Recourse v. Non-recourse Loans in TX

An agent mention to me that laws are changing for lawsuit protection in Texas. It has to do with the mortgage, whether or not it is a recourse or non-recourse loan. Recourse meaning that the litigant can sue beyond the coverage of the mortgage insurance and into your personal assets. Is that true?
The non-recourse loan would protect from getting into personal assets, is that true?

Is an umbrella insurance coverage the easiest protection for RE Investors or do you need to create a seperate entitiy for each property? I’m told that in Texax not to use a LLC but to use a LP or LLP. Any comments?


A recourse loan means that you have personally guaranteed the loan. If you default, then you are personally liable to cover any deficiency that may ensue. Almost all consumer loans (including residential real estate loans) are with recourse.

A non-recourse loan simply means that the lender’s sole recourse to recover damages is the proceeds from the sale of the property in the event of default. You are not personally liable for any deficiency in the event of a default. Many commercial loans are non-recourse.

How proposed changes to Texas law affects this is not clear.