If the bank sells your building for less than you owe, are you liable for the remaining amount?

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If the bank sells your building for less than you owe, are you liable for the remaining amount?

This was an Assisted Living Facility.We were leasing it out and the leasee let her license run out so the state closed it down. It is completely furnished and we are trying to sell the property. We have a mortgage with the bank of $100, 000. So if they start foreclosure and sell for less do we make up the difference?

Asked on September 13, 2011 under Real Estate Law, Michigan

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

When a lender sells real property for less than the remaining mortgage balance, the difference is known as a "deficiency". According the lender can sue the borrower in court for the difference (plus coosts/fees/interest) and obtain a"deficiency judgement". It can they proceed to garnish any non-exempt assets of the borrower in order to satisfythe debt. And deficiency judgment are legal in MI.

At this point you should consult directly with real estate attorney in your area.


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