Recourse or Non-Recourse: That is the Question.

[xandrom]

I am currently refinancing my apartment building and have discovered that I am being offered a loan with recourse as well as a loan with non-recourse. To get a loan with non-recourse, the lender will add 15 basis points to the loan interest rate

Now my apartment building is legally in the name of an LLC in the State of California. So my question is, if I choose a loan with recourse, and the borrower name on the loan is an LLC, would the bank still be able to file a judgment deficiency in the event of a loan default and go after my personal assets outside said LLC?

If the answer is "yes", what good then is an LLC in the first place?

Many thanks from someone who is eager to learn the answer to this hypothetical question.

xandrom

 

[disagreeable]

The bigger question is what good is your LLC without you backing the loan with your personal assets. If it were as simple as forming an LLC and taking out loans, with no potential recourse on an individual, the country would be full of LLC owners, with billion dollar loans and failing companies. The masses would be rich and the lending institutions broke.