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Richard - Bizlaw
Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8788
Experience:  30 years of corporate, litigation and international law
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1.) If a bank has foreclosed on investment property and sends

Customer Question

1.) If a bank has foreclosed on investment property and sends notice of a judgement hearing or law suit, I know the court can seize all bank account in our personal name, but can they also seize our Business account (Inc.) since we are the owners. Note, the foreclosure was not part of that business, but in another LLC? 2.)Can they make us cash in our IRA's, which are in mutual funds. 3.)We have rural property with no liability owed on it, but it has a 2 year contract with a lumber mill company to clear cut the timber. Can this be taken seized?
Submitted: 3 years ago.
Category: Business Law
Expert:  Richard - Bizlaw replied 3 years ago.
When you say foreclosed, has the property been sold at an auction and the amount for which the property was sold was less than the debt? Is there a deficiency judgment? Have you discussed the situation with the lender and is there a possibility for working out a reduced amount or payment plan for the deficiency?
Customer: replied 3 years ago.
It's a long story, but I'll try to hit the main points. We had a JVpartnership with a builder as the investor (along with many other subs he used to build). The chief loan officer "banker" who approved and handled many of the construction and land acquition loans (lots) was involved in some "not so legal" transactions by influence of bldr. Example: 1) gave draws to bldr without being able to produce the inspection that verified the draw; 2) bldr built his own house by asking subs to charge their matls and services to other investors loans; 3) allowed bldr to increase amount of loan at renewal date without new appraisal justifying additional money necessary to finish houses (cash was then given to bldr at the renewal closing) The bldr closed company in 2008 owing 22M and leaving the investors with cleaning up the liens, back debts, legal issues, etc. When we (investors) received our documentation and found these transactions (+others) fraudulent, most investors went to banker and most construction loans were forgiven at that point. We continued to try to hold to our committment and paid the interest for another year. When finances became difficult, we visited all our loan officers for solutions. When we met with this banker, he told us to hold off and let him see what he could work out. He made us a verbal offer to build on our lots and the lots held by the bank and he would roll the lot loans into the constr. loans with no liability to us. The bank would then resume responsibility for debts. 2 week later, we tried to meet with banker to discuss further. (Jan 2009) To date, we have not been able to reach banker by email, fax, phone, cell, home no, personal visit to bank, thru assistants, etc. After 6 months we gave up and assumed he haf forgiven our loans, because monthly coupons stopped coming, and at loan maturity, we weren't notified to renew. At end of 2009, bank went to FDIC. Apparently banker had not written off our loans or done anything with them, because Nov/Dec 2009, I received a call that the props were being foreclosed. A new bank SB&T had bought our loans on the steps at 1/3 the cost of our loan balance. The new bank is pursuing legal judgement for balance of debt, 2 yrs of interest, all other legal & associated fees for foreclosure & court costs. I went to confirmation hearing and the judge let me tell my situation and told me he truly felt we had been taken, but SB&T had processed the foreclosure correctly and therefore, he had to award them opportunity to sue. It has taken them almost 6 months now to get back to me. I have expressed my feelings to their attorney, in that I don't feel I owe this bank anything. I didn't take out the loans with them and I can most likely ask for a jury trial and have all the other investors disposed. But it's not what I want to do-costly for me (not much left to pay for legal fees, etc) and mentally it will be very hard. During all this, my husband had 2 massive strokes and has been in rehab since Nov 2009, one stroke requiring brain surgery, my mother of 92, who lived with us also went into heart failure and passed away within 2 weeks of the surgery, and my construction business partner on a large strip center mall, now in another litigation also passed 2 weeks after my mom. I'm 61, and having to manage our main business, drywall subtracting company, 2 strip center development projects, 4 rental properties, a lake house, and manage the timber sales at our rural land in Milledgeville. I have 8 other loans with 4 banks. I'm trying to hold on to our retirement, which is all the liquid assets we have left. So,my questions relate to trying to make the best decision for securing as many assets as possible, without losing everything. The other bankers are working with me, but realistically, it's only a matter of time before the larger loans (1.7M and 66,000) will be foreclosed on. The drywall business isn't bringing in enough money to balance out the interest on the loans each month. Down to last cash resource.
Expert:  Richard - Bizlaw replied 3 years ago.

I am sorry to hear of your predicament. If there is a personal judgment against you, your personal assets can be levied upon. However, the lien of the deficiency judgment does not take precedence over an existing lien on the property in question. For example, your personal home mortgage would take precedence over the lien of the judgment. This is important because the judgment creditor may not be prepared to pursue such an asset knowing that they must pay off the prior liens otherwise they foreclose themselves out of the property.

 

On your business that is in a LLC name, they judgment creditor has the right to receive the distributions you receive from the business that are profits. Salary you receive is subject to the statutory limitation of 25% of the pay after withholding taxes and social security.

 

Your IRA are exempt from execution so long as they have any anti alienation provision in them. You should make sure they do. Money in 401k plans and pensions are also exempt from execution.

 

On the facts you have stated, I would not abandon defense of the case even if you have to do it yourself. You have a good argument that the bank committed fraud through its bank officer and that the debt itself is the product of fraud in which the bank officer conspired. Your goal is to get to tell your story to a jury. The new bank may decide to settle by just taking the property. If you indicate that you will fight, they may be more reasonable.

 

Good luck

 

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This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.

Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8788
Experience: 30 years of corporate, litigation and international law
Richard - Bizlaw and 5 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.

The new bank hasn't actually requested a judgement hearing date, but sent docs indicating their intention. Which is why I'm undecided whether to settle or pursue jury trial. They want more than I feel is reasonably theirs, considering what I found had gone on for several years with our loans with this banker. I feel the original bank made more than their share of our money on previously satisfied loans.

Last question, related to the land we hold for timber management, which is under a 2 year contract to clear cut. Should SB&T move forward with pursuing a judgement and win (I'm truly trying to be proactive.We may not get to this point, but I want to understand my rights and be prepared for the outcome), can they pursue taking possession of this land to satisfy the amount of debt they are anticipating.? Or is this land secure until the lumber contract is completed? We've already been paid for 75% of the sale of the timber, so I would think because it's a binding and registered contract, they would be less likely to go for it. Your thoughts.........

Expert:  Richard - Bizlaw replied 3 years ago.

If they levied on this land it would be subject to the contract. They would have to put the land up for sale subject to the contract. Alternatively they could collect the remaining amounts due you under the contract. You might consider putting the land in a LLC which would limit their ability to force a sale. This area can get technical and you would need to speak to an attorney to discuss all the issues but it would certainly slow them down on the land.

 

If this answer is responsive to your question, please accept it. That is how we are compensated. I would also be appreciated if you provided feed back on your view of the answer. Finally, if the answer was especially helpful you can provide a bonus. If I can be of further assistance or you have other questions in the future you can ask for me and reach me at this site.
This communication is not intended as legal advice. A local attorney should always be consulted for legal advice. No client/attorney relationship is intended or created by this communication.

Richard - Bizlaw, Attorney
Category: Business Law
Satisfied Customers: 8788
Experience: 30 years of corporate, litigation and international law
Richard - Bizlaw and 5 other Business Law Specialists are ready to help you
Customer: replied 3 years ago.
Thank you so much. The information was very helpful and given me new insite as to resolving these issues.
Expert:  Richard - Bizlaw replied 3 years ago.
You are welcome and thank you for accepting the answer.

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