December 17, 2017

Commercial Foreclosure: When Can Lenders Foreclose?

I was quoted in The Charlotte Observer in 2009 regarding a $515 million luxury condo, office and retail project in Cornelius, NC that wass being foreclosed upon.

Many people are surprised to learn that the developers hadn’t missed payments.  Then why the foreclosure?  Because the project wasn’t hitting agreed-upon milestones — the developers hadn’t leased enough of the space. This is what is known as a “non-monetary default” or “breach of convenants.”

I expect to see more of this type foreclosure.  As a result,I  encourage developers of every size and every stripe (residential, commercial, multi-use)  to consult with a qualified bankruptcy attorney well BEFORE they miss a milestone or loan covenant.

Watching the news and dealing with my clients’ cases, we’re in a climate where many creditors would rather take their beating now than wait for the market to come back. Even if you don’t foresee an issue with your project, a recession like this one is a time every developer should sit down for a proactive asset planning  and protection session with a qualified attorney.

People tend to stick their heads in the sand and hope for the best.  Hoping for the best isn’t a strategy.  You can hope for the best while planning for the worst.

Call my office today.