Owners of Commercial Properties Not Protected by Anti-Deficiency Statutes

by Christopher Combs Arizona Real Estate Attorney Is it better to do a short sale foreclosure or let a building go into foreclosure? The loan on a small office building in Gilbert is $850,000. The bank has approved a short sale of $700,000 to a buyer from California. As a condition of approval, however, the bank is requiring a promissory note to pay the $150,000 short sale deficiency in monthly payments over three years. The bank says that, if the seller does not agree to make these payments, the bank will simply do a short sale foreclosure and sue for the $150,000 deficiency. The bank knows they can collect because they have the loan application which lists personal assets. Do anti-deficiency statutes protect owners of office buildings?

The anti-deficiency statutes do not protect owners of office buildings after foreclosure; and only protect homeowners that own a home located on 2 ? acres or less that is utilized as a dwelling. In this instance it is recommended to close the short sale transaction because that will ?stop the bleeding.? If there is no short sale, the bank is under no obligation to immediately institute foreclosure proceedings, and many banks are postponing foreclosure sales indefinitely because they don?t want to have to pay the property taxes, association dues, repair/maintenance, etc. In other words, if the foreclosure is not held for another year, the value of your office building could decrease to $600,000 with a deficiency of $250,000. And after the short sale transaction closes, one might be able to negotiate a one-time cash payment for less than the $150,000 promissory note, provided funds are available.

Combs Law Group was organized as and continues to be a highly specialized, boutique real estate law firm. For more information please contact us at info@combslawgroup.com or by calling 602.957.9810.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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