Foreclosing on an Assisted Living Facility: What is the lender's role? Who is responsible for patients?
As we all know, there are business cycles that affect certain industries. When the going is good, lenders are lining up to make loans, and borrowers are not as picky as one might hope in taking on debt. When the worm turns, however, borrowers often find themselves in financial distress, right along with their competitors.
Currently, we are seeing assisted living facilities running into problems. These borrowers pose special problems for lenders, who must walk a thin line between collecting a bad debt and dispossessing seniors and handicapped persons. The lender handling a troubled assisted living facility wants to avoid taking over the property because the lender is ill-equipped to care for the residents. But how do you do the right thing - both for the bank and for the residents?
Marianne Dickson of our office recently was faced with this dilemma when a bank client called and asked us to move to have a receiver appointed over an assisted living facility. Here is how Marianne dealt with the problem for our client.