Because lenders have the right to place a lien on any investment property you own, it’s important to act quickly or risk losing the property altogether.

Q: A bank foreclosed on a property I owned with a business partner. The bank sold the property but the proceeds from the sale weren’t enough to cover the amount owed on the loan. My business partner filed for bankruptcy, and the lender then placed a lien against a property I own with a second business partner. Any thoughts on how I can protect this property from this lien.

A: When you signed the promissory note with the bank, you agreed to repay the amount owed. You also agreed to give the bank a lien on that property as collateral for the loan. When the loan went into default, the lender had the right to foreclose on the property, sell the property and use the proceeds from the sale to satisfy the debt or part of the debt owed.

We don’t know why you and your partner didn’t try to sell the property and get as much as you could have from the sale before the foreclosure. We’ve told our readers for years that they should try and sell their properties — even through a short sale — rather than have the lender foreclose on the property. When you are in control of the sale, you tend to get a better price even if that price falls short of the amount owed the lender.

When you have a short sale, the sales price for the property is short of the amount needed to pay off all of the expenses from the sale including the loan on the property. But, you can work with the lender to allow the sale and, in some cases, you might even get the lender to agree to take the amount from the sale to satisfy the full debt. If you have a shortage in the amount owed and the lender wants to go after the borrower for that shortage, that shortage is a deficiency amount.

Without an agreement with the lender, the lender has the right in most situations, and in particular in non-primary residences, to go after the borrower for the deficiency. The lender can take many actions to try to recover the debt owed. The lender can get a judgment against the borrower (you and your former partner) and go after assets that you own and can even go after a portion of your pay from your work.

Given all of this, the lender has powerful weapons to go after any assets you hold in your name. It appears that the lender found out that you own another property in your name with someone else. The lender has the right to go after this property but may have some issues to overcome in trying to take the property over. If you and the partner on this new property own the property in equal shares, the lender can sue and may become the owner of your 50 percent interest in the property, but the lender may not have the ability to force the sale of the property or control it.

The lender may also have the obligation to pay expenses that it may incur once it becomes an owner of the property. The lien the lender put on the property may be of greater value to the bank in knowing that if you try to sell the property, the lender will get a piece of the action. Neither you or your partner will be able to refinance or sell the property without working something out with the lender.

At this point, there may not be much that you can do to “protect” this property. You may want to try to talk to an attorney that works with clients in trying to protect their assets, but they usually like to work with a client well before there are liens and other problems.

Sometimes investors in real estate place their properties in limited liability companies so that the actual owner of the real estate is the company and not the individuals. The lender would not have the right to lien the real estate but could go after your membership interest in the company in any event.

Your former partner filed for bankruptcy and depending on the amounts involved, that option may be available to you as well. If you have no desire to file for bankruptcy or you have assets that could otherwise prevent you from filing for bankruptcy, you might want to work out a settlement with the lender and see if you can pay them a portion of the amount owed in exchange for them releasing the lien and releasing you from the obligations of that old loan. Good luck.

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