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How is a Deficiency in Foreclosure Determined?

Orlando, FL |
Filed under: Foreclosure

We foreclosed several years ago on a commercial property. Our attorney said we were not entitled to deficency although owed 2M because the property we got back, which we bought at auction for $100.00 in an appraisal would be higher than the 2M owed.
The bank is now threatening foreclosure on me for this same property. Its value has decreased but will still be valued in an appraisal at more than is owed. Will I be responsable for the difference if it does not bring at auction the amount owed? I was told I would which seems to contradict what I was told when we foreclosed.

Attorney Answers 3


  1. Best answer

    You state that the property will "still be valued in an appraisal at more than is owed." While that may be true, the actual value of commercial property these days seems to vary greatly depending on whom you ask. Furthermore, you run the risk that the bank will prepare a "low ball" appraisal and sue you for the difference between what you owe and their "low ball" appraisal figure.

    The best way to protect yourself would be to get your own appraisal at or very close to the sale date just in case the bank tries to come back after you for a deficiency.


  2. A deficiency judgment is directed to the equity powers of the Court. It is typically the difference between the funds received through the foreclosure and the actual value of the property. The foreclosure sale amount is an indicator of the value of the property but not the final statement. An evidentiary hearing would be required to determine the amount of the deficiency, if any. You may be responsible for a deficiency if the total value received is less than the amounts due per final judgment. On your case, there likely would not have been a deficiency since the value of the property you received was greater than the debt.

    The answers given are limited to the facts as given and presumed by the answer itself. Without seeing actual written documentation or having a conference to more fully explore the issues, this short answer has only limited application. Make sure to seek legal counsel and provide all documentation to get assistance in making informed legal choices. Bstein@dcfsz.com, 305 377 1505


  3. I guess the other question is that you might not even have a judicial sale depending upon how the case is handled. Is there no possible way to work out the issue with the lender? If you are now resigned to the auction so to speak, then the deficiency may be the difference, certainly, between what is owed at the time of the sale and what the lender realizes at the sale. In that case if you owe more than what is gained at the auction, then YES, there can be additional proceedings to obtain the deficiency from the note obligor (possibly you, personally, or another entity or both).

    I think the key might be to get licensed, experienced counsel, now such that you can evaluate how to handle the case before it gets into a sale situation. Why not negotiate the waiver of deficiency now?

    NOT LEGAL ADVICE--FOR EDUCATIONAL PURPOSES ONLY. We don't know the facts and this is not legal advice. Seek the advice of licensed property law attorneys immediately so they can secure your rights. Hiring an attorney is a serious and important decision. Please ensure that you take the time necessary to evaluate and interview more than one attorney to determine whom to hire.

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