Like homeowners, business owners can fall behind on their mortgage payments. If this happens, your lender will typically start the foreclosure process to sell the property and receive some type of repayment on the loan. The main difference between a residential foreclosure and a commercial foreclosure is the possible appointing of a receiver.
If you are in financial trouble and can no longer afford the payments on your commercial property, it’s best that you reach out to your lender and discuss potential options. It’s also important that you work with a Mississippi real estate lawyer so that your end of the process is handled legally and professionally.
Judicial or Nonjudicial Foreclosures
A commercial foreclosure can be handled in one of two ways, depending on the state you live in and the language in your mortgage agreement.
- Judicial- In a judicial foreclosure, the lender files a lawsuit against the borrower (you) and asks the court for a judgment. You will have a specific number of days, usually, 20-30, to respond to the lawsuit.
- Nonjudicial- In a nonjudicial foreclosure, the lender will foreclose on the property outside of the court. For example, the lender may give you a written notice of default. Mississippi is one of the states where nonjudicial foreclosures are practiced.
Talk to your real estate attorney in Mississippi to determine whether your foreclosure can be handled judicially or non-judicially and the next steps to take.
Appointing a Receiver
As the owner of the property, you should continue to care for the lot/building until the closing date. Below are some of the expectations that the lender may have for you.
- Continue to maintain and secure the property.
- Continue to keep the property insured.
- Do not allow the property to deteriorate.
- Do not collect rent or other profits (unless they go toward the mortgage debt).
In order to protect the property, the lender may ask the court to appoint a receiver, which can happen in both a judicial and nonjudicial foreclosure. The receiver will manage the property until the foreclosure process has been completed.
Asking the Right Questions
When working with your Mississippi real estate lawyer, be sure to ask the right questions. For example,
- Can filing for business bankruptcy help you avoid foreclosure?
- Can you run your business at another location?
Just because your commercial property is being sold doesn’t mean you have to lose your business, too.
For more information in regards to foreclosing on a commercial property, call Susan Pinkston today.