When an organization has borrowed money and has failed to keep up with their mortgage payments or even violated another term a commercial foreclosure attorney may be required. In a commercial foreclosure, the party that is lending the money can opt to foreclose and reclaim the property. Every state has their own regulations and laws concerning commercial foreclosures. Here are some of the main points that you need to know about foreclosures in the world of business real estate.
The Two Kinds of Commercial Foreclosures
There are two kinds of real estate foreclosures in commercial real estate, nonjudicial and judicial. The details of the process that is used to foreclose depends on the specific state in which the property is located.
This process consists of the party that is lending the money going to court and suing the borrower, it is also called a cure. At this point, the borrower is given a date that they have to file a response with the court. If the borrowing party opts to contest the foreclosure, the next step will take place in court. This next step is called the acceleration. Due to that fact that the justice system is involved in the process, a judicial foreclosure takes much more time to finalize than that of a nonjudicial foreclosure.
In many states, the lending party will utilize nonjudicial foreclosure to get back their money from the borrower. The law of the state has to allow nonjudicial foreclosure, and the legal documents regarding the loan must include a power of sale clause. As the name clearly states, a nonjudicial foreclosure is an alternative to going to court. This allows the lending party to complete the foreclosure of the property in a timely manner, rather than spending months in the judicial process. In most cases, the nonjudicial process includes mailing the borrowing party a written notice of default, making it known that the property has sold, and then finally foreclosing and selling the property at an auction that satisfies that loan allotment.
For more information and resources about commercial foreclosure, browse the Warren S. Dank blog.