The property owner and the property lender will each need a lawyer when it is necessary to begin commercial foreclosure negotiations. The lender is subject to state laws concerning commercial foreclosures, but there can be a number of issues arise related to details of the foreclosure like the calculation of the amount that must be paid by the property owner to avoid foreclosure. The process can be even more complex if a lease exists between the property owner and a tenant.
The Lender Has Rights
The lender has certain rights as determined by the commercial mortgage agreement and state law. When a lender must foreclose on the property, the attorney can provide important advice concerning the following.
- Issuing a Notice of Default to the property owner that includes the amount due and the due date
- Issuing a Notice of Acceleration that includes the final amount due to avoid foreclosure
- Foreclosure Notice
- Sale of the Property according to the laws of the state
- Eviction Notice and Process
The foreclosure process is well defined in terms of the amount of required time that must be allowed at each step of the process. If a tenant is renting from the business owner, it will be necessary to evict the tenant unless new lease arrangements are made between the tenant and the lender. The attorney may represent the lender in negotiations with the property owner in the event a new agreement can be reached to avoid foreclosure.
The Property Owner Has Options
A business that is evicted as a result of foreclosure proceedings faces severe disruption. It is in the interest of the property owner to make an attempt to negotiate with the lender. An attorney can provide advice concerning:
- Negotiating a new mortgage agreement as a compromise that leads to lower payments
- Developing an agreement that gives the business owner an opportunity to pay back mortgage payments and fees while remaining in the building
- Negotiating a Deed in Lieu of Foreclosure with the intent of staying in the building
- Insuring the lender follows the laws concerning the foreclosure process
- Renegotiating the existing mortgage by revising the terms of payment
- Stopping the foreclosure process if possible
In the event the foreclosure cannot be prevented, the attorney can advise the property owner on the foreclosure and eviction process and existing leases between the property owner and any tenants.
Consult an Attorney
It is important to consult with an attorney during commercial foreclosure proceedings whether you are the lender, building owner or tenant.
