Legal Question in Credit and Debt Law in Illinois

Returning a property

We have a rental property that is not making money. We have a high vacancy even though the property is in good condition and the location is central. Our commercial banker has visited the property and does not understand why it does not rent. We are dwindling our savings because the rents just cover the utilities and garbage removal. We listed with a realtor almost a year ago but the vancancies are an issue with perspective buyers. We have thought about handing the property back to the bank. How would this damage our credit? We have an LLC. Are there other options?


Asked on 5/15/06, 5:45 pm

1 Answer from Attorneys
Thomas Moens Moens Law Offices, Chartered

Re: Returning a property

What you are suggesting is called a deed in lieu of foreclosure, and yes, it could adversely affect your credit, depending on your agreement with the bank. Further, the bank is under no obligation to accept this arrangement--you would need to talk to them about this. Even if the property is owned by the LLC, the bank probably required you to sign personal guaranties at closing, which would make you personally responsible for the debt. Unfortunately, if you cannot rent it and you cannot sell it, your options are rather limited.

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Answered on 5/17/06, 1:28 pm


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