Non Recourse Promissory Note Template for England and Wales

A Non Recourse Promissory Note is a specialized lending document that protects you as a borrower by limiting the lender's ability to recover debt beyond specific pledged assets. Under England and Wales law, this instrument provides crucial protection for your personal and business assets while still securing the loan with designated collateral.

When do you need this document?

You need a Non Recourse Promissory Note when entering project finance arrangements, real estate investments, or asset-based lending where you want to limit your personal liability. This document is particularly valuable for special purpose vehicles, property development projects, and situations where you're using specific assets as security but don't want to risk your broader estate. It's commonly used in commercial real estate transactions, infrastructure projects, and business acquisitions where the underlying asset should bear the full risk of the investment.

Key legal considerations

The non-recourse provisions must be clearly and explicitly stated to be enforceable under English law. You must ensure the document contains an unconditional promise to pay, specifies the exact principal amount, and clearly defines the interest calculation method. The security arrangements must be properly documented and registered where required, particularly for real property or company charges. Consider whether Consumer Credit Act 1974 protections apply if you're an individual borrower, as this may impose additional regulatory requirements. The document should specify exactly which assets secure the debt and include detailed enforcement procedures that comply with Law of Property Act 1925 requirements.

Legal requirements in England and Wales

Under the Bills of Exchange Act 1882, your promissory note must contain specific elements including an unconditional promise to pay, a definite sum, and proper signatures from all parties. If the note is secured by real property, you must register the charge with the Land Registry to protect the lender's interests. For company borrowers, charges must be registered at Companies House within 21 days. The Limitations Act 1980 establishes a six-year limitation period for claims on promissory notes, which affects enforcement timing. Ensure compliance with Financial Services and Markets Act 2000 if the arrangement requires regulatory authorization, particularly for consumer lending or investment activities.