Deed in Lieu of Foreclosure

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If the person you offered residential or commercial property to on an owner financing loan no longer desires the residential or commercial property or can no longer spend for the residential or commercial property, a Deed in Lieu of Foreclosure may be an excellent alternative to take the residential or commercial property back and cancel the loan.

If you have a secured property loan, and the individual who owes you the cash does not pay the loan, you might require to foreclose your lien by offering the residential or commercial property at public auction. The cash received at the auction is applied to the loan.

A foreclosure can be pricey and might result in a suit or insolvency.

Good to understand: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower merely transfers the residential or commercial property back to the lender and the lending institution cancels the financial obligation. This is sometimes described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent claims and insolvency.

Basically, the debtor simply gives the residential or commercial property back. The customer signs a Deed in Lieu of Foreclosure, gives you the secrets and moves out.

Note: Keep in mind, that many mortgage business will not accept a Deed in Lieu of Foreclosure. If you owe money to a mortgage company, a Deed in Lieu is rarely a choice. Regulations may need a mortgage business to foreclosure although the Borrower no longer desires the residential or commercial property and does not reside in the residential or commercial property any longer.

On the other hand, if you owe cash to a good friend, relative, or a private lender, you might have the ability to move the residential or commercial property back to the lender and cancel the financial obligation using a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower should agree. The loan provider should concur to accept the residential or commercial property AND the borrower need to consent to transfer the residential or commercial property, return the keys, and vacate the residential or commercial property.

Without this shared arrangement, there can be no legitimate Deed in Lieu of Foreclosure. A Customer can not merely send by mail the mortgage business a Deed in Lieu of Foreclosure and expect the loan to be canceled.

A Debtor may buy a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage business has the right to contradict the deed and continue with the foreclosure and expulsion process. It is a waste of money for a Customer to spend for a Deed in Lieu of Foreclosure without first getting the Lender's composed permission.

Good to know: Private lenders might choose a Deed in Lieu of Foreclosure because they get the residential or commercial property back rapidly without threat of being sued or having the borrower file personal bankruptcy. In this case, the Borrower should let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

Borrowers typically choose to use a Deed in Lieu. It may keep the loan default off of their credit reports and it might prevent an eviction. The Borrower and Lender can just concur on an organized relocation out of the residential or commercial property.

Good to understand: Sometimes the celebrations might consent to convert the loan to a rental arrangement. The Borrower transfers the residential or commercial property back to the Lender and then leases it from the Lender.

deed in lieu

The term "Deed in Lieu" is simply a shorter method of stating Deed in Lieu of Foreclosure. Homeowners accept sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the property owner is no longer bound to repay the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is an intricate file and ought to be prepared by an attorney. This is an official legal file used to give up property residential or commercial property from the Buyer back to the Lender or Seller.

A copy of the Promissory Note and Deed of Trust which was signed by the Borrower and which is being canceled will both require to be described in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is legally moving title to the residential or commercial property back to the Lender in exchange for the cancelation of the overdue balance owed on the Promissory Note secured by the residential or commercial property.

By accepting the Deed in Lieu of Foreclosure, the Lender is legally accepting the residential or commercial property as payment in complete of the unpaid balance due on the promissory note.

Deed in Lieu of Foreclosure in Texas

Using a Deed in Lieu of Foreclosure in Texas, the Lender retains the right to perform a "Friendly Foreclosure" after accepting the Deed in Lieu if other liens are found on the title to the residential or commercial property. These other liens may be second liens, home improvement liens, judgment liens, child assistance liens and tax liens.

If other liens are found on the title to the residential or commercial property, the Lender with a Deed in Lieu of Foreclosure keeps the right to foreclosure its lien on the residential or commercial property which ought to "clean out" or remove any liens filed after the Lender's lien

Other liens may consist of the following:

Federal Tax Liens
Judgment Liens
Mechanic's Lien
Home Equity Liens

Even if a foreclosure is needed after the Lender accepts a Deed in Lieu to get rid of liens or clear title, the costs for the foreclosure need to be considerably less due to the fact that the Borrower has agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower should not have the ability to file for Federal Bankruptcy Protection to stop the sale of the residential or commercial property.

A contested foreclosure on a loan not owned by a mortgage company might cost up to $1500 or more. If the Borrower submits a claim to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal charges along could skyrocket, plus the Borrower will stay in the residential or commercial property without spending for the residential or commercial property.

A Deed in Lieu of Foreclosure costs $350. County recording charges are typically about $38.

Deed in lieu of foreclosure prepared for $350

Do you have questions about a Deed in Lieu of Foreclosure? Email lawyer Scott Steinbach straight at scott@texaspropertydeeds.com. Or call 972-960-1850.

R. Scott Steinbach is licensed in the state of Texas. Board Certified by the Texas Board of Legal Specialization in Residential Real Estate Law. AV Preeminent ranked by Martindale-Hubble. Peer rated for Highest Level of Professional Excellence.