Also known as: regresses · regressed · regressing · recourse
Written by attorneys · grounded in primary & secondary sources — see below
A right of recourse against the debtor or a secondary obligor when collateral proves uncollectible or an assumed obligation is not performed.
Ridgeway Partners grants Redwood Bank a security interest in its equipment fleet to secure a line of credit. When the bank later seeks additional protection, Ridgeway executes a mortgage on its warehouse without shareholder approval. The mortgage constitutes a valid regress against the corporate assets under the governing statute.
Redline Automotive sells vehicles on credit and assigns the receivables to Reliance Insurance as collateral. Reliance learns that Redline retains a right to pursue the original buyers if the receivables go unpaid. That retained right establishes Redline as a secondary obligor with regress against the account debtors.
Reliance Insurance collects on assigned accounts after Redline defaults. When several account debtors fail to pay, Reliance charges the uncollected balances back to Redline. The charge-back constitutes a valid exercise of regress against the debtor under the security agreement.
Select any source to read its text and confirm it supports the definition.
Roland Rhodes sells land subject to a mortgage to Rosa Ruiz, who assumes the debt. When Rosa defaults, Roland pays the lender to avoid foreclosure and then sues Rosa for exoneration. The suit enforces Roland's regress against the assuming transferee.
Ravi Reddy transfers mortgaged property to Renata Russo with an assumption agreement. After Renata defaults, the lender sues Ravi personally. Ravi's continuing exposure illustrates the regress that survives the transfer of the real estate.
Raphael Rivera pays off a mortgage after the assuming buyer defaults. He then demands an assignment of the note and mortgage from the lender. The demand asserts Raphael's regress by subrogation to the original mortgagee's position against the property.
No. The right of regress may be asserted by a transferor who remains personally liable even before any payment is made, through an action for exoneration or quia timet relief.
Yes, provided the collection efforts satisfy the commercial reasonableness standard. The secured party may then charge back uncollected amounts to the debtor or secondary obligor.
No. The original transferor remains secondarily liable to the mortgagee unless the mortgagee expressly releases the transferor or a suretyship defense applies.
No. The concept also appears in secured transactions when a secured party holds a right of recourse against the debtor or a secondary obligor after collateral proves uncollectible.
…or change; and where the legislative body does not itself possess the requisite information—which not infrequently is true—recourse must be had to others who do possess it. Experience has taught that mere requests for such information often are unavailing, and also that information which is volunteered is not always…