Bank Foreclosed Properties – a Discussion
Posted on February 23, 2010
Filed Under Bank Foreclosures |
Foreclosure is now at its peak in the UK. Factors like global economic slowdown, credit crunch and faulty credit behaviour are getting increasingly associative to Britons. Earlier, they had taken mortgages on a LTV (loan to value) of more than 100%. And, their inability to repay has lead to negative equity. Any residential property is said to have negative equity when its market value falls short of the amount of loan owed on that particular property. In this situation, repossession and foreclosures have become order of the day.
Foreclosures have become a blessing in disguise for the first time home buyers and businessmen engaged in real estate sector. It has offered them a unique opportunity to own a residential property at a lower price. Foreclosure is different from traditional repossession done by lenders when the borrower defaults. In repossession, the lender sells the property and return money (if any) to the borrower after deducting the owed amount from the sold price. The lender tries his best to sell the property at a higher price to cover his investment. In case of bank foreclosed properties, no such rule is followed and the complete process is carried by the bank. Hence, chances are brighter to get a cheaply home while buying from bank foreclosure properties.
Compared to pre-foreclosure purchase, buying a bank foreclosed property is better when aspects like litigations are taken into consideration. Banks take proper step to make the foreclosed property free from legal hassles. Here, auction process is more institutionalized and there is least chance of fraud.
You can collate scores of information regarding bank foreclosure properties with few clicks on mouse. On the web space, scores of website are there providing information, buying tips and guides regarding foreclosed homes. Hence, before purchase, you should do proper homework to have a better deal on bank foreclosure properties.
Anirban Bhattacharya
http://www.articlesbase.com/real-estate-articles/bank-foreclosed-properties-a-discussion-731601.html
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4 Responses to “Bank Foreclosed Properties – a Discussion”
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Owning Commercial Building Instead of Leasespace?
My husband and I are having a discussion about our shop lease space,
and the current economic climate. I feel that for the best security of
our business, we should own the building but, at present, the owners
are not interested in selling. This brought up a question that neither
of us had considered before. If a commercial property owner was in
financial trouble and was was foreclosed on, or could not pay their
taxes, what happens to the tenants? Would the bank or government
contact us about buying the property? Or, would our business just be
kicked to the curb? If that happened, would we have any legal
recourse? I was curious if anyone had experience with this issue, and
could comment on it.
The lender’s lien to secure the landlord’s mortgage is likely superior to your lease. If the lender foreclosed and purchased the property at the foreclosure sale (which is what usually happens), the lender in theory could evict you, but why would the lender do that? The only reason would be if the building were more valuable put to some other use, which your landlord would have done if that option had been available. What is more likely is that the lender would notify you of new ownership and management and pray that you will stay and continue to pay rent. Better yet, the landlord would likely love it if you would buy the building, because real estate owned by lenders is a drag on their capital requirements. Would they contact you to see if you will buy? Maybe. Should you contact the lender to see if you could work out a deal? Absolutely.
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Experience as an attorney.
Usually in a foreclosure the tenants have to vacate the property and notice is given by court order. That would not leave much time for a business to relocate. I suggest you have a serious discussion with the current owner to make sure that he or she is not in danger of foreclosure. If you are still not confident that they are giving you the right information then do a little investigation.
See if the taxes are up to date and if not then the owners may be in difficulty. See if there are any other indicators that they may be in financial trouble. Read your lease agreement and consult the attorney who drew up that lease or another real estate attorney and express your concerns.
When does your lease expire? Begin to look for a property to purchase that will accommodate your business. Have a back up plan.
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Most banks have wanted to sell their "repo’s" vacant. It just makes life easier for them and makes it available immediately for any purchaser. Your lease is wiped out in any foreclosure; unless the date of your lease preceeds the date of the mortgage. You would learn that by reading the foreclosure notice that would be taped on your front door..
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