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Navigating the Sale of Your Home with an SBA Lien

Discover essential steps and strategies for selling your home with an SBA lien. Learn how to navigate legal challenges and secure lender approval effectively.

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Can You Sell Your Home with an SBA Lien?

Have you ever wondered if selling your home under an SBA lien is possible? This situation can be complex, but understanding the steps involved is essential for a smooth process. When you obtained an SBA loan, your lender might have placed a lien on your home as collateral. Now, selling the property may be necessary, and navigating this process requires careful planning. Let’s explore how to manage selling a home with an SBA lien, with insights from Protect Law Group, a law firm specializing in SBA-related matters.

What Is an SBA Lien?

An SBA lien is a legal claim on your property, often required by lenders as collateral for an SBA loan. Before selling your home, you must address this lien, which typically involves obtaining the lender’s permission. Protect Law Group’s experienced SBA attorneys can guide you through this process, ensuring you understand your rights and obligations.

Why Sell a Home with an SBA Lien?

There are several reasons why you might need to sell your home despite the lien:

Career Changes and Relocation

If you’re relocating for a new job, selling your current home may be unavoidable. Protect Law Group can assist in negotiating a “Substitution of Collateral” or “Replacement Lien” with your lender, allowing you to swap the lien to another property without compromising the lender’s security.

Non-Performing Rental Properties

For rental properties that are not generating income, selling may be the best option. In such cases, Protect Law Group can help you negotiate with your lender to transfer the lien to another property, enabling you to liquidate underperforming assets effectively.

Imminent Foreclosure

If foreclosure is looming, selling your home might be the only way to avoid financial loss. Protect Law Group can guide you through the short sale process, helping you present a compelling case to your lender with appraisals and financial documentation.

Steps to Sell a Home with an SBA Lien

To successfully sell your home, follow these steps:

1. Contact Your SBA Lender

Start by discussing your situation with your lender. Protect Law Group can help you understand the lender’s requirements and negotiate terms for releasing the lien.

2. Explore Substitution or Replacement Liens

If you have another property to offer as collateral, Protect Law Group can assist in negotiating a substitution or replacement lien, ensuring the lender’s interests are protected.

3. Prepare for a Short Sale

In cases of financial distress, a short sale may be necessary. Protect Law Group’s attorneys can help you compile the required documentation and negotiate with your lender for approval.

4. Seek Legal Advice

Consulting with Protect Law Group ensures you receive expert guidance on the legalities of selling a home with an SBA lien, helping you navigate the process smoothly.

Overcoming Challenges

Selling a home with an SBA lien can present challenges, but Protect Law Group offers solutions:

Negotiating with Lenders

Effective negotiation is key. Protect Law Group can help you present a solid plan that protects the lender’s interests while facilitating the sale.

Exploring Alternatives

If negotiations stall, Protect Law Group can advise on alternatives such as refinancing or debt restructuring to manage your obligations.

Strategies for SBA Lien Management

Protect Law Group emphasizes the importance of proactive strategies:

Financial Planning

Detailed financial planning is crucial. Protect Law Group can help you analyze your cash flow and make informed decisions about managing your property under a lien.

Debt Restructuring

Negotiating new loan terms can ease financial stress. Protect Law Group’s expertise ensures you explore all viable options.

Conclusion

Selling a home with an SBA lien may seem daunting, but with the right approach and expert guidance from Protect Law Group, it’s achievable. By understanding your options, communicating openly with your lender, and seeking professional advice, you can navigate this process successfully. Contact Protect Law Group at (833) 428-0937 for personalized assistance and solutions tailored to your situation.

Navigate the Sale of Your Home with an SBA Lien

Are you facing the challenge of selling your home while managing an SBA lien? Protect Law Group is here to help. With a team of experienced SBA attorneys and Federal Agency Practitioners, we specialize in guiding individuals through the complexities of SBA loan issues, including lien management during property sales. Whether you need assistance negotiating with lenders, exploring substitution of collateral, or navigating short sales, our experts provide tailored solutions to meet your needs. Contact Protect Law Group today at (833) 428-0937 for a case evaluation and take the first step toward resolving your SBA lien challenges effectively.

Frequently Asked Questions

Can you sell your home if it has an SBA lien?

Yes, you can sell your home if it has an SBA lien, but it requires addressing the lien before the sale can proceed. This typically involves securing the lender's permission and ensuring the lien is paid off or transferred to another property.

What is an SBA lien, and why is it placed on a property?

An SBA lien is a legal claim placed on a property by a lender as collateral for an SBA loan. It gives the lender certain rights to the property to secure repayment of the loan. This lien must be resolved before the property can be sold.

What are common reasons for selling a home with an SBA lien?

Common reasons include career changes requiring relocation, non-performing rental properties that are not generating income, or financial challenges such as imminent foreclosure. Each situation may require specific strategies to address the lien.

What steps should you take to sell a home with an SBA lien?

First, contact your SBA lender to discuss options and secure their approval. You may also explore substitution or replacement liens, prepare for a potential short sale if necessary, and consult with a legal expert to navigate the process effectively.

What is a substitution or replacement lien, and how does it work?

A substitution or replacement lien involves offering another property as collateral in place of the current one. This can be a viable option if the new property provides better security for the lender, such as having greater equity.

What challenges might arise when selling a home with an SBA lien?

Challenges include negotiating with the lender to release or adjust the lien, ensuring the financials make sense for all parties, and exploring alternatives like refinancing or bankruptcy if negotiations fail. Proper planning and professional advice can help overcome these hurdles.

$298,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$298,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients obtained an SBA 7(a) loan for their small business in the amount of $298,000. They pledged their primary residence and personal guarantees as direct collateral for the loan. The business failed, the lender was paid the 7(a) guaranty money and the debt was assigned to the SBA.  Clients received the Official 60-Day Notice giving them a couple of options to resolve the debt balance directly with the SBA before referral to Treasury's Bureau of Fiscal Service. The risk of referral to Treasury would add nearly $95,000 to the SBA principal loan balance. With the default interest rate at 7.5%, the amount of money to pay toward interest was projected at $198,600. Clients hired the Firm with only 4 days left to respond to the 60-Day due process notice.  Because the clients were not eligible for an Offer in Compromise (OIC) due to the significant equity in their home and the SBA lien encumbering it, the Firm Attorneys proposed a Structured Workout to resolve the SBA debt.  After back and forth negotiations, the SBA Loan Specialist assigned to the case approved the Workout terms which prevented potential foreclosure of their home, but also saved the clients approximately $294,000 over the agreed-upon Workout term with a waiver of all contractual and statutory administrative fees, collection costs, penalties, and interest.

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.

Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.

The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.

The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.

$150,000 SBA COVID EIDL - OFFER IN COMPROMISE & RELEASE OF COLLATERAL

$150,000 SBA COVID EIDL - OFFER IN COMPROMISE & RELEASE OF COLLATERAL

Our firm successfully facilitated the SBA settlement of a COVID-19 Economic Injury Disaster Loan (EIDL) where borrower received an SBA disaster loan of $150,000, but due to the severe economic impact of the COVID-19 pandemic, the business was unable to recover.

Despite the borrower’s efforts to maintain operations, shutdowns and restrictions significantly reduced the customer base and revenue, making continued operations unsustainable. After a thorough business closure review, we negotiated with the SBA, securing a resolution where the borrower paid only $6,015 to release the collateral, with no further financial liability for the owner/officer.

This case demonstrates how businesses affected by the pandemic can navigate SBA loan settlements effectively. If your business is struggling with an SBA EIDL loan, we specialize in SBA Offer in Compromise (SBA OIC) solutions to help close outstanding debts while minimizing financial burden.

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