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Buyer of moms property paid in installment payments. But stopped paying seven months ago. And don't respond to messages. Real Estate lawyer is drafting letter to say I am going to foreclose. Have to get forclosure attorney to actually forclose. Don't think the letter will make buyer start paying again. She has to spend a lot of money to fix the property. And isn't getting a lot of money from it. Brother wants to forclose. The money will go to him. But you can't reason with him. So if it costs a lot to forclose and property doesn't bring much money at auction he looses. And all he can think of is that they owe us money and should pay it. Or we should get the property back.

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Barbara, I worked on commercial real estate foreclosures during two different real estate downturns. These were a bit different than your situation because the lenders were commercial entities. But hopefully this will help you.

1. Was the buyer purchasing on land contract? That's what it sounds like. Or pursuant to a mortgage? The terms of the LC or mortgage should address specific time frames, but generally, if no payments haven't been made for 7 months, the buyer isdefinitely in default.

2. Do check the LC or mortgage to see what notices are required. Typically, a notice of default is sent, allowing a specific time to bring the payments current before foreclosure is commenced. This is known as a "Demand Letter."

3. Assuming no payments are made or that partial payments are made and foreclosure is decided on as a course of action by the seller (your mother's estate), title work is ordered to determine if there are additional interests, such as other lienholders, whose rights must be foreclosed out.

What is ordered used to be called a foreclosure search; I don't know if that's still the title. The difference between this and a title commitment is that the former states what is necessary for a buyer to assume title, but a foreclosure search identifies any parties and interests that might have to be foreclosed out in order for the seller to obtain clear title.

E.g., a buyer could have had improvements made to the property, but not paid for them. The contractor could have filed a lien. That contractor would have to be named as a party defendant in a foreclosure suit to foreclose out his interest so your mother's estate could get clear title.

4. A search may already have been obtained, and nothing done yet because the attorney needed to flush out all the lienors. In Michigan when I worked on foreclosures, a lienor had 90 days in which to file a lien. So no foreclosure suit was filed until after 90 days had run, to allow the lienors to file claims so it could be ensured that any other interests besides that of the buyer could be flushed out and those parties named and their interests foreclosed.

5. The state in which the property is located may allow for foreclosure by advertisement, which is typically for residential properties. If the only party to be foreclosed out is the buyer, and advertisement foreclosure is allowed, that might be a quicker and cheaper option. Your foreclosure attorney should advise you on this.

If there is more than one lienor, suit is generally considered the better alternative, to ensure that all rights of potential challengers are extinguished.

6. The costs will vary by advertisement vs. litigation. Again, it depends on the statutes of the state in which the property is located which method is chosen.

7. You're concerned with costs, indicating it will be expensive to fix up the property. What would be the alternative to not foreclosing, one way of the other? The property would remain in limbo, the LC or mortgage in default, and nothing done to resolve the issue.

Post back if you have any other general or specific questions.
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