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Limited Recourse Loan Agreement for New Zealand

Limited Recourse Loan Agreement Template for New Zealand

A specialized financing agreement governed by New Zealand law where the lender's recourse in the event of default is limited to specific identified assets or a defined pool of assets, rather than having full recourse to all of the borrower's assets. This agreement type is commonly used in project finance, asset-based lending, and real estate development, where the loan is secured against specific revenue-generating assets. The document incorporates New Zealand-specific legal requirements, including compliance with the Contract and Commercial Law Act 2017 and relevant financial services regulations.

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What is a Limited Recourse Loan Agreement?

The Limited Recourse Loan Agreement is a specialized financing instrument used when parties wish to limit the lender's recourse to specific assets rather than the borrower's entire asset base. This document is particularly relevant in New Zealand's project finance, real estate development, and asset-based lending sectors. It needs to comply with New Zealand's legal framework, including the Contract and Commercial Law Act 2017, Property Law Act 2007, and relevant financial services regulations. The agreement typically details the loan facility, identifies the specific assets against which recourse is available, establishes security arrangements, and outlines enforcement limitations. It's commonly used for project-specific financing where lenders agree to look primarily to the project's assets and cash flows for repayment.

What sections should be included in a Limited Recourse Loan Agreement?

1. Parties: Identifies and defines the Lender and Borrower, including their legal details and addresses

2. Background: Sets out the context of the loan agreement and the parties' intention to enter into a limited recourse arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. The Facility: Details of the loan amount, purpose, and drawdown conditions

5. Limited Recourse Nature: Explicitly defines the limited recourse nature of the loan and specifies the assets against which recourse is available

6. Security: Describes the security arrangements over the specified assets

7. Interest and Payments: Specifies interest rate, calculation method, payment dates, and payment mechanics

8. Representations and Warranties: Standard and specific representations and warranties from the Borrower

9. Covenants: Positive and negative obligations of the Borrower, particularly regarding the secured assets

10. Events of Default: Defines circumstances constituting default and consequences, subject to limited recourse provisions

11. Enforcement: Specifies enforcement rights and limitations, emphasizing the limited recourse nature

12. General Provisions: Standard provisions including notices, amendments, governing law, and jurisdiction

What sections are optional to include in a Limited Recourse Loan Agreement?

1. Conditions Precedent: Required when there are specific conditions that must be met before drawdown, such as delivery of security documents or legal opinions

2. Guarantee: Include when there is a guarantor providing additional support for the loan, subject to limited recourse provisions

3. Additional Security Provisions: Required when there are complex security arrangements or multiple secured assets

4. Tax Provisions: Include when there are specific tax considerations or withholding requirements

5. Assignment and Transfer: Include when parties want to allow for potential transfer of loan rights or obligations

6. Increased Costs and Market Disruption: Include for longer-term loans or when market volatility protection is required

7. Multiple Lenders: Required when there is more than one lender, including provisions for decision-making and sharing of payments

What schedules should be included in a Limited Recourse Loan Agreement?

1. Loan Terms Schedule: Details specific loan terms including amount, interest rate, payment dates, and maturity

2. Secured Assets Schedule: Detailed description and/or listing of the assets against which recourse is available

3. Drawdown Notice: Form of notice to be used when requesting drawdown of the loan

4. Conditions Precedent: Detailed list of conditions to be satisfied before drawdown

5. Security Documents: Forms of security documents required to perfect security over the secured assets

6. Repayment Schedule: If applicable, schedule of repayment dates and amounts

7. Compliance Certificate: Form of certificate for periodic confirmation of compliance with loan terms

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

New Zealand

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions































































Clauses


































Relevant Industries

Banking & Financial Services

Real Estate & Property

Infrastructure & Project Finance

Mining & Resources

Energy & Utilities

Asset Finance

Commercial Property Development

Private Equity

Investment Management

Agriculture

Relevant Teams

Legal

Finance

Treasury

Risk Management

Credit

Corporate Banking

Structured Finance

Commercial Banking

Investment Banking

Project Finance

Asset Management

Deal Advisory

Security & Compliance

Portfolio Management

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Corporate Lawyer

Legal Counsel

Risk Manager

Credit Manager

Investment Manager

Project Finance Manager

Asset Manager

Relationship Manager

Commercial Director

Security Trustee

Loan Officer

Corporate Banking Manager

Structured Finance Manager

Industries









Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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