Winston M asked:
A bank is foreclosing on a friends business that they thought was protected by LLC. Now the bank is coming after them personally. Can the bank take their home that another bank has a lean against?
A bank is foreclosing on a friends business that they thought was protected by LLC. Now the bank is coming after them personally. Can the bank take their home that another bank has a lean against?
If this is in California, I know how they can stop the forclosure and sue the lender. Yes the bank can go after them for the deficiency of the forclosure, which means that after the sale of the property as a bank repo, what ever the bank has lost, they can recover by filing a lawsuit against your freind. If the commercial property was personally guaranteed by your freind , that is probably why they are trying to collect. More information is needed on this case. Send me an email.
The bank could place a lien on a home but that will make no sense because this does not guarantee the bank to receive their money.
For instance lets assume that the bank were to place a lien on the home that already has a mortgage (1st lien at 80%) and a 2nd lien at 20%, when the bank places an additional lien, they would be the 3rd lien. Now lets assume that your friends default on the 1st lien, typically after the asset goes to auction, the subordinant liens fall off. The first lien takes prescedence. So the bank will still not get their money,
Now as far as the LLC is concerned, the LLC does protect you in many instances but if your friends signed a personal guarantee, then that protection is lost. However, there are pieces of this puzzle that are missing.
Did the party sign a personal guarantee for the loan? If so, coming after them personally was a foregone conclusion, despite any LLC. If another bank has a first mortgage on the personal residence, they would have to put a lien on the house subordinate to the existing mortgage. Either party can force foreclosure on the house, sell it and repay the mortgage and the lien both.
Not usually. As long as the payments on the home you want to keep are current and you keep insurance and taxes paid.