Lynn Haven, FL asked in Real Estate Law for Alabama

Q: If a person had a loan and mortgage from a bank in Alabama, and that person defaulted and the bank took the property

and sold it, do the proceeds of the sale go towards the balance that was owed at the time of default?

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1 Lawyer Answer

A: THe proceeds of the sale go to the cost of foreclosure and the balance owed. The bank can recover all of their costs of collecting the money through foreclosure before they have to apply anything to the balance. THe amount that is left over after they apply sale proceeds to the cost of collecting and balance is called a "deficiency" and they can sue you for that. The only thing that you have that is of any value is your right to redeem the property after it is foreclosed on. THis right of redemption is only good for one year from the date of foreclosure. THe sale may have been made subject to your right to redeem or the sale may have been after your redemptive right expired. (I can't tell from your question).

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