I have heard about the term "recourse" and "non-recourse" where if you return the property to the mortgagee they have no recourse against the owner. How does that actually work in the state of AL from an owners perspective? Is there a legal article(s) I could read up on?

Here is the scenario - We own the property in an LLC - payments are behind. Can't sale the property due to the economy - Bank unwilling to work with us. Can we lock it up and hand them the keys back with no recourse to us personally?
Thanks for your help.

Hello Stretch:

I think you're mixing apples with oranges. In my view, "recourse" or "non-recourse" notes have nothing to do with your situation.

Ultimately, the answer lies within your agreement with the bank. They're NOT all the same.

However, given what you've said, it would also be my view, that unless you signed a personal guarantee with the bank, the LLC would be the entity who is liable to the bank - not you personally...

My conclusion is based solely on what you said. I DO have my doubts about whether the bank would loan money to an LLC, especially a small one, WITHOUT a personal guarantee. But, banks do make dumb deals. Let's hope they did in your case.

excon