As a lender who secures loans with commercial real estate, you understand that foreclosing on a delinquent borrower while ignoring legal obligations can have serious ramifications for your business. The stress of this reality may make it difficult to complete the process effectively as a hard money lender in commercial foreclosure.
At Total Lender Solutions, we have helped hundreds of lenders complete complex foreclosures with little to no complications, meaning that lender teams can focus on their customers. The most important part of fulfilling your legal obligations as a lender is identifying those responsibilities.
Read more to learn about legal considerations before your commercial real estate foreclosure.
Legal Considerations for Hard Money Lenders in Commercial Foreclosure
At Total Lender Solutions, we have worked with legal teams to come to a satisfactory conclusion to the foreclosure process. In our experience, below are some legal ramifications that lenders sometimes overlook.
Locating Loan Documentation
Many lenders underestimate how easy it is to misplace valuable legal documentation when beginning the foreclosure process. A foreclosure assistance service can help ensure that all loan agreements, promissory notes, and security instruments are gathered and investigated before beginning the commercial foreclosure process. This ensures that you remain in compliance with your deed of trust and with state law throughout the process.
Compliance with State Laws
State and federal compliance laws should always be taken seriously. A foreclosure service like Total Lender Solutions can keep your team educated about specific foreclosure laws and regulations in the state where the property is located.
Since your foreclosure can be deemed invalid if guidelines are not followed, it’s important to pay close attention to the law and watch for any updates.
Due Process
A lender is obligated to protect the rights of their borrower by following the timeline mandated by state law. The timeline of foreclosure varies from state to state but typically includes providing the borrower with adequate notice and an opportunity to cure the default, if applicable.
Proper Notification of Interested Parties
Lenders have not only a duty to borrowers but to all interested parties, including any junior lienholders. If there are other liens or encumbrances on the property it’s crucial to send them the proper notices and to conduct a thorough title search to identify any competing interests or claims that may impact the foreclosure process.
Post-Foreclosure Obligations
After successfully foreclosing on the property, there may be additional legal obligations, such as securing the property and transferring ownership. Certain states allow for reinstatement, where the borrower may reclaim the property if they pay off the loan amount and any fees in full. Understand the local laws and procedures to ensure compliance.
A Chosen Partner for Hard Money Lenders in Commercial Foreclosure
Because foreclosure laws vary from state to state, lenders should partner with a foreclosure expert that is versed in the compliance laws of the state where their property is located.
Total Lender Solutions is your ally in maximizing recoveries on defaulted loans. With over 15 years of industry expertise, our team comprises highly skilled real estate professionals and legal experts who specialize in transforming intricate procedures into straightforward resolutions for both institutional and private lenders.
Take action regarding your commercial foreclosure today and get in touch with us.
