What could happen if we walk away fromsome investment property that we own?

Get Legal Help Today

 Secured with SHA-256 Encryption

What could happen if we walk away fromsome investment property that we own?

We own waterfront property. We bought it 4 years ago for $300K; we currently owe $180K.

Asked on August 1, 2011 Idaho

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Before you decide to walk away from your investment property and let it go into forelcosure, you need to ascertain what its value is presently. Even though you bought it for $300,000 four years ago, you owe $180,000 on it presently. Is it worth $180,000 or less? Can you make the monthly payments on it? Can you rent it our for cash flow purposes to help pay its debt load.

In most states if you buy a home for your own personal use the loan is "purchase money" and non-recourse by statute. Meaning, the loan on it if not refinanced and if defaulted upon cannot be the basis for a deficiency judgment against the borrower.

Also, some states distinguish between a judicial foreclosure and a non-judicial foreclosure. In most non-judicial foreclosures the laws are such that there is no recourse for a deficiency against the borrower even if the loan is not purchase money for a home.

Your investment property may not fall within the purchase money exception for a personal home.

You need to consult with a real estate attorney in your state as to the specifics of the loan for the investment property in conjunction with what is stated in the answer to your question.

Good luck.

 


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption