Non Recourse Loan Agreement for Australia

Non Recourse Loan Agreement Template for Australia

A Non-Recourse Loan Agreement under Australian law is a specialized financing document where the lender's recovery rights are limited to specific collateral assets rather than the borrower's other assets or personal guarantees. This agreement details the loan terms, security arrangements, asset management requirements, and enforcement mechanisms, all within the framework of Australian federal and state legislation. It includes comprehensive provisions for asset valuation, maintenance, insurance, and default scenarios, while ensuring compliance with Australian credit and security laws.

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What is a Non Recourse Loan Agreement?

The Non-Recourse Loan Agreement is a critical financing instrument in Australian commercial lending, particularly utilized in project finance, real estate, and asset-based transactions. It is employed when lenders agree to look solely to specific assets for loan recovery, making it essential for projects where the asset's value and cash flows are the primary security. The agreement must comply with Australian lending regulations, including the National Consumer Credit Protection Act and Personal Property Securities Act. This document type is commonly used for large-scale property developments, infrastructure projects, and asset-specific financing where the lender accepts the limited recovery rights in exchange for higher interest rates or strong asset quality.

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

1. Parties: Identifies and defines the Lender and Borrower

2. Background: Contextual information about the loan purpose and secured asset

3. Definitions and Interpretation: Defines key terms and interpretation rules

4. The Facility: Details of the loan amount, purpose, and non-recourse nature

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown: Procedures and requirements for accessing the loan funds

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

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

9. Security: Details of the asset(s) securing the loan and security arrangements

10. Representations and Warranties: Borrower's declarations regarding their status and the secured asset

11. Undertakings: Borrower's ongoing obligations regarding the secured asset and loan

12. Events of Default: Circumstances constituting default and consequences

13. Lender's Rights and Remedies: Actions available to Lender, limited to the secured asset

14. Costs and Expenses: Allocation of transaction costs and ongoing expenses

15. Notices: Communication requirements and contact details

16. General Provisions: Standard boilerplate clauses including governing law

17. Execution: Signing provisions and execution blocks

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

1. Security Trustee Provisions: Required when a security trustee is appointed to hold the security

2. Guarantor Provisions: Used when there are guarantors for obligations relating to the secured asset

3. Insurance: Detailed insurance requirements when the secured asset requires specific coverage

4. Property Management: Required when the secured asset is real property requiring management

5. Environmental Matters: Included when the secured asset has environmental considerations

6. Special Purpose Vehicle Provisions: Used when the borrower is an SPV

7. Multiple Asset Provisions: Required when multiple assets secure the loan

8. Hedging Requirements: Included when interest rate or currency hedging is required

9. Co-Lender Provisions: Used in syndicated non-recourse loans

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

1. Secured Asset Details: Detailed description and documentation of the secured asset(s)

2. Drawdown Notice: Form of drawdown request

3. Conditions Precedent Documents: List of required documents and conditions

4. Repayment Schedule: Detailed payment dates and amounts

5. Financial Covenants: Specific financial maintenance requirements

6. Security Documents: Forms of security documentation

7. Insurance Requirements: Detailed insurance specifications

8. Fees: Schedule of all applicable fees

9. Form of Reports: Templates for required periodic reports

10. Permitted Encumbrances: List of approved existing security interests or encumbrances

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Real Estate

Infrastructure

Mining

Energy

Project Finance

Commercial Property

Renewable Energy

Transportation

Healthcare

Manufacturing

Agriculture

Hotel and Hospitality

Retail Property

Relevant Teams

Legal

Finance

Risk Management

Credit

Compliance

Treasury

Property Management

Asset Management

Investment

Commercial

Operations

Portfolio Management

Transaction Management

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Commercial Director

Project Finance Manager

Risk Manager

Credit Manager

Asset Manager

Property Manager

Investment Manager

Treasury Manager

Compliance Officer

Financial Controller

Portfolio Manager

Transaction Manager

Senior Banker

Relationship Manager

Security Trustee Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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