LIABLE


In the context of real estate, liability can be limited or excluded by using exculpatory clauses or nonrecourse loans.

An exculpatory clause is a contractual term that limits the liability of one party in the event of specific harm or damages to another party. For example, an exculpatory clause in a real estate contract can limit the liability of a lender in the event of a default by the borrower. A non-recourse loan is a common example of an exculpatory clause, where the lender’s recovery is limited to the collateral securing the loan (i.e., the property), and the borrower is not personally liable.

On the other hand, a nonrecourse loan is a type of loan that is secured by collateral, typically real estate, and limits the lender’s recourse to the collateral in the event of a default by the borrower.


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