Commercial Foreclosure FAQ

In today’s challenging economic climate, business owners and lenders have questions about their options when the mortgage can’t be paid. Can a commercial property be foreclosed upon right now? What does the process look like in a system that is still impacted by the pandemic? In this blog, we answer some of the most frequently asked questions we receive about commercial foreclosures in South Florida.

Can a Commercial Property Be Foreclosed Upon Right Now?

Yes. The current federal moratorium passed by the Centers for Disease Control specifically limits the relief to residential tenants adversely affected by COVID-19. If a commercial property owner and their mortgage holder cannot come to a mutually satisfactory arrangement to pay any arrears, the latter can proceed with a foreclosure.

What Does the Process Look Like in a System That is Still Impacted By the Pandemic?

The process has not changed. When a business owner falls behind on their mortgage payment, the lender sends them a pre-suit letter advising them of the delinquency and providing an opportunity to cure the default. 

If they can’t or won’t make up for the missed payments, the lender can file a lawsuit and begin the foreclosure process. The business owner will receive a notice informing them that pre-foreclosure has been initiated and explain what they can do to remedy the default. Once served, they must respond within 20 days or the lender will receive a default judgment.

If the matter proceeds to court and the judge decides that foreclosure is warranted, they enter a final judgment and schedule a judicial sale of the property.

Are There Defenses to Foreclosure?

Yes. Depending on the circumstances, acceptable defenses may include:

  • Usury: Florida law limits how much interest a lender can legally charge. For loans up to $500,000, the amount is 18%. Anything above that amount is capped at 25%. Any mortgagor that charges more has broken the law.
  • Statute of limitations has expired: In Florida, the statute of limitations for foreclosure is five years from the date of default. Any legal measures pursued after that date are invalid.
  • Lack of notice: If the mortgagor failed to notify the mortgagee of the delinquency or give them the chance to pay the arrears, the court may deny the foreclosure.
  • Fraudulent inducement to default: If the lender uses false pretenses to induce the business owner to default, their foreclosure request could be refused.

Does the Business Owner Need an Attorney?

Yes. Florida law requires businesses in foreclosure lawsuits to be represented by an attorney. In any event, a foreclosure attorney can assist their client in negotiating with the lender to prevent a foreclosure action or pursuing alternate options such as refinancing, loan forbearance, or a short sale.

Contact a Florida commercial foreclosure attorney today

Many Florida businesses are currently unable to make enough money to pay their mortgages, putting lenders in an equally difficult position. At Reyes Law Group, we help business owners and mortgage holders protect their interests during these challenging times. If you have questions or require representation during a commercial foreclosure action, call 954-369-1993 or contact us online.