Balloon Note Payment Overdue - Options for Second Mortgage Holder

[kalkan]

My question involves collection proceedings in the State of: Florida

I am Trustee for my deceased father's Trust. The Trust lent $40k in a balloon note as a 2nd mortgage. The note is now past due and I am trying to collect. The trust does hold a deed for the property.

The property is owned by an LLC - owner says the LLC has no assets and therefore it would be fruitless for me to sue. He offered me $5k to pay off the debt.
The property is a small condo unit he uses for leisure - not his primary home. I spoke with a lawyer who recommends foreclosing.

1.Does it make sense to foreclose on property - as 2nd mortgage holder, what options do I have?
2.What is estimated cost of foreclosing on a property (value is approx. $120k)
3.Can debtor's other assets be pursued to collect?
4. Any other ideas?

THANK YOU.

[Mr. Knowitall]

1. You will have to explore the value of the property, as well as determining if there are other liens with priority over your claim and the amount(s) of any such liens, then consider whether the cost of foreclosure and amount you're likely to recover will justify the action.

2. Get quotes from local real estate lawyers.

3. If you loaned the money to the LLC, with no personal guarantee by the (apparently) sole member, you are probably limited to pursuing the assets of the LLC. If in doubt, have a lawyer review your contracts, as well as potentially reviewing the nature and operation of the LLC to see if there may be an argument to justify reaching the owner/member's personal assets.

4. Exercise due diligence before lending money, and make sure you have sufficient security and appropriate guarantees of payment.

[kalkan]

I appreciate your response - this is very frustrating and I'm not at all experienced with this sort of thing.

The present value of the property is $105k. He paid $246k six years ago. The LLC holds a first mortgage of $168k. My father's trust holds a $40k note. Both notes are recorded.

The lawyer I've been working with recommends foreclosure - I'm just not sure the expense (yet to be determined) is worth it. The trust has little income so a write-off is not going to help either.

I hate to see him get away with it and I want to make a good decision here.