What happens if you default for a mortgage on a building?
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What happens if you default for a mortgage on a building?
My mother and father owned their own business. My father sold the business and the contents to someone but retained the ownership of the building and received rent. My father died 2 years ago, leaving my mother responsible for the mortgage on the building. The person they sold the business to just died and the business will now be dissolved leaving my mother with the building and no rent payment with which to pay the mortgage. She has tried to sell the building but no luck. If she defaults on the loan what would happen?
Asked on May 18, 2016 under Real Estate Law, Indiana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
1) The lender can foreclose on (take) the building and then sell it (such as at a sheriff's sale) to try to recover any unpaid balance on the mortgage.
2) If after foreclosing on and selling the building, there is *still* an unpaid balance (that is, whatever is brought in by the sale, after taking out the expenses of the sale, is not enough to pay off the balance of the loan), the lender could sue your mother, if she is on the mortgage, for the rest of the money.
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