Legal Question in Real Estate Law in Illinois
Multi-Family Property in Foreclosure
I currently have a 6 unit building in foreclosure (5 months past due in payments). 4 of the units have stopped paying rent. I tried applying for a short sale but the lender has refused because they state it is a commercial building (more than 4+ units). Now if I let the property fully foreclose, are they going to come after me for the deficiency? I have heard mixed answers on this
1 Answer from Attorneys
Re: Multi-Family Property in Foreclosure
The answer is they may come after you. It will be a personal debt, the mortgage [lien] having been extinguished in the foreclosure court. However, it's impossible to say if they think it'll be worthwhile pursuing you for the personal debt. I think it's more likely on a commercial property than a personal residence unfortunately, because presumably you still have other assets (e.g., a personal residence) they can pursue.
Additionally, the deficiency (the difference between what you owe and what they collect) is taxable as income if it's not on a personal residence. Their explanation that they won't short sell because it's commercial also doesn't make sense to me. My guess is that they don't want to short sell because the deal wasn't good enough.
Contact my office if you'd like a free consultation to discuss this further.
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