Heller Financial, Inc. v. Lee

Royal Plaza/Maddlee (defendants) formed to buy a hotel and financed it with a $9.9 million nonrecourse loan from Heller Financial (plaintiff). The loan made the defendants personally liable if any liens were placed on the property during the loan term. Six liens were placed on the hotel. Heller declared default and demanded the balance; the hotel was sold, but the proceeds were insufficient, and Heller sought the deficiency personally.

Whether a nonrecourse loan may include provisions making the borrower personally liable for the debt.