(This story, in slightly different form, originally appeared in Incisive Media's Daily Business Review.)
MIAMI-The fight between lenders and developers doesn't end when the foreclosure is over. In many cases, that's where the real battle begins.
Because of the decline in property values, lenders are no longer satisfied with taking over distressed properties and failed projects from developers. Now, they're often going after the former owners of properties or development company executives who signed off on loans that made them responsible for the full payment of the loans.
As their weapon, lenders are heading to court and seeking deficiency judgments against those individuals who in more prosperous times guaranteed the loans would be repaid. This is expected to be the "most bitter source of litigation" to result from the market downturn, predicts Tom Lehman, an attorney at Tew Cardenas in Miami. Lehman is representing a lender seeking a deficiency judgment following the foreclosure of a prime development site in Fort Lauderdale.
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