Michigan Laws 445.1592 – Definitions
Current as of: 2024 | Check for updates
|
Other versions
Terms Used In Michigan Laws 445.1592
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Nonrecourse carveout: means a specific exception, if any, to the nonrecourse provisions set forth in the loan documents for a nonrecourse loan that has the effect of creating, if specified events occur, personal liability of the borrower or a guarantor or other surety of the loan for all or some amounts owed to the lender. See Michigan Laws 445.1592
- Nonrecourse loan: means a commercial loan secured by a mortgage on real property located in this state and evidenced by loan documents that meet any of the following:
(i) Provide that the lender will not enforce the liability or obligation of the borrower by an action or proceeding in which a money judgment is sought against the borrower. See Michigan Laws 445.1592Nonrecourse provisions: means 1 or more of the provisions described in subdivision (b)(i) to (v), whether or not the loan is subject to a nonrecourse carveout or carveouts. See Michigan Laws 445.1592 Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land. Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
As used in this act:
(a) “Nonrecourse carveout” means a specific exception, if any, to the nonrecourse provisions set forth in the loan documents for a nonrecourse loan that has the effect of creating, if specified events occur, personal liability of the borrower or a guarantor or other surety of the loan for all or some amounts owed to the lender.
(b) “Nonrecourse loan” means a commercial loan secured by a mortgage on real property located in this state and evidenced by loan documents that meet any of the following:
(i) Provide that the lender will not enforce the liability or obligation of the borrower by an action or proceeding in which a money judgment is sought against the borrower.
(ii) Provide that any judgment in any action or proceeding on the loan is enforceable against the borrower only to the extent of the borrower’s interest in the mortgaged property and other collateral security given for the loan.
(iii) Provide that the lender will not seek a deficiency judgment against the borrower.
(iv) Provide that there is no recourse against the borrower personally for the loan.
(v) Include any combination of subparagraphs (i) to (iv) or any other provisions to the effect that the loan is without personal liability to the borrower beyond the borrower’s interest in the mortgaged property and other collateral security given for the loan.
(c) “Nonrecourse provisions” means 1 or more of the provisions described in subdivision (b)(i) to (v), whether or not the loan is subject to a nonrecourse carveout or carveouts.
(d) “Post closing solvency covenant” means any provision of the loan documents for a nonrecourse loan, whether expressed as a covenant, representation, warranty, or default, that relates solely to the solvency of the borrower, including, without limitation, a provision requiring that the borrower maintain adequate capital or have the ability to pay its debts, with respect to any period of time after the date the loan is initially funded. The term does not include a covenant not to file a voluntary bankruptcy or other voluntary insolvency proceeding or not to collude in an involuntary proceeding.