Breaking Down What Default Means for Commercial Mortgages
If you’re paying a commercial mortgage loan, you must understand certain terms that apply to it. In this guide, you’ll learn what it means to default and what steps you could take to prevent it.
Understanding What It Means to Default
When you signed your loan, you also received a deed of trust or a promissory note. There are strict legal terms that apply to these documents. If you fail to meet these terms, you’ll breach your contract or default. Most people default when they fail to make their monthly loan payments on time. There are other ways to default as well. For example, you could default if you:
- Fail to process your insurance payments on time
- Let a property deteriorate
- Transfer a deed to another owner without consulting your lender
What Happens After You Default
If you breach your contract, the lender can take legal action, and you may have to cover the outstanding balance. This practice is called accelerating the debt, and it can be very effective for a lender. If you fail to repay your outstanding balance, the lender will have the right to foreclose.
In some circumstances, federal foreclosure laws could delay a foreclosure by up to 120 days. If your case involves a non-monetary breach, you might have an opportunity to postpone the foreclosure. Many people will review all their options for loss mitigation during this time span, and some property owners will cure the default.
If you’re able to cure the default, you’ll need to pay what you owe before your property is foreclosed. The charges will only be for the overdue payments. However, you’ll also have to pay any outstanding fees plus interest.
You may not have a lot of time to cure the default as there are different laws in every state. Most laws will also restrict how often someone can cure a default.
Seek help from a foreclosure attorney, as they can help you understand the best way to move forward in your situation. Whether you are trying to prevent defaulting or you already have defaulted, a foreclosure lawyer from Warren S. Dank, Esq., P.C. can help you understand your rights when it comes to commercial foreclosure.