Mary Johnston: October 2020

Saturday, October 31, 2020

Defective Seat Belts

While seat belts are designed to save lives, defective belts can lead to severe harm, even death. While seat belts are designed and marketed as a necessary line of defense for vehicle passengers, defective seat belts can make serious car accidents even worse, leading to severe injuries, pain and suffering.

Seat Belt Risks & Car Crash Injuries

Seat belt manufacturers and auto companies have a legal duty to design and manufacture seat belts that operate correctly in the event of a crash. Seat belts, in short, should be “crash worthy,” able to survive the significant rigors of an accident while fulfilling their intended purpose. Unfortunately, manufacturers do not always recall defective seat belts when they should. Some defective seat belts remain on the market for years, even though their manufacturers understand their risks, putting drivers and passengers at risk. Generally, seat belts have two functions. Seat belts prevent passengers from being ejected from the automobile during the accident. At the same time, seat belts reduce the risk that a passenger or driver will collide with objects inside the car, which can cause injuries secondary to the primary impact of the accident.

Types of Seat Belt Failure

While seat belt manufacturers have converged on a standard design for their products, there are still a myriad of designs out there, some of which work better than others. Accident experts have identified a wide range of potential seat belt failure mechanisms:

• Inertial Unlatching: In simple terms, inertial unlatching occurs when the seat belt mechanism releases during an accident. The latch plate, which fits into the buckle, detaches, disconnecting the belt and leaving a passenger or driver unprotected. Seat belts without a locking latch plate are more prone to this form of failure than newer designs. Accident engineers, theorize that inertial unlatching occurs when the forces created by an accident resonate inside the buckle’s spring mechanism, thus unlatching the seat belt.

• False Latching: This occurs when the latch appears to be buckled, but is not. This can occur due to user error, or due to internal friction inside the locking mechanism itself. False latching can also happen when there is an additional slot for the latch to enter, adjacent to the actual locking mechanism. When a passenger is falsely latched, rather than properly latched, they are at risk of being ejected from the vehicle in the event of a crash.

• Accidental Release: Some seat belt mechanisms are easier to unlatch than others. In the event of a crash, seat belts can come unlatched when jostled by the passenger’s elbow or hip. Accidental release can be a sign of poor seat belt design.

• Webbing Failure: The seat belts webbing, the strap that extends from the shoulder to the hip or across the lap, must be strong and free of defects to work properly. Manufacturing defects can leave seat belt webbing vulnerable to tears or breaks, which can become fatal in the event of an accident. Dynamic forces can make the problem worse. If the seat belt has not retracted correctly, and slack remains in the line, the force of an occupant moving forward can snap the belt’s webbing, leading to a seat belt failure.

• Retractor Failure: For seat belts to work as intended, the webbing strap must pull taut against an occupant’s body during a crash. Most cars now feature an automatic retractor, which pulls the seat belt taut against the body when an impact occurs. As we’ve seen, slack in the seat belt can lead to a webbing failure, which occurs when the seat belts webbing snaps under the force of a moving body. It can also leave the driver or passenger vulnerable to secondary impact injuries, as the body is thrown against features inside the car’s interior.

How to Detect Seat Belt Failure

Detecting seat belt failure isn’t always a straightforward matter. The effectiveness of your vehicle’s seat belts should be evaluated based on the facts of your particular accident and injuries. Based on past cases and experience, here are just a few signs that may indicate a seat belt problem:
• A person injured in the accident was found with a loose-fitting seat belt.
• An injured vehicle occupant isn’t wearing a seat belt but maintains that they were wearing one at the time of the accident.
• A seat belt shows ripped or worn webbing.
• There are serious injuries in a minor collision accident.
• A front seat occupant makes contact with the windshield.
• There is a discrepancy in the seriousness of injuries from belted occupants. For example, one person walks away with another suffering major injury.

Who is Responsible for Seat Belt Failure?

If you’re injured because of seat belt failure in a vehicle, both the manufacturer of the product and the vehicle could be at fault. Designers of seat belts work to create a system that will protect vehicle occupants in some of the most extreme conditions, but they don’t always work as planned. Seat belts are tested by both the product creator and the vehicle manufacturer, to make sure that they adhere to certain safety standards. Even if the tests are passed, standards can change, or defects in manufacturing can arise that make the products less effective. Automakers may also be slow to adopt new seat belt technology in the vehicles, which could lead to modern cars having antiquated systems.

Seat Belt Injuries and Potential Damages

Seat belt failure may be difficult to detect, but the related injuries are often quite serious. If you’re involved in an accident with a seat belt failure, the proper investigation may be able to identify the design or manufacturing defect that was the likely cause of your injuries. Victims who have been harmed by defective seatbelts might receive compensation that consists of compensatory and/or punitive damages. Compensatory damages will reimburse you for such things as medical care, lost wages, disability, and even suffering from the seat belt-related injuries. Punitive damages are sometimes awarded to victims as a means of punishing companies for wrongdoing. These damages can be significant, and they discourage manufacturers from releasing defective products or forgoing important safety testing in the future.

If You’ve Been Injured Due to Seat Belt Failure

If you or a loved one has been injured due to seat belt failure, you have the right to claim financial compensation for those injuries with a defective product lawsuit. Most law enforcement officers who investigate these accidents miss a potential defective seat belt and it may take hiring an expert with accident reconstruction experience to uncover the truth.
Defective Seat Belts and Their Threat to Your Family’s Safety
Seatbelts have been a safety staple in automobiles for over 50 years. In that time, they have succeeded in saving countless lives and protecting millions of drivers and passengers alike from horrendous injuries. While they were the first real car safety feature, there is no doubt that driver and passenger safety belts continue to be one of the most effective. However, in order for them to work, they have to be used properly and they must be designed, manufactured, and installed correctly.

Using Seatbelt Effectively

In order to secure a passenger, a seat belt must:
• Be worn properly: The lap restraint needs to be placed over the hip bones and the chest strap must lay across the collarbone.
• Be properly fastened: In order to withstand accident forces, the belt buckle must be completely clicked in and secured in its lock.
• Be secure: The strength and security of a belt must be rigorously tested in order to pass safety standards.
Unfortunately, defective seat belts are not all that uncommon, producing the illusion of safety without the actual benefits of being secure.

Seatbelt Defects Law

Seatbelts are supposed to keep you tightly strapped in to prevent impact and ejection injuries. However, if the belt fails when you need it most, the consequences can be serious for you and everyone else involved. Without the belt to restrain you, you could be thrown around inside the car from the force of an impact. Or, perhaps even worse, you could be ejected from the vehicle altogether.
There are several reasons your seat belt could fail during an accident, including:
• Weak fabric: The seatbelt material needs to be able to withstand pressures exceeding 300 pounds per inch. If the fabric is weak in any way, it can tear leaving the wearer without protection.
• A defective buckle or poor connections: In order for the belt to be secure, all connections need to be tight and working correctly. If a connection is loose or the buckle isn’t holding the connector, the restraint is useless.
• A faulty feeding mechanism: Most seat belts retract into the seat to prevent clutter. If the feeding mechanisms fail to release the belt, the wearer may not be able to buckle. On the other hand, if the feeding mechanism fails to tighten during an accident, the belt will slacken and prevent adequate restraint.

Who’s to Blame for a Faulty Safety Belt

If you were involved in a collision and were injured because of a defective seat belt, you might be eligible to receive compensation for your injuries from the vehicle’s manufacturer or seller.

Seat Belt Injuries in a Car Accident

How seat belt injuries occur, how they can be prevented, and legal issues that can be raised around these kinds of injuries. Statistically, it has been proven that wearing a seat belt while traveling in any kind of motor vehicle saves lives. Of course, wearing a seat belt alone does not ensure the safety of drivers and passengers involved in a car accident. And at rare times, the seat belt itself may cause further injury. While the majority of seat belt injuries are minor and even expected especially in serious, high-impact crashes some car accident injuries caused by seat belts can be serious.

How Seat Belt Injuries Occur

In many traffic accident scenarios, an automobile comes to a sudden stop, requiring a seat belt to restrain a still-moving driver or passenger. While a seat belt may indeed prevent severe injury when it is worn properly and functions as intended, it is entirely possible that the seat belt itself can cause injury to a driver or passenger, due to a variety of factors, including:
• the severity of the accident/impact
• exceptionally tight restraints
• seat belt malfunction
• improper placement of the belt on the body, or
• manufacturer defect (product liability; more on this later).
Types of Seat Belt Injuries
Most seat belt injuries are minor and involve bruising and scrapes from the restraints, with severity that typically corresponds to the severity of the collision. Generally, lap belts are responsible for internal injuries to the abdomen and spinal cord, while shoulder belts often result in injuries to the shoulder, neck and sternum.

The most severe injuries that can be caused by (or exacerbated by) seat belts include:
• fractures
• dislocations
• internal organ damage
• internal bleeding (the kinds of car accident injuries that may not show up right away)
• spine injuries, and
• intestinal injuries.
Preventing Injuries Through Proper Seat Belt Placement
Proper placement of a seat belt on a vehicle occupant is one of the keys to the prevention of seat belt-related injuries. According to the National Highway and Safety Administration (NHTSA):

• The shoulder belt should be placed across the middle of your chest and away from your neck
• The lap belt should be placed firmly across your hips and below your stomach
• Never place the shoulder strap behind your back or under your arm, especially merely out of desire for comfort.
• No belt should ever be uncomfortably tight or so loose as to allow the occupant to freely move about in the seat.
Legal Issues Related to Seat Belt Injuries
• Defective Seat Belts: Some seat belt injuries are caused by defects in the seat belt restraint system itself — meaning that the seat belt did not perform as expected because of a flaw in its design, or a mistake in the manufacturing process. A few examples of these kinds of defects include defective latches or defective tension detectors. A defective latch may cause the seat belt to detach through the force or angle of impact in a collision. Defective tension detectors may fail to remove slack in the belt, or fail to keep a belt taut after any slack is removed.
• Insufficient Seat Belts: A number of recent lawsuits present the legal issue of whether vehicle manufacturers can be liable for providing insufficient seat belts in the design of a vehicle. Basically, the plaintiffs in these cases claim that by installing only a lap belt in a vehicle, manufacturers are making passengers more susceptible to serious injuries, compared with passengers who are dually restrained by lap and shoulder belts. In situations where an injury can be attributable to a seat belt malfunction or the manufacturer’s design defect, injured drivers and passengers may be able to pursue a products liability claim. Parties at fault in a products liability claim may include a manufacturer, retailer, supplier or distributor of the seat belt itself, or of the automobile in which the seat belt was installed. Product liability claims can get pretty complex in terms of proving the defect and linking it to the plaintiff’s injuries. So, if you’re involved in an accident where a seat belt may not have functioned properly, or where you believe that the vehicle maker’s failure to provide adequate safety restraints made your injuries worse, it may be time to talk with an experienced personal injury attorney.

Personal Injury Lawyer

When you need legal help with seat belt defects in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

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Custody Lawyers Utah

Worried about representing yourself in court? Many parents wonder how to get custody of a child without a lawyer, either because of the cost of hiring one or for other reasons. Yet, custody proceedings aren’t necessarily the easiest first-introduction to the legal system. If you plan to head into court solo, here’s what you need to know:

In legal terms, filing for child custody “pro se” means filing on behalf of yourself. In other words, without the help of a lawyer. For many single parents who want to file for child custody, but who cannot afford a lawyer, filing for child custody pro se is a viable alternative. Plus, even if you do end up working with a lawyer later, teaching yourself how to go through the process pro se can equip you to be your own best advocate.

• Contact the court clerk: The very first thing you need to do is contact your local family court and ask the clerk how you can obtain the papers you will need in order to file for child custody without a lawyer. In some states, these forms can be printed right from your computer. In other states, you will need to physically go to the courthouse to obtain the paperwork you’ll need to file for child custody pro se.

• Research child custody laws in your state: Make sure you have a solid understanding of the details, legal hoops, and fine print that could impact your case. This is tedious, time-consuming work, but understanding the child custody laws in your state will have a huge impact on your ability to represent yourself well.

• Consider all of your child custody options: Don’t just automatically file for sole physical custody because you don’t want to live apart from your kids, or because you find your ex difficult to work with. Give consideration to every child custody option that is available to you, and carefully consider what would really be best for your children.

• Maintain clear, detailed child custody documentation: Keep a record of each and every visit, phone call, email, and contact between you and your ex, and between your children and your ex. As best as you can, stick to the facts and refrain from using negative or derogatory language.

• Pay close attention to all of the deadlines and dates related to your case: Many of the papers you will need to file will require follow-up activities within a given time period, such as 30 days. Do not miss a single deadline. In addition, keep all of your papers and materials organized. This will help you stay on top of the details of your case.

• Consider whether you feel confident that you can get custody without a lawyer: Before you go to court, consider whether you feel 100% confident in representing yourself. If you do not, consider contacting Legal Aid to find out whether there are any nearby legal clinics where a paralegal or law student could review your case thus far and give you further direction before going to court.

• In court, be polite and respectful at all times: Do not allow the judge to see your anger and frustration. Instead, focus on being pleasant and attentive, and stick to the facts of your case.

• Do not give up: Getting custody without a lawyer is difficult, and you’re probably going to face some setbacks along the way. Stays focused on your mission and remember that what you are doing is 100% for your kids. This will come through in all you do as you work toward securing custody of your children.

How to Get Sole Custody

Getting full custody is often what parents want to achieve in their custody case, but, many times, parents don’t know what it means or how to get sole custody. Understanding how sole custody works is crucial because you want to be sure that getting sole custody, also known as full custody, is what you really want. In addition, judges like to see both parents involved in raising your child. Getting full custody means you’ll have to show the judge why you’re the only parent who deserves custody.

Sole Custody vs. Joint Custody

How to gain full custody involves a certain strategy, but before you can get full custody, it’s important to know what sole custody is:
• Sole physical custody is where the child lives primarily with one parent, while the other parent has visitation rights.
• Sole legal custody is where one parent has decision-making authority. This includes making major decisions about education, religion, and medical care.
• Sometimes a parent will have both sole physical custody and sole legal custody, although this is the exception, rather than the rule.
• Often, if one parent has sole physical custody, the parents have joint legal custody, which requires discussing major decisions and coming to an agreement.
• Joint custody, or shared custody, can be either joint physical custody, joint legal custody, or both. With joint physical custody, the child lives with each parent for a certain percentage of time, such as part of a week or every other week.
• Each state has its own view of custody, but because courts want both parents involved in the child’s life, most judges want the parents to have joint custody.

How to Obtain Full Custody

Filing for full custody is the first step in the process of getting sole custody. The best case scenario is if your spouse agrees to your having full custody. This prevents fighting for full custody, is less expensive for everyone, and is also less stressful than a full-blown trial. You can file for custody even if you’ve never been married, so long as you have a child in common. Filing for custody if you’ve never been married to the other parent is similar to how to get full custody in a divorce, except there is no marriage. The requirements in cases with or without a marriage are the same, so long as the father has established paternity if the parties were never married.

How Do You Get Full Custody of Your Son or Daughter?

Whether or not you’ll get sole custody depends on several factors in addition to best interests and the inability to co-parent. Some scenarios that give you a better chance of getting sole custody are if:
• The other parent is unable to adequately raise or properly supervise the child
• The other parent has neglected, abused, or abandoned the child
• You have a more flexible work schedule than the other parent, or you’re available to take care of the child more often
• You have a restraining or protective order against the other parent, and the other parent poses a threat to the child
• The child is old enough to express his preference, and your state allows your child to have input about his custody
• The child has special needs, which you are better equipped to handle
• The child has bonded better with you and is thriving in your care
• You are the primary caregiver, and the other parent has minimal involvement in the child’s upbringing
• You are the better parent at helping ensure the child’s educational success

• You have more financial stability than the other parent
• You offer the child a more stable home environment (shelter, food, attention)
• The other parent has serious issues, such as domestic violence, substance or alcohol abuse, or other serious mental health issues that interfere with raising the child.

Is There a Preference of Full Custody for Mothers?

Most states used to award custody to mothers more often than to fathers. Now, almost every state has laws allowing both parents to get custody. As many fathers know, however, some judges still believe the mother should be the custodial parent. Some states are better than others in allowing either you or your spouse to have an equal chance of getting full custody. If you’re seeking sole custody, you should hire an experienced family lawyer. Custody is too important to handle by yourself.

Dos and Don’ts for Winning Child Custody

These dos and don’ts will help you present yourself to the courts in the best light and help you win your child custody case:
• Do show a willingness to work with your ex: Some parents have actually lost child custody because of their demonstrated unwillingness to collaborate with the other parent. So remember that while you may not like your ex, they are a part of your kids’ lives, and you need to show the family court that you’re willing to work together.
• Do exercise your parental rights: If you’ve been granted visitation rights with your kids, take advantage of it. Spend as much time with them as you can, and make sure that you’re doing regular, everyday things—including homework and chores.
• Do request an in-home custody evaluation: This can be extremely helpful, especially if you’re concerned that your ex will try to present a negative impression of your home life.
• Do be aware that perception is everything: One of the hardest things to grasp in a custody battle is the fact that it doesn’t really matter if what is being said about you is true or not; what matters is whether the court believes they’re true. Do everything you can to present yourself to the court as a competent, involved, loving parent. This includes arriving on time, dressing for court, and demonstrating proper courtroom etiquette in front of the judge.
• Do teach yourself about family law: Read up on the child custody laws in your state so that you will know in advance what to expect.
• Do prepare documentation: In situations where you honestly believe your children would be unsafe with the other parent—for example, because he or she has a history of physical abuse—you should carefully document your interactions with your ex, as well as his or her interactions with your children. Be aware, though, that the other parent may feel the same way about you and may be preparing similar documentation for the courts.
• Do work with an experienced child custody lawyer: Even if you don’t think you can afford a lawyer, set up a free consultation to discuss your options.
• Don’t talk about your ex negatively to your kids: In front of your kids, try to keep your opinions and feelings about your ex to yourself. Vent your frustration to a trusted friend, instead.
• Don’t arrive late for visits or pickups: Little things like showing up late can be used to create a negative impression of your commitment.
• Don’t make a habit of rescheduling time with your kids: Repeatedly rescheduling your parenting time could make it appear to the court that you’re just filing for custody out of spite not because you really want custody. So make sure you’re there when you say you will be so that your ex can’t present a documented pattern to the court that reflects negatively on you.
• Don’t abuse alcohol or drugs, especially when you’re with your kids: Here’s something else that could be documented and used against you. Make sure there’s not even the suggestion that you’re doing something that would put your kids at risk.
• Don’t refuse to do anything the court is asking of you: This is your time to show the courts how committed you are. So if they require you to take parenting classes or seek counseling, do so immediately. View it as an opportunity to demonstrate just how far you’re willing to go for your kids.
• Don’t involve your children in the court case: You may be tempted to share the details of the case with your kids, but it’s important to let them be kids right now and not place the burden of adult issues on their shoulders.

• Don’t invent negative stories in an attempt to win custody: Never come up with unfounded allegations of abuse or exaggerate your ex’s shortcomings in order to win custody. Any lies you present will come back and be used against you in court. To get this transfer done right and to protect yourself in the future, you’ll need to draw up an agreement between you and the child’s mother. You can do this without a lawyer, but you’ll need to present this agreement to the local court for a judge’s approval. If you try to skip the court altogether, you put yourself at risk. More often than you’d imagine, the parent giving up custody changes his or her mind after a while and then denies there ever was any agreement. In that case, the parent accepting custody can get stuck with paying back support even though the child has been living with him or her during the whole time period. Make sure the agreement says that each of you intends that your son’s legal and physical custody be transferred from his mother to you and that all child support will cease as of a specific date (which you’ll choose and include). The agreement doesn’t have to be in fancy legal language, it just needs to make the important points in writing and include both your full names and that of your son. Then be sure you both sign the agreement in front of a notary public. Forward the agreement to the court that handled your divorce and include a letter asking a judge to adopt it as a court order. Also ask the judge to make an order canceling the deductions from your paycheck. A sympathetic judge will give you what you need to take to the payroll office and cancel the child support. An unsympathetic judge may tell you that you need to hire a lawyer for the job. But in truth, it is a very simple procedure and you should be able to get the court to do the necessary paperwork.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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What Is The Difference Between A Prospectus And An Offering Memorandum?

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Friday, October 30, 2020

What Is The Difference Between A Prospectus And An Offering Memorandum?

An Offering Memorandum is also known as a private placement memorandum. It is used as a tool to attract external investors, either specifically targeting a known group or just soliciting willing investors in general. The document enables the investor to understand in detail the investment, so as to help them assess their interest in participating in the deal. An investment banker often prepares an offering memorandum on behalf of the business owners. In investment finance, an offering memorandum is a kind of a detailed business plan that highlights information required by an investor to understand the business. It provides details on the terms of engagement, potential risks associated with the business, and a detailed description of the operations of the business. The document also often includes a subscription agreement that acts as a contract between the two parties, i.e., the investor and the issuing company. Investments formally follow these guidelines and are mostly required by securities regulators. A prospectus is similar to an offering memorandum, but the former is for publicly-traded issues while the latter is for private placements. Business growth requires an injection of capital that is obtained from investors. The offering memorandum is part of the investment process. For instance, a company may decide to increase the number of its offices, which will require a significant amount of funds. The process begins with the firm deciding how much they need for the expansion. Then, an investment banker drafts the offering memorandum, which must comply with existing procedures and securities laws and regulations. The company then chooses who to issue the document with, depending on their targeted investors. It is much like the process of doing an IPO, but an offering memorandum is aimed at a private placement investment rather than the company seeking funds going public.

What Are The Contents of the Offering Memorandum?

An offering memorandum comprises key information on the company’s future growth strategy, upcoming opportunities in the market, strategy for achieving future projections, and details on competition in the marketplace. How the current management team plans on dealing with weaknesses, operations scalability, etc., are detailed in the document. The investment banker, financial advisors, and the like, should provide valuable information but the offering memorandum should also contain information directly from the company. Every clause should be scrutinized and vetted to ensure it’s free from errors or omissions. The document is meant to give the company an opportunity to convince targeted investors, and it should be flawless for this purpose.

Example Offering Memorandum Table of Contents:
• Summary of the Offering
• Business Summary
• Requirements for Purchasers
• Forward-Looking Information (Financial)
• Risk Factors
• Use of Proceeds
• Management
• Compensation
• Board of Directors
• Capitalization Table and Dilution
• Legal Information
The document should present data to show the company’s progress, and provide future projections, highlighting various strategies being implemented to cope with challenges. It should present a realistic picture of the industry the company operates in and show the investor clearly what the company’s prospects and goals are. False information is dangerous and can attract heavy fines if it is determined that investors have been deceived into making commitments. The details on the balance sheet should be presented to tell the investor what the business is worth in assets and liabilities, which also helps the investor determine if the share value is worth committing their investment. Ultimately, the presentation should portray the company as a valuable entity that anyone should feel fortunate to have the opportunity to invest in.

What Is The Importance of Issuing an Offering Memorandum?

The document is legally binding, and its importance goes beyond being a necessary document in the process of investment for both sellers and investors. The document protocol helps the investor understand the opportunities being presented in the investment, imminent risks, potential returns, the operations involved, and the general capital structure. The offering memorandum also provides protection for the investor and for issuers of securities. The issuer is required to follow to the letter all regulations outlined by the SEC (Securities and Exchange Commission). The SEC promotes fairness in the investment industry by shielding investors in the securities industry from falsified information and by aiding the investor in making informed decisions in the process of committing huge amounts of funds. The offering memorandum also presents a professional touch to the seller. Investors cannot commit their money to businesses that don’t look organized or professional in their area of operation. Presenting a memorandum shows seriousness and professionalism in the business.

Who prepares the Offering Memorandum?

When any company goes through a sale process, it hires an investment banker. The first step of the banker is to understand the company and gather as much information as possible from top management to come up with a profile the company. The banker prepares the CIM and uses it as a marketing document, which is intended to make the company look attractive as the objective is “not just to sell, but to sell for maximum value.” The reason an investment banker tries to sell a company at the maximum value is because they represent the best interest of their client (the seller), and that their commission is based on the sale price.

Offering Memorandum Vs Prospectus

A prospectus offering document can bring added protection to your business and is often required to raise either debt or equity capital in the public and private markets. A well written prospectus will tell the story of the company, from the minute details of the types of securities being offered, e.g. stock versus bonds, to the management team, the market, the risk factors and the overall prospectus model of the company, among many other features. The final part of the prospectus is reserved for the subscription agreement, which is an essential component of any prospectus as the subscription agreement is the contract between the issuer and the person buying the debt or equity securities. Although the prospectus is first and foremost a document used to raise capital, the structure and presentation of the prospectus can add value to a company’s products and services and team by portraying them in a well-polished format. A prospectus shows an investor that one is serious and has gone the extra length to ensure regulatory compliance and good business practices. Without a formal document that outlines the company’s prospectus and securities structure it is often difficult to raise capital from any serious investor. A prospectus is used for public markets while an offering memorandum is used for private markets. The offering memorandum document can also be referred to as an “offering circular” if it requires registration with the stock exchange commission. The offering memorandum and the prospectus share many attributes, ranging from the types of disclosures and amounts required to terms and conditions. Both documents describe the terms of the offer, such as the minimum amount to invest and the qualifications of an investor. The investor is also briefed on imminent risks such as tax issues, vulnerabilities, transferability issues, and potential returns. Both documents are basically a detailed business plan, with in-depth information on management structure, strengths and weaknesses, capital structure, asset values, share values, amount of shares available, and financial projections.

Offering Memorandum

An offering memorandum is a legal document that states the objectives, risks, and terms of an investment involved with a private placement. This document includes items such as a company’s financial statements, management biographies, a detailed description of the business operations, and more.An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.

Understanding an Offering Memorandum

An offering memorandum, also known as a private placement memorandum (PPM), is used by business owners of privately held companies to attract a specific group of outside investors. For these select investors, an offering memorandum is a way for them to understand the investment vehicle.
Offering memorandums are usually put together by an investment banker on behalf of the business owners. The banker uses the memorandum to conduct an auction among the specific group of investors to generate interest from qualified buyers. An offering memorandum, while used in investment finance, is essentially a thorough business plan. In practice, these documents are a formality used to meet the requirements of securities regulators since most sophisticated investors perform their extensive due diligence. Offering memorandums are similar to prospectuses but are for private placements, while prospectuses are for publicly traded issues.

Example of an Offering Memorandum

In many cases, private equity companies want to increase their level of growth without taking on debt or going public. If, for example, a manufacturing company decides to expand the number of plants it owns, it can look to an offering memorandum as a way to finance the expansion. When this happens, the business first decides how much it wants to raise and at what price per share. In this example, the company needs $1 million to fund its growth at $30 per share. The company begins by working with an investment bank or banker to draft an offering memorandum. This memorandum complies with securities laws outlined by the Securities and Exchange Commission (SEC). After compliance is met, the document is circulated among a specific number of interested parties, usually chosen by the company itself. This is in stark contrast to an initial public offering (IPO), where anyone in the public can purchase equity in the company. The offering memorandum tells the potential investors all they need to know about the company: the terms of the investment, the nature of the business, and the potential risk of the investment. The document almost always includes a subscription agreement, which constitutes a legal contract between the issuing company and the investor.

Offering Memorandum vs. Summary Prospectus

While an offering memorandum is used in a private placement, a summary prospectus is the disclosure document provided to investors by mutual fund companies before or at the time of sale to the public.This written document is an abridged version of the final prospectus that allows investors to see pertinent information regarding the fund’s investment objectives and goals, sales charges and expense ratio, focused investment strategy, and data on the fund’s management team. Relevant tax information and broker compensation are also included in the disclosure document. A summary prospectus provides investors the information they need from the final prospectus quickly and in plain English.
Offering Circular

What is an Offering Circular?

An offering circular is a prospectus for a new security listing. It is delivered to individuals and brokerage houses who are interested in potentially purchasing the newly issued mutual fund or stock. It may be slightly abbreviated from the final, long-form prospectus, but is still required to contain specific information. Offering circulars are required to contain certain pieces of information that are meant to be helpful to a prospective investor in deciding whether or not the investment is suitable for their interests. This information includes items such as the issuer of the security, the objective of the mutual fund or the purpose of the stock issue, the terms of the issue, and any additional information that could be helpful to a prospective buyer. An offering circular should not be confused with a red herring or preliminary prospectus. The preliminary prospectus, or red herring, is issued during the IPO process and is intended to generate interest in the new issue. It lacks many of the specifics regarding the new issue. The offering circular is a more complete document and should be viewed before making a final decision about an investment.

Information About An Offering Circular

An offering circular allows investors to access information regarding a new issue. It provides them with very important information about the security such as financial information about the issuer, the objective of the fund or purpose of the funds being raised, and other terms of the security issuance. The offering circular is a legal document and is a requirement for many, but not all, new issues. It is important to distinguish it from the red herring, or preliminary prospectus, which lacks significant details about the new issue. The red herring is a promotional item passed out to potential investors early on in the IPO process to solicit indications of interest and does not include the crucial information that an investor should review before purchasing a security. However, this important information is included in the offering circular.

Securities Lawyer

When you need legal help from a Securities Lawyer, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

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Difference Between Real And Personal Property

There are two types of property. In legal terms, all property will be classified as either personal property or real property. This distinction between types of property comes from English common law, but our modern laws continue to distinguish between the two.

Each type of property is treated differently under the law. There are many different types of laws that specifically pertain to personal property, and many other types of laws that pertain specifically to real property.
Personal property is movable property. It’s anything that can be subject to ownership, except land. Real property is immovable property – it’s land and anything attached to the land.

Normally, a piece of property can be easily classified as either personal property or real property. The difference between the two is usually fairly straightforward. However, sometimes it’s a little harder to categorize property.

Let’s say that I buy lumber and other building supplies, such as a saw, a hammer, and some nails. These supplies are personal property. They’re moveable and they belong to me.

Next, I use these items to build a shed on my land. Is this shed personal property? No. The shed is real property because it’s attached to, and now part of, my land. Any leftover building supplies are still personal property, like my saw and hammer. But anything that’s actually part of the shed is now real property.

Personal Property

Let’s take a closer look at why this is. Let’s look at the types of items that are classified as personal property.

Personal property includes possessions, of really any kind, as long as those possessions are movable and owned by someone. Personal property isn’t affixed to or associated with land. These moveable items are sometimes known as chattels. The law regarding chattels includes those laws covering possession, gifts, lost property, abandoned property, and stolen property.
Having understood what real property is, what then is personal property? Well, think of it as any movable property. Personal property, unlike real property, is not fixed or associated with land. Therefore, if real property is described as land and any property attached to land, then personal property is everything else apart from that.

Personal property, therefore, includes belongings of any kind, as long as they are movable and are owned by someone. Personal property is usually viewed as assets and can be used in defining the net worth of a person. Some examples of personal property include bank accounts, insurance policies, furniture and fixtures in the homes, stocks, vehicles, boats, collectibles, antiques, books and pensions. Adding on the example about farm structures above, farm animals would be personal and not real property. They can be moved from one place or farm to another.
It is important to note that personal property is further divided chattel and intangible property.

It’s helpful to note that personal property includes both tangible and intangible items. A tangible item is an item that can be felt or touched. For a business, tangible personal property includes items the business owns such as:
• Office furniture
• Business equipment
• Business vehicles
• Business goods
An intangible item is simply an item that can’t be felt or touched. For a business, intangible personal property includes items the business owns such as:
• Stocks
• Bonds
• Intellectual property
• Money

Personal property: Chattels

The term chattel sometimes refers to all kinds of personal property, but often it refers only to tangible personal property (such as nose flutes and toenail clippers) as opposed to intangible property.

A chattel, such as a furnace, can be affixed to land and become part of the real property. Such chattels are called fixtures.

However, fixtures may retain their quality as separate personal property for certain purposes. For example, at the end of a lease term, the tenant generally has the right to remove fixtures she installed even though she doesn’t have any more right to the real property when the lease ends.
About personal property, the term chattel refers to all kinds of tangible personal properties. Tangible personal property is a property that can be touched or felt. A furnace is a fixture that you can feel and touch. At the end of a lease period, a tenant usually has the right to remove fixtures that he/she installed even when there is no more right to the real property.

Another example let us say that a person buys lumber and other building supplies including a hammer, saw, and some nails. These materials are personal property. They are chattels since they are tangible and are moveable. In a business setting, chattels or tangible personal property can include business equipment, office furniture, business vehicles, business goods and more.

Extending this example, let us also say that this same person uses these tangible items to construct a shed on their land. Can we say that the shed personal property? No. The shed is real property. Because it is attached to and is now part this person’s land. Well, what about the building materials saw, hammer and leftover nails? Those are tangible personal property – they are movable, unlike the shed.

Personal property: Intangibles

Intangibles are all kinds of personal property that aren’t tangible, that can’t be seen or touched. So, you can say this kind of property doesn’t involve a “thing” at all; it involves only a legal right. The mere existence of such a category of property is a reminder that, in the law, property most accurately refers to legal rights, not to things.
A person can own all sorts of intangible “things,” including the following:
• Bank accounts
• Franchises and licenses
• Insurance policies
• Intellectual property such as patents, copyrights, and trademarks
• Stocks, bonds, promissory notes, and similar documents that aren’t themselves valuable but merely represent intangible rights; currency is sometimes treated as an intangible
• Intangibles personal property is the opposite of tangible property – cannot be seen or touched. It only involves a legal right. The fact that such kind of property exists is a reminder that, as far as the law is concerned, property mostly refers to legal rights and not physical things.
• Intangible properties include bank accounts, insurance policies, franchises and licenses, intellectual property such as copyrights, patents, and trademarks. Bonds, stocks, promissory notes, and other similar documents merely represent intangible rights. Money is also treated as an intangible

Property rights: Things that can’t be owned

Some things can’t be owned at all and therefore can’t be private property. Some of these things, such as light, air, and the high seas, can’t be owned because they naturally seem communal. Other things, such as rivers and coastal waters, can’t be owned because they belong to the public. And some things can’t be owned because they’re illegal, like heroin.

Real property: Land and buildings

Real property describes land and things that are attached to the land, which is why land is sometimes called real estate or realty. Even though wood, steel, and other building materials aren’t land themselves, when they’re built into structures attached to the land, they become real property, too.

Trees and other plants naturally growing on the land are also part of the real property. But plants that require regular human cultivation and labor, such as grains and vegetables, sometimes aren’t treated as part of the real property.

Real property is immovable property. It describes land and things, such as buildings, that are attached to that land, which is the reason why land is sometimes called real estate. Although steel, wood and other building materials are not land in themselves, when constructed into structures attached to land, they become real property. Trees, as well as other plants that are naturally growing on the land in question, are also part of the real property. However, plants requiring consistent human labor such as vegetables and grains are not treated as part of the real property.
Therefore, when someone remarks real property, what they are talking about is land, a home, building, as well as mineral interests. All the materials used to construct any structure that is attached to a piece of land are also considered real property like mentioned above. Hence, the critical thing to remember is that real property is land and anything else attached to that land. Real property is referred to like real estate and is also fixed property – meaning it cannot be moved. For instance, farm structures in a farm are real property because they are attached to the land.

Differences between Personal and Real Property

Now that we have understood the two types of properties, the next thing is to outline the differences between them. Although in trying to explain the meanings of the two types of property many differences have come up, we are going to outline those differences below. How many have you picked from the discussion above? Here are the major differences between personal and real property.

1. Real property is immovable and is permanently attached to the land including a house, walls, blinds, windows, fixtures, doors, and more. On the other hand, personal property can be moved or taken from a home or business including furniture, artwork, light fixtures and more. It is not affixed in any way.
2. Real property is mostly tangible while personal property is both tangible and intangible
3. Real property is long lasting and durable while personal property is not necessarily durable
4. Personal property is easy to understand – If a piece of property is not real property, then it is personal property.
5. In legal considerations, both real and personal property follow different legal procedures.
6. Real property cannot be hidden, but personal property can be hidden

Real Property Lawyer

Real property is not only what is on your land, but it also consists of what is below and above it. If you have oil in your backyard, by all means you have the right to dig and acquire that oil.
On the other hand, if your neighbor has that oil, you cannot dig through your yard downward, and then sideways towards the neighbors. With solar heating and cooler units, airspace becomes more demanding because of the sun needed to shine down on the property in order for the heating/cooling to take place.

Personal property deals primarily with movable things, even if they weigh a ton, as long as they are not attached to the land. You might ask yourself, what’s the purpose behind these two classifications? Well, the classifications enable the law to draw a line between the two.
For example, if you are purchasing a house with a swing and slide set in the backyard, if the swing set is not bolted, the seller of the land has all rights to take it with him or her, unless it was highlighted within the contract of sale. If the swing set was bolted, the only way the seller could take that with him or her is if it has been stated on the contract, if not, then the swing set is staying on that land since it is permanently attached.
Looking at the above example comes to display the advantages of being able to decipher between real and personal property. Same thing goes for a shed, regardless of its price, if it is portable and has wheels, it’ll be labeled as personal property, but if it is bolted or cemented, it is clearly labeled real property.
When it comes to purchasing land, some people tend to concentrate more on what is beneath the land, why? Because the minerals below the ground, whether oil, gas or even coal may be worth more than the property itself. With these kinds of minerals below your house, you are the sole owner. That means you can sell or contract those minerals to companies who have a known interest within those minerals.
All in all, Real property can never be taken from you without your permission, unless done so by a governmental agency. A governmental agency can use your property without asking, instead they’ll tell you, this occurs only when the land may be used for the benefit of the state or federal government.

Property can be categorized as real or personal.

Real property comprises of anything that is attached permanently to land such a home, a garage, shed or even a rose flower. Conversely, if it were movable, then it would be personal property. A rose bush is a real property unless if it is pulled out of its garden, which would make it personal property. That said anything that is movable represents personal property, while the immovable is real property.
Additionally, real property not only includes things that are permanent on your land but also includes whatever that is above or below it. If you have oil in your land, it is real property. You can dig up your land to extract and acquire the oil. Even if it weighs tones, personal property mostly deals with movable things, long as they are not attached to the land.
These rankings enable smooth legal procedures. For instance, if you are looking to buy a home with a swing and slide set in the backyard, the seller of the house has every right to take it if it was not bolted permanently unless it is indicated in the contract as part of the house.
In addition, when buying land, many people have a habit of concentrating more on what is beneath the land. Because the land could be having minerals such as oil, gas, coal or any other below the ground and such minerals could make the land worth more than the property itself. In such a situation, the selling price and the buying prices of that land must change and will be affected. Even the legal policies such as contract agreements will also change.

Real Estate Lawyer

When you need legal help with real property law or personal property law, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506

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Thursday, October 29, 2020

Commercial Property Foreclosure

Commercial foreclosures are, in most cases, very similar to residential foreclosures. The foreclosure may be non-judicial or judicial depending on the state where the property is located and what the loan documents dictate. With both non-judicial and judicial commercial foreclosures, the process starts when the borrower defaults on the mortgage. A default occurs when the borrower falls behind in payments or fails to do something that the loan documents require, such as maintaining hazard insurance on the property. After the default, the lender may accelerate, or call due, the outstanding balance on the loan. Typically, the lender must first send a breach letter to the borrower that outlines the reason for default and gives a time frame during which the borrower may cure the default and avoid acceleration. Usually, the amount of time given to cure a default is thirty days, but this can vary depending on the terms of the mortgage. Once the time period expires, if the borrower has not cured the default, then the lender may commence foreclosure proceedings.

Non-judicial Commercial Foreclosures

A non-judicial foreclosure, or power of sale foreclosure, is an out-of-court process. With a commercial foreclosure, just like a residential foreclosure, the lender may proceed non-judicially if the loan documents contain a power of sale clause and if allowed by state foreclosure law. The power of sale clause is located in the deed of trust or mortgage and empowers a trustee sell the property without court supervision. This process typically involves recording a notice of default (or similar document) in the county records, mailing a copy of that notice to the borrower and other interested parties, as well as publishing the notice of default or notice of sale, though non-judicial procedures vary from state to state.

Judicial Commercial Foreclosures

Judicial foreclosures are processed through the court system and are initiated when the lender files a lawsuit usually in the form of a complaint for foreclosure or petition for foreclosure against the borrower seeking a judgment of foreclosure and order for sale. First, a title report will be ordered so that the lender’s attorney can determine all interested parties that must be named as defendants in the lawsuit. The defendants might include lien holders (like junior mortgage holders) or the U.S. Internal Revenue Service, if there is a federal tax lien on the property. The attorney will also receive copies of all underlying commercial mortgage documents, including the mortgage, the security agreement, the assignment of leases (if any), the assignment of rents (if any), any UCC filings, and any guaranties. Because commercial loans are often taken out in the name of the business, in many cases the business owner will have provided a personal guaranty pledging payment of the loan. The business owner as guarantor will also be included as a defendant in the foreclosure suit, along with the business itself. Each defendant must be served with a copy of the complaint for foreclosure, either personally or by publication if a particular defendant can’t be found. Defendants are given a certain amount of time, often 20 or 30 days, to file an answer to the complaint. In an uncontested foreclosure, the lender’s attorney will file a motion to obtain a judgment. In a contested case, the matter will typically proceed to trial. Once the judgment and order of sale have been entered, notice of the sale date will be given to the defendants and might be published, depending on state requirements. The foreclosure sale will be held, and the property will be deeded to the new owner after any applicable redemption period has expired.

Potential Defenses in a Commercial Foreclosure

In a commercial foreclosure, just like with residential foreclosures, many potential defenses are available to a property owner to fight the action. Possible defenses include:
• failure to comply with state foreclosure procedural requirements
• inaccurate affidavit
• failure to comply with notice provisions
• mistakes or errors
• failure to prove who owns the mortgage and note
• equitable estoppels
• laches, and
• unclean hands.

Tenants’ Rights Following a Commercial Foreclosure

The rights of any tenants in a foreclosed commercial property will depend on the terms of the lease and the date on which the lease was signed. The tenant’s interest could potentially be terminated by a foreclosure due to the legal concept referred to as “first in time, first in right,” which allows the purchaser of a foreclosed property to void a lease if the mortgage was executed before the execution of the lease. (See our article on The First in Time, First in Right Rule.) Many commercial leases contain a subordination, non-disturbance, and attornment agreement, or SNDA. Under the terms of an SNDA, the tenant agrees to subordinate, or make junior, its interest in the lease to any lender making a loan secured by the commercial property; the tenant agrees to attorn to, or recognize, any new owner of the commercial property as its landlord; and any new owner of the commercial property agrees not to disturb the tenant’s possession of the property as long as the tenant pays rent and complies with the terms of the lease. For tenants, an SNDA provides some assurance that their rights to their premises will be preserved even if the property is foreclosed.
Foreclosure Alternatives for Commercial Properties

Forbearance Attorney

One workout option for commercial loans as well as residential loans is forbearance. Forbearance is when the lender agrees to reduce or suspend mortgage payments for a certain period of time and not to initiate a foreclosure during the forbearance period. Sometimes the lender will also agree to waive or modify a mortgage requirement that the borrower is unable to meet. In a forbearance, the lender retains the right to resume the foreclosure once the forbearance period expires if the agreed-upon conditions are not met.

Lawyer For A Loan Modification

A commercial loan workout could also consist of a loan restructuring by means of a loan modification. With a modification, the lender might agree to:
• reduce the interest rate
• waive late fees
• delay or halt the foreclosure process
• cancel a receivership, or
• lengthen the amortization schedule.

Short Sale Lawyer

Another possible commercial loan workout option is a short sale. In a commercial short sale, as with a residential short sale, the borrower sells the property for a price that is less than the total debt. The lender agrees to release its lien on the property and to accept the proceeds of the sale in full or partial satisfaction of the outstanding indebtedness. Depending on the terms of the short sale agreement, the lender might be able to get a deficiency judgment by filing a lawsuit following the short sale. Lenders are, in general, more likely to seek a deficiency judgment after the short sale of a commercial property than a residential property.

Attorney for Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is also sometimes an option for commercial borrowers who are facing foreclosure. A deed in lieu of foreclosure is a transaction in which the borrower voluntarily transfers title to the commercial property to the lender in exchange for the lender releasing the mortgage lien in full or partial satisfaction of the outstanding indebtedness. Borrowers are commonly given a release of all liability with deeds in lieu of foreclosure. But if the property is severely underwater (where the value of the property is significantly less than the total debt), the lender might require an additional payment or insist it retain the right to seek a deficiency judgment. A key benefit to a commercial deed in lieu of foreclosure transaction is that it generally provides a smoother transition of the commercial property than a foreclosure. Usually, there is a mutual cooperation clause in the agreement so that files, leases, and other records are easily transferred, and other issues that might come up are addressed. For this reason, lenders are sometimes more willing to consider a deed in lieu of foreclosure as an alternative to foreclosure for commercial properties than they are for residential properties.

Difference between Commercial and Residential Workouts

Workouts that are available for commercial properties are generally very similar to those that are available for residential properties. But one significant difference in the process of negotiating a workout involves the pre-negotiation letter. Whether a commercial property owner is seeking forbearance, loan modification, short sale, or deed in lieu of foreclosure, the commercial workout process often starts with the pre-negotiation letter, which provides an outline for the preliminary discussions about the workout. The purpose of the pre-negotiation letter is to avoid any misunderstandings during the workout negotiations. The letter will set the ground rules for the workout discussions, preserve the lender’s rights regarding the existing default, and might eliminate the ability of the borrower to later claim that the lender made verbal promises or otherwise acted improperly regarding the workout. The letter will typically require the borrower to acknowledge that a workout agreement is not binding until and unless it is formalized in writing and has been signed by all parties.

Commercial Real Estate Foreclosures

When considering investing in real estate, do not overlook the opportunities in income producing properties. Commercial real estate investment is an industry that offers one of the surest ways to gain wealth with the lowest barriers to entry. Real estate markets have ups and downs, with values fluctuating due to market conditions in certain localities primarily driven by overbuilding and high interest rates. Commercial real estate typically does not react to those outside factors in such broad swings. Values on commercial real estate tend to follow a steady upward path. The fact that a property is available through a real estate agent specializing in foreclosures, or on the foreclosure.com website, does not mean there is something wrong with it. Properties in this category are more likely to be in foreclosure or bankruptcy on an account of problems of the owner/developer than from forces directly related to the property. Prime properties and excellent opportunities abound in the commercial real estate space. Banks can be a good source of distressed commercial properties. They exist to attract accounts and make loans. Managing real estate is outside their area of expertise. Creditors end up owning properties they never intended to own, and are stuck with REO (Real Estate Owned), a particularly unwelcome item on their balance sheets. From an accounting standpoint, while real estate for owner/investors is an asset on its books, it is the opposite in terms of banking bookkeeping. Real estate on a bank’s balance sheet appears on the liability side of the leger. It is a liability that drags down their net worth and causes their auditors and regulators to restrict their lending activities. Thus the banks are highly motivated to move properties off their books, and often decide to cut their losses by discounting the sales price for a quick sale. One thing that banks are particularly bad at owns real estate, so any real estate on the books of a lender is an opportunity for an investor. The pathway to success in commercial real estate can be shortened by researching the commercial foreclosure and business foreclosure markets.

Foreclosure Rules Vary from State to State

First of all, as with most real estate laws, foreclosure rights and procedures are different in each state. These differences can be minor variations in things such as how many times a lender must publish notice of a foreclosure sale, or the number of days a borrower has to respond to a lawsuit. They can also, however, vary significantly in terms of borrower and lender rights. For example, a borrower may or may not have the right of redemption, which is the ability to recover their property following a foreclosure sale by paying the sale price, interest and other costs to the winning bidder or if the redemption happens before the sale, by paying the lender its outstanding debt and other costs.

Procedural Requirements

Because foreclosures result in the loss of property, including people’s homes, strict compliance with procedural items, such as the method and form various notices must take, is required. Accordingly, knowing when, where and what form notices must take (as well as all other procedural requirements) is critical to a successful foreclosure. While there may be some similarities, the procedural requirements for a foreclosure can vary widely from state to state.

Time to Complete the Process

Depending on the state, foreclosures can occur as quickly as 30 days, and up to seven months (or longer).
Right of Redemption
Some states grant a borrower a right of redemption, and others do not. Generally redemption is not available in non-judicial foreclosures unless the deed of trust grants the right. Even where they are given, there is a great deal of variation among the states as to the period in which a borrower must exercise or lose its right to redeem (generally between six months and a year). Further, state laws may condition the right of redemption, or modify the time period in which it can be exercised, on different factors, such as:
• Requiring the borrower to redeem the property before the foreclosure sale
• The percentage of the unpaid loan amount at the time of foreclosure judgment
• Whether the property has been abandoned
• Whether the borrower relinquished possession to the new owner (the winning bidder at the foreclosure sale) following demand
• Whether the borrower lost its source of income following foreclosure
• In what year the mortgage was granted
• Whether a lender gets a deficiency judgment
• Whether the lender was the foreclosing buyer
• The type of property (e.g., agricultural), and
• The terms of the mortgage or deed of trust

Deficiency Judgments

Where the proceeds from the foreclosure sale aren’t enough to pay the borrower’s unpaid debt, the lender may be able to obtain a deficiency judgment against the borrower for the difference. Some states permit them, and some do not. Generally such judgments are not available where a deed of trust was used. Again, however, even where a deficiency judgment is permitted, the states can differ on their application, such as the time period in which it must occur and conditions on its availability (e.g., a borrower may be able to avoid a deficiency judgment if it agrees to a sale of the property prior to foreclosure).