Borrowers often purchase large tracts of land, either to hold for resale or to begin developments on. Depending on how much space the land takes up, developers may design whole new subdivisions for cities. When the holders of this undeveloped land fall into default, land foreclosure is the result.
Most states will treat undeveloped land the same as any other type of foreclosure. The lender will either have to go to court to sue for an order to sell the property, or it will be able to publish notice of sale and simply have it sold. This depends on the state foreclosure laws and what type of foreclosure process will be conducted.
In a few states, though, land may be treated differently. Usually the difference is in how much of a redemption period the owners have to save the property after it has been sold but before legal ownership is transferred to the new owner. Anyone facing land foreclosure should look up their state’s laws about foreclosure of land.
With the large number of developers and home building companies that have gone out of business in the past few years, much land is sitting undeveloped. Subdivisions are being left almost empty, while smaller developers face foreclosure on the loans they had taken out in order to build houses.
But it’s not just the small developers who are struggling to avoid foreclosure. many larger developers have gone out of business, or have filed bankruptcy to protect their assets.
Land foreclosure, although it does not affect the vast majority of families facing the loss of a home, is not an issue that will be going away any time soon.
Borrowers who do own land should take every opportunity to keep it out of foreclosure and defend the property just as vigorously as they would developed land if their lender is attempting to have it sold at auction.
If you are facing a land foreclosure, then you need to take actions to fight the foreclosure, using our free foreclosure membership.
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