When a business defaults on a loan secured by personal property, a lender can take back and sell commercial assets under Florida law. This out-of-court process helps secured creditors collect unpaid debt.
How a UCC Article 9 foreclosure works
A lender can take possession of collateral without going to court if the process remains peaceful. Florida law protects business owners from physical conflict or force during repossession.
After taking the property, the lender must send written notice to the borrower and other qualified lienholders before holding a sale. The lender can proceed using specific options:
- Public sale through open bidding
- Private sale to specific buyers
- Full or partial asset retention
The lender can keep the assets to clear the debt if you agree or do not object in writing within 20 days. Every step of the sale must be commercially reasonable. If a lender sells collateral to an insider below fair value, courts recalculate the debt balance using true market rates.
Types of assets subject to Article 9 foreclosure
Article 9 applies to personal property used to secure business financing. Real estate follows separate mortgage foreclosure rules:
- Inventory and raw materials
- Office equipment and machinery
- Accounts receivable
- Intellectual property and patents
Reviewing your loan documents helps you see which specific assets secure your debt. Knowing these boundaries helps management evaluate company risk when money gets tight.
Protect your business assets during a secured debt default
Commercial borrowers have statutory rights throughout a debt default. You can redeem your property before the lender sells or accepts it by paying off the debt balance, repossession costs and agreed attorney fees.
You can also seek a court injunction if the lender fails to send proper written notices. Speaking with a commercial debt attorney can help you protect your business rights.