Which clause would specify that the lender's recourse is limited to the property securing the loan?

• A. Non-Recourse Clause
• B. Recourse Clause
• C. Exculpatory Clause
• D. Deed of Trust

Answer: (A)

A non-recourse clause defines borrower liability as limited to the collateral securing the loan. When a loan is non-recourse, if the borrower defaults, the lender can foreclose and recover only the property itself; the borrower’s other assets cannot be pursued to satisfy the debt. This contrasts with a recourse loan, where the lender can seek deficiencies or pursue other assets of the borrower.

The other options don’t describe this limitation. A recourse clause would allow pursuing additional assets. An exculpatory clause releases liability in certain contexts but isn’t about what the lender can pursue after default. A deed of trust is the security instrument that creates the lien and mechanism for foreclosure, not the limitation on recourse.