Commercial foreclosures are commercial properties that are scheduled for sale because the owner defaulted on their mortgage loan. When a commercial property owner defaults on their loan, the lender will foreclose on the property and sell it at public auction in order to retrieve the outstanding loan debt.
Secured creditors may take action allowed by their loan documents. For example, a creditor holding a security interest in a car may repossess the car. A commercial creditor holding a security interest in equipment or real estate may be able to recover and sell the equipment and foreclose on the property. Secured creditors have rights that unsecured creditors simply don’t possess.
Unsecured creditors also have rights. Under certain circumstances, when sellers of goods believe their customers are insolvent or in default on their payment obligations, they can stop their delivery trucks that are in transport to their customers’ facilities.
Foreclosure procedures vary from state to state. State statutes establish the procedures, by case law, and by local practice. In about half of the states, foreclosures are court proceedings. First the creditor files a suit in a court located near the property. Creditors foreclose by simply advertising the home for sale, using a legal notice in a newspaper. If homeowners want to contest this type of foreclosure, they must file a lawsuit and ask the court to stop the sale. Sometimes if the homeowner wants the court to stop the foreclosure, the homeowner must file a bond to protect the creditor. Unless the homeowner initiates a court proceeding, there is no judicial involvement in such a foreclosure. Some states allow both types of foreclosure, judicial and non-judicial. Practicality and local custom usually dictate a creditor’s choice of one type over the other.
This post was written by First Source Law
