In recent years, lenders have been unwilling to relieve borrowers from personal liability in the event of fraud, environmental problems, or unpaid property tax obligations. Therefore, some lenders include a clause that pierces the single-purpose borrowing entity to hold the actual borrower liable in such instances. This clause is commonly referred to as a:

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This type of clause, which holds the actual borrower personally liable in the event of certain prohibited actions, is commonly known as a "bad boy carve-out" clause. This clause is designed to discourage borrowers from engaging in actions that could negatively impact the property or lender's collateral, such as fraud or environmental violations. By including this clause, lenders can protect themselves from potential losses and hold borrowers accountable for any wrongdoing.

In Recent Years, Lenders Have Been Unwilling to Relieve Borrowers