Commercial Foreclosure: Notice of Default

Commercial foreclosure occurs when a commercial property owner fails to make payments as agreed to the terms of his or her mortgage loan. The lending company secures this loan against the value of the property. Therefore, when the borrower fails to make the required payments, the lender forecloses, meaning works to take the property back through legal channels.

Commercial Foreclosure Default Notice

The commercial foreclosure process varies from state to state. In most states, the initial step in the process is called the Notice of Default. Several things occur when the property owner receives this document, generally by certified mail.

• The lender states the amount the borrower must pay to get the loan current.
• The document outlines the steps the lender will take if the payment is not made.
• A specific date is given to the borrower by which time the borrower must have made all payments to get the loan current.

The Notice of Default alerts the property owner of the pending foreclosure process. The borrower must make all payments to reinstate the loan. This may include payments such as the principle and interest past due, as well as any fees associated with the late payments.

If the borrower does not adhere to the directions provided in the Notice of Default, the lender will then pursue legal foreclosure. This will include the Notice of Acceleration, which demands payment in full for the entire amount due on the property, not just late payments. This notice specifies a specific time by which the borrower must either pay off the loan in total or obtain a new loan to pay off the original. Then, a Notice of Foreclosure will occur if the property owner has yet to get current. At this point, the lender will outline the foreclosure sale, including the date when the property will be sold.

The Notice of Default is the first opportunity for the commercial borrower to get out of the foreclosure process. At this time, the lender is likely to work with the borrower get late payments caught up. Loan modifications may be available at this time as well.

Hiring An Attorney

The law does not require an individual to hire an attorney. However, during the commercial foreclosure process, it can be critical. Contact an attorney and alert the attorney about the Notice of Default received. The attorney can then work with you and the commercial lender to obtain some type of method for getting the loan caught up. Alternatively, the attorney can help to work out another arrangement that suits all involved.