That being said, what I have been getting from attorneys that I have been talking to is that all purchase money loans are non-recourse and that anything that can be framed as being used for home improvement is arguably non-recourse. I am arguing that with my seller’s lender right now.
He refi-d the place 1 year after buying and now it is 60% upside down. In other words, the loan to value is 220%. Since he used the funds to improve his place, I have been advised by counsel (real estate attys) that it is going to be very hard to categorize this as recourse debt like a credit card.
You should consult an attorney. I can recommend some if you like. As a non lawyer, it looks like it is non-recourse.
