- 5 - interest.4 This requirement was imposed, in part, to secure payment of the investor notes. In accordance with the aforementioned security agreements, the partnerships negotiated, pledged, and assigned all of the investor notes as collateral for loans to the partnerships from financial institutions. In turn, the partnerships acquired a number of real properties with the loan proceeds. The notes issued to the lenders by the partnerships were nonrecourse to the general partners, but through various additional agreements, the general partners were rendered liable with respect to the partnership indebtedness. These notes were not, by their terms, recourse to the limited partners.5 4As an example, on Oct. 12, 1984, William M. and Dianne B. Stephens, as investors, signed a Security Agreement, in which they: [acknowledged] that the investor note and this agreement, which stands as collateral therefore [sic], will be assigned by the partnership as collateral for a loan to a lender, and [the Stephens] hereby expressly waives every defense, counterclaim or set-off which [the Stephens] or any of [the other investors] may now have or hereinafter may have to any action by such lender or the lender's assignee. This Security Agreement designates "Dakotah Hills Offices Limited Partnership" as the "Secured Party". 5For purposes of this opinion, the term, "recourse indebtedness" means that the debtor's assets may be reached by creditors if the debt is not paid. Conversely, "nonrecourse indebtedness" means that a creditor's remedies are limited to a particular collateral for the debt. Raphan v. United States, 759 F.2d 879 (Fed. Cir. 1985).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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