Business Facing Foreclosure? Here Are Your Options

If you have fallen behind on mortgage payments on your business’s commercial property, your lender or mortgage holder may send you notice of default or intent to foreclose, warning you that your business is facing foreclosure. With your business’s financial health and future at risk, you need to know what options you have to respond to foreclosure.

When your business has defaulted on a mortgage or has received notice of a lender’s intent to foreclose, you need experienced legal counsel to advocate for your rights and interests. Turn to the foreclosure defense, debt defense, and bankruptcy law firm of Loan Lawyers for help.

Our attorneys have extensive experience defending the rights and interests of thousands of businesses and property owners throughout Florida facing foreclosure. Our firm never pressures clients to file for bankruptcy when less drastic and more cost-effective options may be available.

If your business is facing foreclosure, you should act quickly to protect your investment and future. Reach out to Loan Lawyers today for a free, confidential consultation to discuss your legal options with a seasoned Dania Beach business foreclosure lawyer from our firm.

What Is a Business Foreclosure?

A business foreclosure occurs when a bank or a mortgage holder forecloses on a commercial property purchased by a business with loaned funds. If the business fails to make the required mortgage payments, the lender has the right to begin the foreclosure process in Florida.

In Florida, a lender must obtain foreclosure through the judicial process. This requires the lender to file a lawsuit in court for a foreclosure judgment. The foreclosure judgment will authorize the sale or transfer of the property for the debt owed under the mortgage.

What Happens When a Business Goes into Foreclosure?

A bank or mortgage holder may initiate a foreclosure on a business’s commercial property when the business defaults under the mortgage terms. Typically, the lender will give a notice of default to the business, allowing the business an opportunity to fix the situation.

The business may pay the money needed to become current on its mortgage payments, work out a loan modification agreement with the bank, or declare bankruptcy. If the business does not fulfill the agreement, the lender may issue a notice of intent to foreclose. This tells the business that the lender intends to file a lawsuit to seek foreclosure.

In a foreclosure proceeding, the lender asks for a court order to sell the property, usually through a bidding process, to satisfy the loan’s outstanding balance that the mortgage secures. The lender may “purchase” the property and take possession. They would usually do this if no other prospective buyers are willing to pay more than what is owed. Another party may also purchase the property, and the proceeds are used to pay the lender.

In some cases, the business and creditor may agree to a deed in lieu of foreclosure, where the business surrenders ownership of the property. The lender and business must agree on the property’s value. If the property is valued at less than the outstanding mortgage balance or is sold at a business foreclosure auction for less than the balance, the lender may have the right to pursue recovery of any excess amounts owed from the business.

Can Foreclosure on a Business Occur Without Bankruptcy?

A business’s commercial property foreclosure can occur without the business declaring bankruptcy. A lender or mortgage holder will typically pursue foreclosure when the business stops making the required mortgage payments.

However, a business may need to declare bankruptcy to resolve its debts if it cannot pay mortgages and other bills. While bankruptcy can delay foreclosure, the bankruptcy does not necessarily give the business owner the right to simply walk away from the property.

How Can I Stop a Foreclosure on Business Property?

Even when a lender sends notice of its intent to foreclose on a business’s commercial property, the business may have options to delay or even stop the foreclosure. Options for getting out from under the threat of foreclosure on a commercial property include the following:

• Seeking refinancing – Under certain circumstances, a business may have the option of refinancing the mortgage, either with the same lender or another bank. Refinancing can lower mortgage payments.
• Applying for a loan modification – Similar to refinancing, a loan modification involves the business and lender agreeing to change the mortgage terms to lower payments. This may be done by lengthening the repayment term, lowering the interest rate, or forgiving a portion of the balance owed.
• Agreeing to a short sale – In a short sale, the mortgaged property is sold for less than what is owed on the mortgage. The lender may agree to forgive the remaining balance or reserve the right to pursue further repayment from the business.
• Offering a deed in lieu of foreclosure  – If the lender agrees to it, the property owner may be able to give the property to the lender to release them from the mortgage agreement without going through foreclosure proceedings.
• Filing for bankruptcy – Filing bankruptcy typically pauses all debt collection efforts, including business foreclosure. However, a business may only be able to keep the mortgaged property when it files for reorganization bankruptcy under Chapter 11 bankruptcy. In a Chapter 7 bankruptcy, the property may still be sold to satisfy the business’s debts.

Talk to a Foreclosure Lawyer in Dania Beach, Florida Today

If your business property is about to be foreclosed on, don’t assume that you have no options for protecting your hard work and investment. Contact Loan Lawyers today to talk to a Florida foreclosure defense lawyer in Dania Beach, FL about how our firm can assist you in defending your commercial interests.