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The Limited Recourse Loan Agreement is a specialized financing instrument used in Canadian jurisdictions where lenders agree to limit their recovery rights to specific assets or collateral rather than having full recourse to all of the borrower's assets. This document type is particularly valuable in project finance, real estate development, and other structured finance transactions where the loan is secured by specific high-value assets or cash flows. The agreement must comply with Canadian federal banking laws, provincial secured transaction legislation, and other relevant regulatory requirements. It typically includes detailed provisions regarding the collateral, enforcement mechanisms, and the explicit limitation of recourse, making it distinct from standard loan agreements. The Limited Recourse Loan Agreement is especially useful when borrowers seek to ring-fence certain assets or when lenders are comfortable with the value and quality of specific collateral without requiring additional security.

1. Parties: Identification of the lender and borrower, including full legal names and addresses

2. Background: Context of the loan agreement, including purpose and general structure of the limited recourse arrangement

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and interpretation rules

4. The Loan: Principal amount, purpose, availability and drawdown mechanics

5. Interest and Fees: Interest rate, calculation method, payment periods, and any associated fees

6. Repayment Terms: Repayment schedule, prepayment provisions, and mandatory prepayment events

7. Limited Recourse Provisions: Explicit limitation of lender's recourse to specified collateral/assets

8. Security: Description of collateral/assets securing the loan and security interest creation

9. Conditions Precedent: Conditions that must be satisfied before loan advancement

10. Representations and Warranties: Borrower's statements regarding its status, authority, and the collateral

11. Covenants: Borrower's ongoing obligations regarding the loan and collateral

12. Events of Default: Circumstances constituting default and consequences

13. Enforcement: Lender's rights and remedies against the specified collateral upon default

14. General Provisions: Standard provisions including notices, amendments, governing law, etc.