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Richard, Lawyer
Category: Real Estate Law
Satisfied Customers: 55611
Experience:  32 years of experience as lawyer in Texas. I'm also a Real Estate developer.
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I have commercial property that I am trying to short sale the

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I have commercial property that I am trying to short sale the bank will approve the shot sale if I pay a deficency of 100 k over 5 years which would come to almost 2000 a month I can't afford it but I want to sell the property because I feel a forclosure would be a lot more money . What would happen if I agreed to the deficency sell the property then pay for a while then default on the 100 would that be a stragetic way of my exposure
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good evening. Basically, in entering into this agreement with your lender, you and your lender would be entering into a new promissory note specifying the loan amount of $100,000 and the terms being payable over 5 years. This note would be unsecured. Should you later default, then the bank would have the right to pursue you for the remaining balance owed. Whether or not they will depends upon their assessment of the collectibility of a judgment against you. So, if you can convince them at that time there is nothing for them to get, and that if they were to pursue a judgment, you would simply file for bankruptcy protection and get the judgment discharged—and even if you have no intention of doing so, it is still good leverage with the bank because they do not know whether or not you would… then it is unlikely the lender will spend the time and money necessary to get a judgment they believe is uncollectible in the end. There would be no impact, adverse or otherwise, on your buyer.

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Customer: replied 4 years ago.
So if I default on agreed upon amount can the bank persue for the original defincency amount that had to do with the commercial property
Thanks for following up. You will want to clarify in the note that you signed that this $100,000 note represents your full liability to the lender and that in the event of a default, the lender only has the ability to sue on any unpaid balance of the note. You want to make sure that your documents do not give them the right to pursue the entire original deficiency. The lender will agree to these terms if you let them know that's the only way you are willing to agree.
Customer: replied 4 years ago.
What do banks normally do as far as the language goes would it not be a new promisory note or would they try to Ty the the two together
Most people don't read what they are signing and so sign something that allows the bank to pursue the entire deficiency...after all it's the bank that's drafting these documents. But, in almost all cases that I've been involved, if you insist that you only be liable for the remaining portion of the $100,000, the bank will agree.
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