It’s beyond the scope of this blog to predict where the commercial real estate market is heading, but there are those who have predicted a downturn. If that turns out to be right, there may be more loans than usual going into default. If you are considering buying a commercial note that is in default because you ultimately want to foreclose to buy the property securing the loan, consider the following as part of your due diligence:
- Are the loan documents enforceable? The loan documents should be reviewed for compliance with Florida law. Presumably this was done by the lender and borrower when the loan was originated, but don’t assume anything.
- Does the current lender have the original promissory note and any allonges? In Florida, a lender generally needs the original note and any allonges to turn over to the court at a certain point in a foreclosure. A lender without the original note may still enforce it, but there are legal requirements that must be met.
- What’s on the title report? A note purchaser should consider ordering a title search on the property to check for other mortgages, liens, and surprises.
- What did the current lender and borrower discuss? If the loan is already in default, the current lender and borrower may have discussed the default and related issues, like forbearance or modification of the loan terms. It is important to understand what representations the current lender made to the borrower and vice versa.
- Are there any known defenses of the borrower? Ask the current lender whether the borrower has already suggested how it might defend a foreclosure or lawsuit to enforce a loan guaranty. For example, has the borrower asserted that the lender did not fully fund the loan? Or has the borrower claimed that it was promised a loan modification?
These are common issues, but every loan can have its own quirks.
- Partner
Matt Chait is the Managing Partner of the West Palm Beach office of Shutts & Bowen LLP, where he is a member of the Business Litigation Practice Group. His statewide practice focuses on commercial real estate and land use litigation ...
Search Blog
Follow Us
Recent Posts
- Florida Appellate Court Provides Further Guidance Regarding New Summary Judgment Rule
- SEC Adopts New Cybersecurity Rules
- From 😊 to 💼: Can Emojis Create a Legally Binding Contract?
- HB-3: An Overview of ESG Factors Relating to Public Funds Investment and Financial Industry Impacts
- The Live Local Act Part 2 - Affordable Housing Incentives
- Florida's Live Local Act
- Florida Preliminary Injunctions Must Merely Preserve the Status Quo
- Can a Landlord Obtain Funds Deposited by Tenant in the Court’s Registry?
- Drawn-out negotiations over purchase agreement result in extensive litigation
- In eviction case, trial court wrongly made landlord produce leases with other tenants
Popular Categories
- Litigation
- Contracts
- Landlord-Tenant
- Business
- Litigation (Appellate)
- Supreme Court
- Real Estate Law
- Cyber fraud
- Technology
- Business of Real Estate
- Property Tax
- Development/Land Use
- Cybersecurity
- Data Security
- Conveyances
- Foreclosures
- Estate planning
- Trusts and Estates
- Lease
- Wealth planning
- Business
- Insurance
- Restrictive Covenants
- Title
- Construction
- Promissory Notes
- Regulatory Compliance
- Government
- Creditor's Rights
- Liens and encumbrances
- Compliance
- Americans with Disabilities Act
- Eviction
- Bankruptcy
- Ad Valorem Assessments
- Attorneys' Fees
- Appeals
- Attorneys' Fees
- Employment and Labor
- Litigation (Labor & Employment)
- Small Business
- Mortgages
- Loan guaranties
- Consumer Protection
- Regulation
- Maritime
- GAO
- Commercial Brokerage
- Renewal
- email hacking
- Lis Pendens
- Homestead
- Partnerships and LLCs
- Standing
Editors
- Associate
- Partner
- Partner
- Partner
- Partner
- Associate
- Partner
- Associate
- Partner
- Partner
- Partner
- Partner
- Partner
- Associate
- Partner
- Partner
Archives
- August 2023
- July 2023
- June 2023
- May 2023
- January 2023
- October 2022
- July 2022
- March 2022
- February 2022
- January 2022
- December 2021
- October 2021
- September 2021
- August 2021
- July 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- October 2020
- September 2020
- July 2020
- June 2020
- March 2020
- October 2019
- August 2019
- July 2019
- May 2019
- February 2019
- July 2018
- June 2018
- May 2018
- March 2018
- February 2018
- January 2018
- October 2017
- August 2017
- July 2017
- June 2017
- May 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016