If you are a lender or have sold a property and taken back a mortgage you may find yourself in need of a real estate lawyer in the event payments are not made, or other conditions of the loan are not met such as failure to insure the property, pay the real estate taxes, or using the property in a manner that violates the law. If you own property subject to a mortgage or deed of trust, and your lender is foreclosing you should consult a real estate attorney immediately. Often owners who become aware of a foreclosure wait and do nothing until it is to late. From a tactical standpoint this puts you and the attorney at a huge tactical advantage. Certain statutory laws exist to protect your rights, however you must exercise these rights within certain time limits or your forfeit your ability to exercise them.



If you are a lender you must follow certain statutory rules in order for the sale to be legal and clear clouds on title. The laws of Missouri and Kansas are very different as it relates to foreclosure law. Missouri is a non-judicial deed of trust state and Kansas is a judicial mortgage state. In each case the foreclosing lender will notice all parties who have a potential interest in the property in order to quite title. This would include consensual (1 and 2 mortgages) and non consensual (judgements, tax liens) interests in the property. st nd If the property is taken back by the lender the lender will resale the property. Often when the property is resold it is for substantially less than the amount owed. This difference is called a deficiency. Often the lender will not decide to pursue you for a deficiency. In this instance the lender files a notice of forgiveness of debt and issues a 1099. The amount of debt forgiven is treated as taxable income. In certain instances the debt forgiveness is not treated as taxable income despite the issuance of a 1099.

Missouri is a non-recourse state. In Missouri a first mortgage lender cannot pursue you personally for a deficiency. Second and third mortgage lenders can pursue you personally to collect a deficiency. Kansas is a recourse state. In Kansas a first mortgage lender can pursue you personally to collect any unpaid balance after sale. Just as in Missouri, second and third mortgage creditors can pursue you personally to collect any unpaid balance after sale. In all instances if a mortgage lender forgives debt the lender has the right to issue a 1099, which depending on your circumstances, may or may not create an income tax liability. If you need to foreclose on a property, or find yourself being foreclosed on, I would strongly encourage you to consult with a real estate attorney.