Right of the mortgagee or landlord to
seize and auction chattels, after due notice
of a public auction, in settlement of the
mortgagor’s or tenant’s debt.
Example of Distain (Distress)
If the tenant is in
Default as defined in the lease, the
landlord, in addition to any other righty
or remedy it may have, will have the right
of immediate re-entry and may remove any
person
or property from the premises. The property
may be stored in a public warehouse or
elsewhere
at the cost of and the account of the tenant
all without service of notice or resort to
legal process and without the landlord or
its agents being considered guilt of
trespass or becoming liable for loss or
damage occasioned thereby. Any of the
property of the tenant, namely goods and
chattels on the premises, when seized will
be sold and applied to the indebtedness
owed by the tenant to the landlord.
A sale in which the owner is in a state
of anxiety (usually finance related), and
frequently requiring disposition of property
for an amount less than true market value.
A
Seller is facing possible power of
sale or foreclosure action on his home as a
consequence of certain business decisions.
The mortgagee, aware of Smith’s
difficulties, approaches with a solution.
The original purchase price of the
property (when Smith bought) was $250,000
and the first mortgage was for $180,000.
However, at this juncture, Smith requires
cash to settle his business affairs and
cannot continue making payments on the
house. The mortgagee suggests taking over
the property. The offered price under this
distress situation is $220,000. While Smith
will lose $30,000 of his original equity,
the offer furnishes him with $40,000 in cash
to address other matters, and releases him
from continuing obligations regarding the
property. If the parties agree to the
$220,000, the transaction could be described
as a distress sale.
A property under foreclosure or other
legal remedy, or such action is imminent due
to default concerning financial obligations
relating to that property.
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