I. Typical Scenario

  • Non-Institutional Lender
  • Higher than average interest rates
  • Borrower in distress prior to loan
  • Borrower overextended on this loan and possibly others
  • Default has occurred and lender has decided to foreclose
  • Significant Available Loan Documentation
    • Promissory Note
    • Mortgage, Security Agreement, and Fixture Filing
    • Personal Guaranty
    • Mortgage on Guaranty-related Property
    • Assignment of Rents and Leases
    • Forbearance Agreements
    • Pledge Agreements (in the shares of stock of the borrower or the guarantor)
  • Lawsuit is filed in Florida Circuit Court
    • Breach of Promissory Note
    • Foreclosure of Mortgage
    • Foreclosure of Security Interests (UCC-1)
    • Enforcement of Lender's Rights To Rents (via Assignment of Rents and Leases and Florida Statute § 697.07)
    • Action to Appoint a Receiver
  • Lawsuit is filed in Florida Circuit Court
    • Breach of Promissory Note
    • Foreclosure of Mortgage
    • Foreclosure of Security Interests (UCC-1)
    • Enforcement of Lender's Rights To Rents (via Assignment of Rents and Leases and Florida Statute § 697.07)
    • Action to Appoint a Receiver
    • Breach of Guaranty
    • Foreclosure of Guaranty Mortgage
    • Breach of Pledge Agreement
  • To the Lender . . .

Time = Tax Payments + Insurance Payments + Attorneys Fees + Lost Opportunities = One Big Headache

  • To the Borrower . . .

Time/Delay = Hope

  • The borrower engages lender in significant motion practice and possibly counterclaims.
    • Motion to Dismiss Complaint
    • Motion to Appoint Receiver
    • Motion for Assignment of Rents and Leases
    • Counterclaim for Usury
    • Counterclaims for Slander of Title
  • The borrower may even conduct discovery for further delay.
  • Eventually, the Lender obtains a judgment.
  • The borrower seeks stay of foreclosure sale pending appeal with trial court.
  • The borrower appeals to District Court of Appeal.
  • The borrower moves for a stay of foreclosure sale with appellate Court.
  • On eve of the foreclosure sale, the Borrower files a Chapter 11 Bankruptcy Petition.