Also known as: with-recourse · recourse
Written by attorneys · grounded in primary & secondary sources — see below
A contractual stipulation or indorsement that preserves the endorser's or obligor's personal liability for payment if the primary obligor defaults or the collateral proves insufficient.
Westmont Healthcare's board authorizes a loan secured by its medical equipment fleet. The loan agreement dedicates the equipment to repayment with recourse, allowing the lender to pursue the corporation's other assets if foreclosure yields a shortfall. The board records the transaction as an ordinary-course encumbrance under its articles.
Windham Technologies sells accounts receivable to a factor. The purchase agreement states that Windham remains a secondary obligor with a right of recourse against its own customers if any account debtor defaults on the assigned invoices. The factor later enforces that recourse clause after several customers fail to pay.
Select any source to read its text and confirm it supports the definition.
Wrightway Engineering grants a security interest in its accounts to a lender. After default the lender collects directly from account debtors but recovers only partial sums. The lender then charges the uncollected balances back to Wrightway under the recourse provision in the security agreement.
Winston Ward sells mortgaged land to a buyer who assumes the note. After foreclosure the sale price falls short of the debt. The original lender invokes the with-recourse clause to obtain a personal judgment against Winston Ward for the deficiency.
William Williams borrows against commercial property under a mortgage labeled nonrecourse. When the borrower defaults the lender attempts to reach Williams's other assets. The court enforces the nonrecourse label and denies the lender any personal recourse beyond the collateral.
Winter Wolfe endorses a promissory note with recourse before transferring it to a holder. The maker defaults. The holder sues Wolfe personally on the endorsement and recovers the unpaid balance because the recourse language preserved Wolfe's secondary liability.
A with-recourse indorsement keeps the endorser secondarily liable to later holders if the instrument is dishonored. The endorser must pay the holder upon proper presentment, dishonor, and notice unless the endorser has valid defenses.
With-recourse language allows the secured party to charge uncollected collateral back to the debtor or secondary obligor after commercially reasonable collection efforts. The secured party may then pursue the debtor personally for any remaining deficiency.
Yes. Unless the mortgagee expressly releases the original borrower, with-recourse language keeps the transferor personally liable on the debt even after the property is conveyed to an assuming transferee. The mortgagee may sue the transferor directly or seek a deficiency after foreclosure.
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