Notice of Default - Process and options

[Steve Hiltabiddle]

Hey Lenders,  I'm going through my first default process on a private loan for an investment property and I've done so with the assistance of an Attorney.  However, I’m curious how much of this process needs to be done with the Attorney and what I might be able to do myself. Presently, we (the Attorney) just sent out the Notice of Default and the Borrower has 10 days to cure. If not cured, it’s my understanding they are then in default. It’s at that time that I can start to charge default rate of interest and we can begin the foreclosure process. Given the legal challenges that can come with Foreclosure, I recognize the importance of having an Attorney involved for the Foreclosure process. However, I’m wondering if I need to engage an Attorney a borrower has missed a payment and it’s time to send a Notice of Default.

Must the Notice of Default (NoD) be a letter sent certified mail or would an email sent to the borrower notifying them of non-payment be considered sufficient as a Notice of Default. Does it have to come from an Attorney or is that simply the best way to ensure Notice was given and to minimize issues if Foreclosure is necessary?  What I’ve learned in my first experience is Notice must be given to start the process but I am not familiar with what is the minimum standard for the Notice of Default.   I assume state laws dictate and for reference if necessary, this is in Pennsylvania. 

Thanks in advance for any guidance or sharing of experience,

Steve

[Ryan Konen]

In Pennsylvania, an attorney isn’t required to send a Notice of Default (NoD), but it ensures compliance with laws. Certified mail is the best method, as emails usually don’t meet legal standards unless allowed by the loan agreement. The NoD must clearly state the missed payment, cure period, and consequences; consulting an attorney for your first default is a smart precaution.