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Non Recourse Loan Agreement Template for Germany

A German law-governed Non-Recourse Loan Agreement is a specialized financing document where the lender's recovery rights are limited exclusively to specific collateral assets, typically real estate or other substantial assets, without recourse to the borrower's other assets or personal guarantees. The agreement, governed by German civil law (BGB) and financial regulations, details the loan terms, collateral arrangements, enforcement rights, and explicitly limits the lender's recovery to the specified assets. It includes comprehensive provisions for asset valuation, maintenance, and disposal procedures in case of default, all structured within the German legal framework.

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What is a Non Recourse Loan Agreement?

The Non-Recourse Loan Agreement is a specialized financing instrument used when lenders agree to look solely to specific collateral assets for loan recovery, waiving rights to pursue the borrower's other assets. This type of agreement is particularly common in real estate financing, project finance, and asset-based lending under German law. The document must comply with German civil law requirements while clearly delineating the non-recourse nature of the loan. It typically includes detailed provisions regarding collateral valuation, maintenance obligations, default scenarios, and enforcement procedures. The agreement is especially relevant when financing single-asset projects or when borrowers seek to isolate risk to specific assets. Key components include thorough collateral description, limited recourse provisions, detailed security arrangements, and specific German law compliance measures.

What sections should be included in a Non Recourse Loan Agreement?

1. Parties: Identification of the lender and borrower with full legal names and addresses

2. Background: Context of the loan agreement and brief description of the non-recourse nature

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. The Loan: Principal amount, purpose, and basic terms of the loan

5. Collateral: Description of the assets securing the loan and their valuation

6. Limited Recourse Provisions: Explicit provisions limiting the lender's recourse solely to the specified collateral

7. Drawdown: Conditions precedent and procedures for drawing down the loan

8. Interest: Interest rate, calculation method, and payment terms

9. Repayment: Repayment schedule, methods, and prepayment provisions

10. Representations and Warranties: Borrower's confirmations regarding their status and the collateral

11. Covenants: Ongoing obligations regarding the collateral and borrower's conduct

12. Events of Default: Circumstances constituting default and consequences

13. Enforcement and Remedies: Lender's rights regarding the collateral upon default

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

16. Miscellaneous: Standard boilerplate provisions including severability and amendments

What sections are optional to include in a Non Recourse Loan Agreement?

1. Security Trustee: Required when multiple lenders are involved and a security trustee is appointed

2. Interest Rate Adjustment: Include when the interest rate is variable or subject to adjustment

3. Currency Provisions: Required for cross-border transactions involving multiple currencies

4. Tax Provisions: Detailed tax provisions when complex tax implications exist

5. Insurance Requirements: Detailed insurance obligations when specific insurance for the collateral is required

6. Property Management: Include when the collateral includes real estate requiring management

7. Environmental Matters: Required when the collateral includes property with potential environmental risks

8. Data Protection: Include when personal data processing is involved beyond standard contract administration

What schedules should be included in a Non Recourse Loan Agreement?

1. Schedule 1 - Loan Details: Detailed breakdown of the loan amount, interest rate, and payment schedule

2. Schedule 2 - Collateral Description: Detailed description and documentation of the collateral assets

3. Schedule 3 - Drawdown Notice: Form of drawdown notice and drawdown procedures

4. Schedule 4 - Conditions Precedent: List of all documents and conditions required before drawdown

5. Schedule 5 - Form of Compliance Certificate: Template for periodic compliance certification

6. Appendix A - Valuation Report: Independent valuation of the collateral assets

7. Appendix B - Insurance Certificates: Copies of required insurance policies for the collateral

8. Appendix C - Security Documents: Forms of security documents relating to the collateral

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Germany

Document Type

Financing Agreement

Cost

Free to use

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