An exculpatory clause contained in a loan contract is a provision that relieves the borrower from any personal liability.
Should the sales proceeds be insufficient to fully settle the outstanding debt, there is no other legal avenue for the lender to pursue the borrower for the shortage.
There would be no legal basis to file a suit or obtain a deficiency judgment from the courts.
For this reason, homeowners are usually receptive to exculpatory clauses while lenders naturally want to avoid them as much as possible.
Because of this, mortgage contracts usually do not contain exculpatory clauses unless expressly requested by the mortgagor.
Even so, lenders would surely want to get something back in exchange for inserting such clauses which limits their legal actions.
In the investment world, real estate investors often make use of exculpatory clauses for tax planning purposes.
This have to do with personal liabilities of partners which affects tax claims for depreciation.