In New York, an owner can generally sell a commercial building at any point before the foreclosure sale, because foreclosure is a judicial process and title does not pass until the referee's sale. If the sale price covers the loan, the lender is paid at closing. If it does not, the lender must agree to a short sale. Acting early, with an attorney, gives the owner the most options.
How does commercial foreclosure work in New York?
The lender files a foreclosure action in the Supreme Court in the county where the property sits. The owner has a chance to respond. If the lender wins, the court issues a judgment of foreclosure and sale, and a court-appointed referee sells the property at a public auction. The process commonly takes many months, and contested cases can take much longer. A receiver may be appointed to collect rents along the way.
Can I still sell once foreclosure has started?
Generally, yes. Until the referee's sale, you usually still own the property. Many owners sell during the case. The buyer's closing pays off the lender, or pays the amount the lender agrees to accept, and the lender discontinues the action.
Have your attorney confirm the status of the case, whether a receiver is in place, and whether any court orders affect a sale.
What if I owe more than the building is worth?
Then the sale is a short sale and the lender must approve it. Lenders want to see a credible written offer from a buyer who can close, an explanation of value, and confirmation of where the proceeds go. Guarantors should discuss with their attorney how a short sale affects any personal guaranty and whether a release is available.
Can I keep running my business in the building?
Often, yes, through a sale-leaseback. You sell the building to a buyer and sign a lease to stay. The sale pays off the debt and you keep your location. The rent and lease term are negotiated upfront so you know exactly what you are agreeing to.
What should I do first?
Talk with a real estate or bankruptcy attorney. Gather your loan documents, leases and any notices from the lender or court. Then get a written offer, so you have real numbers. Belcz Group buys commercial buildings as-is from $250,000 to $3,000,000 and sends written offers within 2 business days. There is no obligation and no pressure.