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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.

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.

The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.

Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.

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$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

$220,000 SBA 7A LOAN -DOT WAIVER OF ADMINISTRATIVE FEES & COSTS

Clients personally guaranteed an SBA 7(a) loan that was referred to the Department of Treasury for collection.  Treasury claimed our clients owed over $220,000 once it added its statutory collection fees and interest.  We were able to negotiate a significant reduction of the total claimed amount from $220,000 to $119,000, saving the clients over $100,000 by arguing for a waiver of the statutory 28%-30% administrative fees and costs.

$750,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$750,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $750,000.  She and her husband signed personal guarantees exposing all of their non-exempt income and assets. With just 18 months left on the maturity date and payment on the remaining balance, the Great Recession of 2008 hit, which ultimately caused the business to fail and default on the loan terms. The 7(a) lender accelerated and sent a demand for full payment of the remaining loan balance.  The SBA lender’s note allowed for a default interest rate of about 7% per year. In response to the lender's aggressive collection action, Client's husband filed for Chapter 7 bankruptcy in an attempt to protect against their personal assets. However, his bankruptcy discharge did not relieve the Client's personal guarantee liability for the SBA debt. The SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection against the Client to the SBA. The Client then received the SBA Official 60-Day Notice. After conducting a Case Evaluation with her, she then hired the Firm to respond and negotiate on her behalf with just 34 days left before the impending referral to Treasury. The Client wanted to dispute the SBA’s alleged debt balance as stated in the 60-Day Notice by claiming the 7(a) lender failed to liquidate business collateral in a commercially reasonable manner - which if done properly - proceeds would have paid back the entire debt balance.  However, due to time constraints, waivers contained in the SBA loan instruments, including the fact the Client was not able to inspect the SBA's records for investigation purposes before the remaining deadline, Client agreed to submit a Structured Workout for the alleged balance in response to the Official 60-Day Notice as she was not eligible for an Offer in Compromise (OIC) because of equity in non-exempt income and assets. After back and forth negotiations, the SBA Loan Specialist approved the Workout proposal, reducing the Client's purported liability by nearly $142,142.27 in accrued interest, and statutory collection fees. Without the Firm's intervention and subsequent approval of the Workout proposal, the Client's debt amount (with accrued interest, Treasury's statutory collection fee and Treasury's interest based on the Current Value of Funds Rate (CVFR) would have been nearly $291,030.

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