While many lenders think of a courthouse auction when they think of a foreclosure, the team at Total Lender Solutions knows that there is a complicated process that must be completed from the beginning to the end. “We have fifteen years of experience as highly experienced real estate professionals advocating for lenders looking to maximize recoveries on defaulted loans,” says Randy Newman, CEO of Total Lender Solutions. “If you are a lender foreclosing on a loan secured by commercial real estate property, you will need to complete a uniform commercial code sale to recoup your assets.”
What is the Uniform Commercial Code?
According to the Uniform Law Commission, the Uniform Commercial Code (UCC) is defined as “a comprehensive set of laws governing all commercial transactions in the United States.” Like many uniform laws that are not federal, the UCC is adopted by each state. Because these laws govern all commercial transactions, including those which happen across state lines, these laws must be uniform across the country.
The UCC is made up of nine articles that cover different aspects of banking and loans. Article nine, also known as UCC-9, regulates secured transitions. Since mortgages are secured by real property, the laws surrounding these types of loans are covered under article nine.
Part six of article nine outlines the specifics of handling a loan secured by a commercial real estate property when there is a default. Section 9-610 outlines Article 9 Sale, or UCC-9 Sale, which is the right of the lender to sell the debtor’s collateral so that the borrower may avoid being sued in the case of a default.
Related Article: How to Conduct a UCC-9 Sale
What Do Lenders Need to Know About Uniform Commercial Code Sales?
A UCC-9 foreclosure sale happens near the end of the nonjudicial foreclosure process. Section 9-610c says that a secured party may purchase collateral either at a public disposition, like a live auction, commonly done on the steps of the courthouse in the county where the property is located; or at a private disposition. Private dispositions are only permitted if “the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.”
While many lenders think of the process of the UCC-9 sale when they think of a foreclosure, the Uniform Commercial Code outlines a protocol for many steps that must be taken with great scrutiny before the sale can take place. These laws are often affected by state regulations that give specific timelines for notices, filings, and procedures before the UCC-9 sale.
The UCC additionally outlines ways lenders might exhibit noncompliance with these regulations, for instance, if the conduct is found to be commercially unreasonable.
Lenders needing to enact a UCC-9 sale on a secured commercial real estate property should not navigate the process alone. A foreclosure service, like Total Lender Solutions, can carry out the entire foreclosure process from the first notice of default through to the foreclosure sale and immediate aftermath.
Keep Your Team Educated About Foreclosure Law
We work as a vigorous extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today.
