There are many states where foreclosure sales happen without judicial intervention. In these states in order to prevent lawful foreclosure sales from happening, debtors will file for a temporary restraining order (TRO) seeking to prevent lenders from foreclosing on their properties. In a recent case out of Washington, a debtor, after taking out a short-term, high interest loan from a hard money lender, sought a temporary restraining order in federal court to prevent the sale of his property.
Hard money lenders provide a unique, valuable service to businesses and individuals in need of immediate capital. While it may take some financial institutions up to six (6) months in order to approve a loan, hard money lenders can approve loans in as little as a few days. Typically, hard money loans are secured by real property. If a debtor defaults on a hard money loan, a hard money lender, through its attorneys, can either file suit on the loan or move to foreclose on the secured property.
In Weinkauf v. Veristone Mortg., LLC, the debtor obtained a $1,047,000.00 short-term loan from a hard money lender that he sought on the Internet. 2016 U.S. Dist. LEXIS 88938 (W.D. Wash. July 8, 2016). Despite very clear terms and conditions, the debtor, who made two (2) payments on the hard money loan, claimed that he was coerced into borrowing the money from the hard money lender. Id.
When the hard money lender sought to foreclose on the debtor’s property, the debtor filed a TRO action in federal court. Of course, the federal judge saw exactly what the debtor was trying to accomplish and, in denying the TRO and approving the foreclosure, found that “[the debtor] ha[d] almost no chance of success on the merits of his claims, …” Id.
If you’re a hard money lender and a debtor defaults on their Florida hard money loan, you’re entitled to certain remedies under Florida law. While Florida may have a reputation of being a consumer friendly state, hard money lenders can prevail in Florida state and federal courts.
Founded in 1997, Gill Law Firm represents small, medium and large corporations in commercial debt recovery, small business and nonprofit startups throughout the state of Florida. To find out how the firm may help your company, please contact A. Wayne Gill, Esq. via email at email@example.com or by phone at (561) 454-0301.