Non Recourse Loan Agreement Template for England and Wales

A Non Recourse Loan Agreement is a specialised financing document that limits the lender's ability to recover funds to specific secured assets, protecting you from personal liability beyond those designated assets. Under England and Wales law, this agreement creates a ring-fenced lending arrangement where your personal assets and other business interests remain protected if the secured assets prove insufficient for loan repayment.

When do you need this document?

You need a Non Recourse Loan Agreement when securing substantial financing for asset-heavy projects where you want to limit your personal exposure. This document is essential for real estate development projects, infrastructure investments, renewable energy ventures, and large-scale commercial property acquisitions. It's particularly valuable when you're undertaking speculative developments or entering new markets where project risks are significant. The agreement is also crucial for institutional investors and pension funds providing project finance, as it clearly defines the scope of security and recovery rights from the outset.

Key legal considerations

The limited recourse provisions form the core of this agreement, requiring precise definition of which assets secure the loan and explicit exclusion of your other assets from potential recovery action. You must ensure the security provisions comply with registration requirements under English law, particularly for charges over land or company assets. The agreement should include comprehensive maintenance covenants requiring you to preserve the secured assets' value and income-generating capacity throughout the loan term. Cash flow arrangements and reserve accounts need careful structuring to ensure loan servicing while maintaining operational flexibility. Events of default clauses require particular attention, as they can trigger enforcement action against the secured assets, and should be negotiated to provide reasonable cure periods and materiality thresholds.

Legal requirements in England and Wales

Under England and Wales law, you must comply with the Companies Act 2006 for registration of charges if the borrower is a company, with filing requirements at Companies House within 21 days of creation. The Consumer Credit Act 1974 may apply if you're an individual or small partnership, requiring additional consumer protection measures and regulated agreement procedures. Security interests in land must satisfy Law of Property Act 1925 requirements, including proper execution as deeds and Land Registry registration for legal mortgages. If the lender is FCA-regulated, the agreement must comply with FCA handbook provisions regarding lending standards and conduct of business rules. The Unfair Contract Terms Act 1977 and Consumer Rights Act 2015 provide additional protection against unreasonable terms, particularly relevant for smaller borrowers. Environmental due diligence and compliance certificates may be required for projects involving potentially contaminated land or regulated activities.