Nonrecourse Carveout Risk Calculator

Nonrecourse carveouts can convert to full recourse. This calculator sizes trigger risk.

Loan principal

Full recourse exposure

Trigger probability %

Partial recourse

Expected recourse exposure

$437,500

Full recourse EL

$370,000

Partial recourse EL

$67,500

How the math works

Expected = (full recourse exposure × trigger prob) + (partial × industry trigger rate ~15%).

SPE maintenance discipline is the cheapest risk mitigation in CRE debt. A $5-15k annual corporate housekeeping budget (separate books, board consents, proper commingling controls) neutralizes carveout triggers worth millions in personal exposure.

How to Use

Enter loan principal.
Enter total carveout exposure (full recourse trigger items).
Enter probability-weighted trigger %.
Enter partial recourse carveouts.
Read expected recourse exposure.

Frequently Asked Questions

Common carveouts?

Full recourse triggers (bad boy): fraud, misappropriation, voluntary transfer in violation, voluntary bankruptcy, unauthorized subordinate debt. Partial recourse: waste, environmental, failure to pay taxes/insurance, failure to maintain SPE.

Full vs partial?

Full recourse: entire loan becomes personally guaranteed. Partial: only the economic harm from that item. A bad-boy fraud act can convert a $20M nonrecourse loan to a $20M personal guarantee. Partial often limited to damages caused.

Prevention?

SPE compliance audits. Separate entity books. Board/manager resolutions before any transaction. Don't file voluntary bankruptcy without lender consent. Keep taxes and insurance current. Each prevents a trigger event.