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Judicial vs. Non-judicial commercial foreclosures

When real estate is your business, you have to make decisions that work best for you. Unfortunately, that sometimes includes commercial foreclosures.

In the state of New Hampshire, judicial and non-judicial foreclosures are available. It is important to understand the difference between the two in order to make the best choice for your situation.

Non-judicial

This is the more common form of foreclosure because it tends to be a quicker way for lenders to recover funds in full. The option is available when the deed or mortgage contains a power of sale clause. This clause basically states that a mortgagor pre-authorizes the sale of the property in order to pay off any associated debt. In order for the foreclosure to become valid, lenders must follow proper protocol, as set forth in New Hampshire's foreclosure law. This includes filing a notice of sale with the county, notifying the mortgagor at least 25 days before the foreclosure sale, and listing the property in the local newsletter for at least three consecutive weeks, amongst other requirements. If any part of the requirements is not met, the clause becomes invalid. However, the judicial foreclosure process would still be an option.

Judicial

For the judicial process, a lender files a complaint with the court in the county that holds jurisdiction over the property. The court then issues a decree of sale to the lender. The courts give the mortgagor some time to answer the complaint, and many times the court will allow the mortgagor to establish an agreement to pay the delinquent amount and any additional fees. If the mortgagor does not uphold the agreement, the lender may then sell the property.

As you can see, outside of the receiver option, a commercial foreclosure is similar to the residential process. However, having a clear understanding of the actual commercial process will allow you to prepare properly so that you reach the best outcome.

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