Non-Recourse Promissory Note Law and Legal Definition
A non-recourse promissory note is a note that prohibits the lender from attempting further restitution from the borrower in case of default. Here the lender is allowed to move only against the collateral used for securing the loan. Non-recourse promissory notes are often used for securing a mortgage loan. In real estate, under a non-recourse promissory note, the house of the borrower is often taken and liquidated to recover the lender's potential loss.
However, a non-recourse promissory note is an extra level of protection for a borrower in case where s/he is forced to default on the loan. In case of defaults, the lender can only seize the chief asset assigned in the note and cannot hold the borrower personally responsible for full repayment.
