In the purchase of commercial property, investors may negotiate a nonrecourse loan, which means:

In the context of a nonrecourse loan, the key characteristic is that investors are not personally liable for the repayment of the debt. This means that if the borrower defaults on the loan, the lender cannot pursue the borrower's personal assets beyond the collateral securing the loan, which in the case of a commercial property would be the property itself.

Because the loan is secured only by the property, the lender has the right to take possession of the property if the loan is not paid, but cannot seek additional payment from the investor's other assets or income. This arrangement provides a significant layer of protection for the investors, making it an attractive financing option in commercial real estate transactions.

The other options do not accurately reflect the nature of a nonrecourse loan. For instance, in scenarios where investors are partially or fully liable for the debt, it describes a recourse loan rather than a nonrecourse loan. Similarly, while interest rates can vary, the structure of the loan being nonrecourse does not inherently mandate higher interest rates—this is determined by other market factors.