Is it legal to sell some properties and let others go into foreclosure?
Jennifer S asked:
I have several properties. Some are upside-down and some have equity. Is it legal to sell the ones with equity and let the others go into forclosure?
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I have several properties. Some are upside-down and some have equity. Is it legal to sell the ones with equity and let the others go into forclosure?
April 20th, 2010 at 3:26 pm
Yes. frak1a12345
April 21st, 2010 at 8:00 am
your lender’s will have deficiency judgements against you for short properties and will come after you for those balances.
they will not just give up on an investment loan. you will need to file for bankruptcy protection in order to prevent them from going after you for deficiency judgements on investment property.
you need to see a tax attorney as fast as you can. you could also be taxed on deficiency amounts. David Z
April 21st, 2010 at 4:27 pm
Probably can’t quite work it out that way. They will want liens and chase after you, your other property.
With personal residence, owner occupied, the loans are Non-recourse, the lender has to be satisfied by the property. But with investment properties, that is NOT the case, they can come after you for deficiency after foreclosure.
So yes it is Legal to sell some of your property and let others go into foreclosure, but you aren’t protecting yourself that way. Yes it is legal for them to chase you for the money you promised to pay them. And if instead of chasing you, they give you a 1099C, you have lots of income to pay taxes on.
I’d suggest hanging on to the property if it is generating adequate cash flow and wait for the market to stabilize more. Sounds like you’re overleveraged. chatsplas
April 25th, 2010 at 3:11 am
Yes, it’s perfectly legal, but it might not be in your best interest.
Just letting a property go into foreclosure is never a good idea.
Your best solution all of this is to try and work with your lenders to get a fresh start without any of the homes completing the foreclosure process.
I’m going to assume these are (supposed to be) income producing properties, since you are referring to multiple properties. This advice may not be the same if these are all personal properties, but hopefully it’s helpful either way.
If you intend to get rid of all your property, then you should get all of them listed for the current market value. Once you have an offer, you will need to negotiate a short sale with the lender(s). When you do this, you need to make sure you have them agree not to pursue a deficiency judgment. I would highly recommend hiring a professional to make sure this is done correctly and you are protected.
If you have some properties that are still producing an income, you may want to keep them. This can be done while still getting a short sale on the others.
It may also be possible to get loan modifications on all the properties too. So if reduced payments could help you save the homes, this option should definitely be considered. Again, a negotiator would be advisable for a loan mod, since most lenders automatically turn down home owners these days.
There are many options when facing foreclosure, but in most cases, you will need to hire someone who has experience and knows exactly how to resolve these issues.
Just be careful who you work with, because there are a ton of scams out there and plenty of scumbags who will try and steal from you! foreclosurefish_com