Depending on what state(s) you do business in, a commercial foreclosure can last anywhere from a few months to a few years. That’s why having a trusted partner like Total Lender Solutions, who understands the intricacies of commercial foreclosure law—as well as the specifics required per state—is so important. Below are some key factors involved in commercial foreclosure law.
Judicial vs. Non-Judicial Commercial Foreclosure States
States that follow a non-judicial foreclosure procedure can move through the foreclosure process quickly because lenders do not have to file their claims with the court. The judicial foreclosure process, however, requires lenders to go through court proceedings.
In all states where Total Lender Solutions practices – Nevada, California, Texas, Arizona, Oregon, Missouri, and Washington – both judicial and non-judicial foreclosures are allowed. Where both are permitted, lenders may strategically choose which process to pursue. Read more on the pros and cons associated with each procedure below.
Judicial Commercial Foreclosures
The judicial foreclosure process takes the longest but allows lenders to recover the full deficiency, i.e. the difference between the total amount the lender owes and the original sale price. Deficiencies are not recoverable in non-judicial foreclosures. Despite this, in all of the states in which TLS operates, the judicial path is the least popular.
The primary reason for this is the glacial pace of the judicial commercial foreclosure process. First, time is allotted for a borrower to pay off their total debt on the property, including any fees owed, before the eviction can proceed. If the borrower fails to make those payments, the bank can file a lawsuit with the courts. The court sends the borrower a notice, and the borrower has a chance to respond. If the borrower has a complex defense, this may draw out the process exponentially. The bank only has the right to evict after the judge passes favor to the bank. This whole process can take twelve to eighteen months—or longer.
Non-Judicial Commercial Foreclosures
Non-judicial foreclosures are more common, as they are cheaper and faster than judicial foreclosures. In a non-judicial foreclosure, a bank is allowed to auction a home once the right sequence of notices has been issued. The whole process can sometimes take just a few months.
Some states have the right-to-redeem, and in other states, commercial foreclosure law dictates that lenders can recover their deficiencies through an added deficiency judgment.
Dual Tracking
In some cases, a lender may try dual tracking, in which a lender files for both a judicial and non-judicial foreclosure at the same time. This allows the lender to evaluate which might be the best course of action. In states with one-action laws like California, however, a lender may only file to completion under one type of foreclosure.
The Experts in State Foreclosure Laws
For more than 35 years, Total Lender Solutions has been transforming complicated foreclosure processes into clear resolutions for institutional and private lenders across seven states – California, Arizona, Nevada, Missouri, Texas, and Oregon. We are committed to providing seamless communication and comprehensive solutions, from pre-foreclosure and notice of default to the final sale phase. Contact us for your state-specific customized Foreclosure Action Plan today.
