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.
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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
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
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
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