Getting a Deficiency Judgment After a Commercial Foreclosure

If you are a Real Estate Asset Manager or Loan Portfolio Manager, you know how complicated it can be to get your non-performing properties through the foreclosure process and to an auction. Sometimes, however, the auction sale does not produce enough funds to pay your debt on the property. If the property is located in Florida, you then have the right to obtain a Deficiency Judgment or have one issued by the Court.

A Deficiency Judgment is a Court Order that seeks to cover any debt that was left unaccounted for after the foreclosure process ends. They are typically awarded when an auction sale does not reach the total amount of the debt owed on the property. A Deficiency Judgment is not awarded automatically – your attorney has to request one. It will never be for more than the amount of the outstanding debt, although it is possible it could be for less.

Imagine a borrower purchased a commercial property at the price of $700,000. After six months of making payments, they default on the property, with $650,000 still outstanding. Following a commercial foreclosure, the property is sold for $590,000. Typically, that is the end of the story – even though there is still $60,000 left unpaid and unaccounted for. If the Asset Manager or Loan Portfolio Manager wishes, they can obtain a Deficiency Judgment ordering the borrower to still pay the remaining $60,000. This successfully covers all of the Asset Manager’s losses.

So now that you have been awarded the Deficiency Judgement, what happens next? Once the Deficiency Judgment has been successfully obtained, the obvious next step is to pursue the debtor and/or guarantor to collect on the difference. At the Reyes Law Group, we are familiar with navigating this aspect of the Commercial Foreclosure process. When the borrower signed for the property, they were agreeing to pay for it – and they are still obligated to do so.

If you are facing the issue of still needing to collect on debts after a Commercial Foreclosure and an auction – whether you have already obtained a Deficiency Judgment and need help collecting or you are interested in the process of being awarded one – contact the Reyes Law Group today! We exist to serve Real Estate Asset Managers and Loan Portfolio Managers with non-performing properties in Florida. At the Reyes Law Group, we not only defend your investment, but preserve your rights and value your trust… every single day.

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Reyes Law Group

Reyes Law Group represents clients in a multi-disciplinary legal practice involving real estate transactions and litigation with a “footprint” that covers the State of Florida. Over the firm’s first 10 years, Reyes Law Group has closed over $100M in commercial closings, representing buyers and sellers in contract negotiations, due diligence, and the related title review and policy issuance related to closings. In litigation, the firm has commercial litigation experience focused on prosecuting or defending claims such as breach of contracts, partition actions, trade secret violations, and breach of non-competes. However, our firm’s MAIN FOCUS is assisting asset and loan portfolio managers, investors and private lenders with a “ 4-PILLAR APPROACH” to the legal challenges they face with non-performing assets: 1) LOAN WORKOUTS; 2) COMMERCIAL FORECLOSURES (across the State of Florida); 3) COMMERCIAL EVICTIONS; and 4) REO COMMERCIAL CLOSINGS.30+ years’ legal experience means - WE CAN HELP!

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