In general, an exculpatory clause is a clause that eliminates a partys liability for damages caused by a breach of contract. A common type of exculpatory clause involves limiting liability on a loan to the collateral. In other words, if there is a default, the contract says that the damages will be limited to execution on the collateral (i.e., foreclosure on the property covered by the mortgage or deed of trust).
An Exculpatory Clause or Nonrecourse Provision in Mortgage regarding Deficiency Judgment is a legal provision included in some mortgage agreements in Oklahoma. This clause aims to protect borrowers from being personally liable for any deficiency judgment resulting from foreclosure or the sale of the mortgaged property. In Oklahoma, there are two main types of Exculpatory Clauses or Nonrecourse Provisions in Mortgage regarding Deficiency Judgment. The first type is known as a "limited recourse" clause. This type of clause limits the lender's ability to pursue a deficiency judgment against the borrower to only the proceeds obtained from the foreclosure sale or the fair market value of the property at the time of the foreclosure. The borrower is typically not liable for any shortfall beyond these amounts. The second type is known as a "full nonrecourse" clause. This type of clause provides even stronger protection to the borrower. With a full nonrecourse clause, the lender is completely barred from seeking any deficiency judgment against the borrower. The borrower's liability is limited solely to the collateralized property. This means that if the property sells for less than the outstanding mortgage balance, the borrower is not responsible for the shortfall. It's important for borrowers in Oklahoma to carefully review their mortgage agreements to determine whether they contain an Exculpatory Clause or Nonrecourse Provision in Mortgage regarding Deficiency Judgment. Having such a provision can provide valuable protection in the event of foreclosure or the sale of the property. Overall, an Exculpatory Clause or Nonrecourse Provision in Mortgage regarding Deficiency Judgment is a crucial safeguard for borrowers in Oklahoma, shielding them from personal liability for any deficiency judgment resulting from the foreclosure or sale of their mortgaged property. These provisions ensure that borrowers are not burdened with additional financial obligations beyond the value of the property they have put up as collateral. It's essential for borrowers to understand the specific type of Exculpatory Clause or Nonrecourse Provision included in their mortgage agreement and seek legal advice if they have any questions or concerns.
