New To Forum. I Have A Legal Real Estate Question
I have a client that worked with a private investor to do financing for a rehab. The contractor he hired buckled the structure. He pursued a lawsuit against the contractors insurance and was declined. He also kept telling the insurance company that the structure was going to collapse and something had to be done. It rained heavily one day, and the three story structure collapsed. The day after the insurance company declined the loan. He called his private investor and told him about everything during this whole mess. My client ended up spending over 200k in attorney, engineer fees and a new contractor fees. He is now broke and let the property go back to the private investor. But before he did let it go to foreclosure. The structure was leveled and removed. It is now a commercial lot. My question is. The private investor is pursuing a lawsuit against my client for the full loan balance of 480k. The private lender foreclosed on the property and holds title. How can the investor come back and sue after they have the property, and let me say it much better condition then it was when he bought it. It was apartments and was raided by the SWAT team as it was a crack house. My client wanted to restore the building and had nothing but good intentions to bring up the appearance in the neighborhood. Also the property is zoned commercial and can be built as condos. Located in a nice area with a well known business across the street. Anyone have any ideas to help this client get out from under the lawsuit?
[ Edited by OLDDOG on Date 11/17/2007 ]
The private lender loaned your client $480K to purchase a property that secured the loan. Your client defaulted on the loan and the private investor foreclosed.
Your client removed the structure and ended up with a vacant lot. The private lender got a vacant lot as a result of the foreclosure.
What is the appraised value of the vacant lot? Probably a lot less than the value of the improved lot that secured the loan. At the very least, the private investor has grounds for a deficiency judgement against your client for the difference between the remaining loan balance and the value of the lot taken by foreclosure as well as the cost of the foreclosure itself.
Just how I see it.