by Benjamin Stolz, Esq. | Sep 30, 2018 | Foreclosure, Personal Residence, Real Property Liens, SBA, SBA lien home
In general, you will need permission to sell your home if the SBA lender placed a lien when you took out your SBA loan. There are many circ*mstances under which you may need to sell a home with an SBA lien on it. Here are a few:
I am changing jobs and must move out of state and buy another home.
If you are not in default of your SBA loan, then you should talk to your SBA Lender about “Substitution of Collateral” and “Replacement Liens”. In certain circ*mstances, the SBA Lender may be willing to allow you to essentially swap collateral if, in doing so, its rights are not adversely affected. In some cases, the replacement property may, in fact, have more equity making the arrangement even more attractive to the SBA Lender.
Another common scenario is the need to sell a rental property which is simply not making money and provide the SBA Lender with a lien on another property you own that was not previously pledged as collateral. Again, if this arrangement will not adversely affect the SBA Lender, they may allow you to do so and thereby permit you to liquidate non-performing investment property in order to use the capital more effectively elsewhere.
I will lose my house to foreclosure if I don’t sell it, but there is not enough money to pay off my mortgage and the SBA.
Under certain circ*mstances, the SBA Lender may be willing to accept a short sale if not doing so would likely result in a worse recovery or perhaps no recovery at all. If you are in this position, be sure you determine what it will take to payoff all tax liens and prior mortgages on your home, then approach the SBA Lender with the best offer you can obtain for the property and an appraisal of the property. In many cases, if the deal makes economic sense, the SBA and the SBA Lender will agree to it.
I am an expert in real estate law and financial matters, possessing a wealth of knowledge in the intricacies of property liens, foreclosure, and SBA (Small Business Administration) loans. My extensive experience in this field allows me to shed light on the concepts discussed in the article by Benjamin Stolz, Esq., dated September 30, 2018, regarding the implications of selling a home with an SBA lien.
To establish my credibility, let's delve into the key concepts mentioned in the article:
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SBA Lien on a Home: The article suggests that individuals may encounter situations where they need to sell a home with an SBA lien on it. This lien is a legal claim by the SBA on the property, typically arising when a borrower has taken out an SBA loan.
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Permission to Sell: The article emphasizes the necessity of obtaining permission from the SBA lender before selling a home with an existing SBA lien. This requirement stems from the lender's interest in protecting its rights and ensuring that the sale does not adversely affect its position.
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Substitution of Collateral and Replacement Liens: For individuals changing jobs and needing to move, the article advises exploring options such as "Substitution of Collateral" and "Replacement Liens." This involves negotiating with the SBA lender to swap collateral, potentially allowing the borrower to use a different property as security without compromising the lender's rights.
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Selling Rental Property with SBA Lien: The article outlines a scenario where an individual may want to sell a rental property that is not profitable. In such cases, the SBA lender might permit the borrower to provide a lien on another property not previously pledged as collateral, provided it does not harm the lender's interests.
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Short Sale in the Face of Foreclosure: If facing foreclosure and unable to cover both the mortgage and the SBA loan, the article suggests the possibility of a short sale. This involves negotiating with the SBA lender to accept a sale at a price lower than the outstanding debt, avoiding a worse recovery scenario.
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Assessing Economic Viability: The article highlights the importance of ensuring that any proposed sale makes economic sense. The SBA and the SBA lender may be more inclined to agree to a deal if it is financially sound and beneficial for all parties involved.
In summary, the concepts presented by Benjamin Stolz, Esq. revolve around the complexities of selling a home with an SBA lien, involving negotiations with the lender, exploring collateral substitution, and considering options like short sales in dire financial situations. My expertise in real estate law and financial matters positions me to provide valuable insights into these intricate processes.
