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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.

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN – NEGOTIATED WORKOUT AGREEMENT

Client’s small business obtained an SBA 7(a) loan for $150,000.  He and his wife signed personal guarantees and pledged their home as collateral. The SBA loan went into default, the term or maturity date was accelerated and demand for payment of the entire amount claimed was made.  The SBA lender’s note gave it the right to adjust the default interest rate from 7.25% to 18% per annum. The business filed for Chapter 11 bankruptcy but was dismissed after 3 years due to its inability to continue with payments under the plan. Clients wanted to file for Chapter 7 bankruptcy, which would have been a mistake as their home had significant equity to repay the SBA loan balance in full as the Trustee would likely seize and sell the home to repay the secured and unsecured creditors. However, the SBA lender opted to pursue the SBA 7(a) Guaranty and subsequently assigned the loan and the right to enforce collection to the SBA. Clients then received the SBA Official 60-Day Notice and hired the Firm to respond to it and negotiate on their behalf. Clients disputed the SBA’s alleged balance of $148,000, as several payments made to the SBA lender during the Chapter 11 reorganization were not accounted for. To challenge the SBA’s claimed debt balance, the Firm Attorneys initiated expedited discovery to obtain government records. SBA records disclosed the true amount owed was about $97,000. Moreover, because the Clients’ home had significant equity, they were not eligible for an Offer in Compromise or an immediate Release of Lien for Consideration, despite being incorrectly advised by non-attorney consulting companies that they were. Instead, our Firm Attorneys recommended a Workout of $97,000 spread over a lengthy term and a waiver of the applicable interest rate making the monthly payment affordable. After back and forth negotiations, SBA approved the Workout proposal, thereby saving the home from imminent foreclosure and reducing the Clients' liability by nearly $81,000 in incorrect principal balance, accrued interest, and statutory collection fees.

$150,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

The client personally guaranteed an SBA 7(a) loan for $150,000. His business revenue decreased significantly causing default and an accelerated balance of $143,000. The client received the SBA's Official 60-day notice with the debt scheduled for referral to the Treasury’s Bureau of Fiscal Service for aggressive collection in less than 26 days. We were hired to represent him, respond to the SBA's Official 60-day notice, and prevent enforced collection by the Treasury and the Department of Justice. We successfully negotiated a structured workout with an extended maturity date that included a reduction of the 14% interest rate and removal of substantial collection fees (30% of the loan balance), effectively saving the client over $242,000.

$150,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

$150,000 SBA 7A LOAN - NEGOTIATED STRUCTURED WORKOUT AGREEMENT

Client personally guaranteed SBA 7(a) loan for $150,000. COVID-19 caused the business to fail, and the loan went into default with a balance of $133,000. Client initially hired a non-attorney consultant to negotiate an OIC. The SBA summarily rejected the ineligible OIC and the debt was referred to Treasury’s ureau of Fiscal Service for enforced collection in the debt amount of $195,000. We were hired to intervene and initiated discovery for SBA and Fiscal Service records. We were able to recall the case from Fiscal Service back to the SBA. We then negotiated a structured workout with favorable terms that saves the client approximately $198,000 over the agreed-upon workout term by waiving contractual and statutory administrative fees, collection costs, penalties, and interest.

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