Lenders and borrowers often prefer to avoid foreclosures. Short sales and deeds in lieu of foreclosure are two methods that may be employed to accomplish this objective. Workouts are a third option.
A major premise of a workout is that institutional lenders would rather receive loan repayments than engage in foreclosure and/or litigation proceedings.
A workout is just that — the lender and the borrower work out an agreeable alternative to foreclosure. Upon request of the defaulting debtor, the lender may be willing to reasonably accommodate the debtor. This accommodation can take many forms including, but not limited to, temporarily suspending mortgage payments, waiving accrued costs, fees, or penalties, or extending the loan’s repayment period.
In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.
Sometimes parties to a construction contract encounter conditions on the site that were unknown at the time they entered into their contract. Who bears the risk and expense of dealing with those conditions?
The general rule in Texas: a contractor who is paid on a lump-sum basis is not entitled to additional payment because differing site conditions are encountered and must be addressed.
Exceptions to the general rule may arise where there was fraud or mutual mistake, or the parties expressly agreed in their contract how to allocate such risk and expense.
In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more involved and complex discussions.