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With an increasing number of commercial loan defaults, property owners are frantically seeking a solution to their financial crisis. The team at CLR is here to help! with a series of tip and tricks for commercial property owners facing hardships.
1. DO - PROTECT YOUR PERSONAL ASSETS
We don’t advocate hiding your assets, but making yourself “insoluble” as an individual is prudent. Lenders often have personal guarantees that they feel give them leverage. Ask your consultant for advice on how to make it difficult for any lender to pursue you on a personal basis.
2. DO - MAKE A COMMITMENT TO KEEP YOUR PROPERTY OR PREPARE AN EXIT STRATEGY
If you feel there is still potential in keeping your property, then you must take action in order to put yourself in the best position to succeed. If there is no potential, then make sure you protect your assets if a foreclosure is imminent.
3. DO - HAVE AN EXPERT IN THIS SPECIFIC AREA DEAL WITH YOUR CASE
Commercial loan workouts are totally different from residential loan modifications, and therefore requires totally different skill sets and experience. If you (or anyone you are thinking of retaining) have never successfully negotiated a commercial loan workout, keep in mind that your best opportunity for success is your first attempt. Your bank will typically offer some minor modifications that they feel might help. But those terms are typically not the best terms for the property owner.
1. DON’T - GIVE UP HOPE UNTIL ALL OPTIONS HAVE BEEN EXPLORED
Most property owners don’t know their true options. You may be selling yourself short if you only check into re-finance or sale options. Even if foreclosure proceedings have been filed, there is often still time to cure the problem.
2. DON’T - WAIT UNTIL THE LAST MINUTE TO DEAL WITH A POSSIBLE FORECLOSURE
It takes time to properly put together a proposed workout with a bank, and then it takes some time to negotiate. Every bank has their own “point of no return” where they have committed to proceeding with a foreclosure. Don’t take chances unnecessarily and avoid this situation if at all possible.
3. DON’T - TAKE ADVICE FROM THOSE WITHOUT DIRECT EXPERIENCE
The same could be said about any important decision. Friends or associates may have all of the good intentions when they give you advice, but remember it isn’t their property. You should seek advice from those who have specific experience in this area.
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