the list of results connected to your document through the topics and citations Vincent found.
You can sign up for a trial and make the most of our service including these benefits.
Why Sign-up to vLex?
-
Over 100 Countries
Search over 120 million documents from over 100 countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
-
Thousands of Data Sources
Updated daily, vLex brings together legal information from over 750 publishing partners, providing access to over 2,500 legal and news sources from the world’s leading publishers.
-
Find What You Need, Quickly
Advanced A.I. technology developed exclusively by vLex editorially enriches legal information to make it accessible, with instant translation into 14 languages for enhanced discoverability and comparative research.
-
Over 2 million registered users
Founded over 20 years ago, vLex provides a first-class and comprehensive service for lawyers, law firms, government departments, and law schools around the world.