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It’s a common misbelief that the terms litigation and lawsuit mean the same thing. The lawsuit is the actual filing of a complaint, or the complaint itself, while the litigation involves all of the processes required to investigate and settle the complaint. Litigation can include things like arbitration, the issuing of restraining and custody orders, pre-trial negotiations, and court hearings. The dispute can be settled at any time during the process, even after court proceedings have begun, as long as the resolution is agreeable to both parties.

Commercial foreclosures refer to properties that are business-related rather than residential, however the foreclosure processes are very similar. Since laws and procedures vary from state to state, there are several things you should know before initiating foreclosure litigation.

  1. The process is civil as opposed to criminal. This means that the legal action or lawsuit is being brought by a private individual against another private individual. This is why it can be settled with or without the approval of the court. Criminal proceedings involve charges being brought against a person by society as a whole when a crime has been committed and a punishment must be enforced. Criminal cases have to be resolved by a judge or a jury.
  2. Commercial foreclosure litigation can be initiated by the lender or the borrower. A lender may initiate commercial foreclosure litigation because the borrower has not made the payments, has violated zoning laws for the property, or has incurred outside liens on the property. A borrower may contend that the terms of the mortgage weren’t followed or that the lender refuses to grant reasonable loan modifications to help the borrower.
  3. The foreclosure process can be judicial or non-judicial. Judicial procedures require the filing of a cure or quit notice and the attendance of both parties in court. The matter is decided by a judge. A non-judicial procedure allows the lender to simply take the property back from the borrower by giving the borrower a notice of the violations, marking the property for sale, and selling the property at auction. Only 29 states allow non-judicial procedures so it’s important to check the laws where you live.
  4. Regardless of the procedure, a lender can request that a receiver be appointed by a court to manage the property during the foreclosure. The receiver is responsible for maintenance, keeping the property protected and insured, and collecting all rent or income due to the lender.
  5. The foreclosure sale will amount to the property being sold to the highest bidder. The money from the sale goes to reimburse the lender so that the borrower’s debt can be absolved.
  6. There are a few ways to avoid a commercial foreclosure. One is to make an agreement allowing the borrower to catch up over time, which would include paying all late mortgage payments and associated fees. Another is to modify the existing loan agreement to make the terms easier for the borrower to meet.

Lenders and borrowers who find themselves in a mortgage dispute can benefit from the guidance of a commercial foreclosure litigation attorney. As a lender filing a complaint, the commercial foreclosure litigation lawyer can provide assurance that the terms of the loan have indeed been violated and that the lender has just cause to pursue the foreclosure. The attorney can check the applicable state laws and follow the correct procedure to gain reparations for the lender.

As a borrower, a commercial foreclosure litigation lawyer can help you navigate your options. In addition to being your spokesperson, an attorney can do the following:

  • Help you determine, request, and obtain loan modifications to make the property more affordable
  • Present applicable defenses in court
  • Find and use loss mitigation options
  • If you have reached the last resort, help you file for Chapter 13 bankruptcy

Warren S. Dank, Esq., P.C. is a New York law firm that has experienced foreclosure litigation attorneys who can protect your rights and make sure that you receive fair treatment and a just outcome. Visit our website or contact us today to schedule your free consultation.