What happens if a property I have a lien on is being foreclosed on?
Full Question:
Answer:
A deficiency judgment is typically in an amount equal to the difference between the funds received from a court sale of property and the balance remaining on a debt. Deficiency judgments are commonly issued when a property owner fails to pay amounts owed on a mortgage and the property securing the mortgage is sold to satisfy the debt, but the proceeds from the sale are less than the amount owed.
Deficiency judgments are not allowed in all states. In order to get a deficiency judgment in most states, the party owed money must file a suit for judicial foreclosure instead of just foreclosing on real property.
You might want to see USLF LA-5188 on our website which is a Louisiana Petition for Deficiency Judgment. It concerns defendants who have defaulted on loan payments, resulting in the foreclosure, seizure and sale of certain property of the defendants. Following the sale, a net unpaid balance due to petitioner remains, and petitioner requests that defendants be ordered to pay the full amount owing, along with interest, attorney’s fees and court costs. Petitioner further requests general and equitable relief. In addition, petitioner requests and is granted the appointment of an attorney to represent an absentee defendant in the matter.
If no funds were left over after the foreclosures, you can still bring suit on the promissory note unless it contains an exculpatory clause restricting you to proceeds from a foreclosure.