As a commercial property owner, foreclosure can lead to devastating, long-term personal and financial losses. However, with the right strategies, you can avoid foreclosure and protect your investment. There are many different ways to avoid foreclosure, but without the knowledge and experience, it can be hard to maneuver the process.
That’s why it’s imperative to partner with a reputable commercial real estate lawyer to avoid major financial losses. Below, we discuss 5 steps you can take to prevent the foreclosure of your commercial property.
How to Avoid Commercial Property Foreclosure
1. Work With a Real Estate Lawyer
Real estate lawyers do more than help you prepare and review papers involved in buying commercial properties- they know the strategies needed to avoid commercial property foreclosure and provide valuable assistance to their clients.
A real estate lawyer will give you a realistic idea of your options, present the best alternatives to foreclosure, and negotiate with your lender on your behalf. A lawyer can also introduce you to assistance programs and attorneys that can help you keep your property.
2. Arrange a Short Sale
A short sale is when a commercial property owner sells their property for less than they owe on a mortgage, and the lender accepts the sale as payment of the debt. When you opt for a short sale, you spare yourself the devastating financial implications of a foreclosure.
These implications include a heavy impact on your credit score, the ability to get another loan for a property, and so on. By conducting a short sale, you won’t have to pay anything out of the pocket because the lender will consider your loan settled. You may also be able to purchase another commercial property sooner than if you went through foreclosure.
3. Transfer of Ownership
Another option to consider when wondering how to avoid commercial property foreclosure is to transfer the property’s title to the lender in exchange for partial or full payment of the outstanding debt. Transferring the title of your commercial property (deed in lieu of foreclosure) means that the debt on your property is forgiven. It also makes the transfer of leases and tenant files easier for lenders.
4. Make a Forbearance Agreement
Forbearance is when a lender temporarily reduces or suspends mortgage payments and stops foreclosure proceedings, provided that the borrower makes good on some actions to pay off the mortgage. In a forbearance agreement, the lender can resume forbearance proceedings if you do not make the agreed-upon payments within the specified time frame.
5. Work Out a Loan Modification
A loan modification is a relief plan where a lender adjusts the original terms of a mortgage loan, making it easier for the borrower to catch up on missed mortgage payments. The lender might waive late fees, lower the interest rate, reduce the monthly payments, or extend the number of years you hold the mortgage.
To qualify for a loan modification, you must demonstrate difficulty making mortgage payments. This can include presenting documentation to the lender, such as a letter of hardship or records of your income before and after the hardship.
Talk To A Real Estate Lawyer To Avoid Commercial Property Foreclosure
Saving your commercial property from foreclosure involves taking a few simple steps, including working out a loan modification, arranging a short sale, transferring property ownership, making a forbearance agreement, and working with a real estate lawyer. Avoiding foreclosure will help keep your finances in check and protect your commercial property investment. Talk to a real estate lawyer today and keep your investment safe.
