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If the person you sold residential or commercial property to on an owner finance loan no longer wants the residential or commercial property or can no longer spend for the residential or commercial property, a Deed in Lieu of Foreclosure may be a great choice to take the residential or commercial property back and cancel the loan.

If you have a secured realty loan, and the individual who owes you the money does not pay the loan, you may 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 costly and could lead to a claim or personal bankruptcy.

Good to know: A choice to a public auction is a Deed in Lieu of Foreclosure. The borrower simply transfers the residential or commercial property back to the loan provider and the loan provider cancels the debt. This is often described as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid lawsuits and insolvency.

Basically, the customer simply gives the residential or commercial property back. The customer indications a Deed in Lieu of Foreclosure, offers you the keys and moves out.

Note: Bear in mind, that most mortgage companies will decline a Deed in Lieu of Foreclosure. If you owe cash to a mortgage company, a Deed in Lieu is seldom an alternative. Regulations might require a mortgage company to foreclosure although the Borrower no longer desires the residential or commercial property and does not reside in the residential or commercial property anymore.

On the other hand, if you owe money to a good friend, member of the family, or a private lending institution, you may be able to transfer the residential or commercial property back to the lender and cancel the debt using a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower must concur. The lending institution must consent to accept the residential or commercial property AND the borrower need to accept transfer the residential or commercial property, return the keys, and leave the residential or commercial property.

Without this shared arrangement, there can be no legitimate Deed in Lieu of Foreclosure. A Debtor can not just mail the mortgage company a Deed in Lieu of Foreclosure and anticipate the loan to be canceled.

A Debtor might acquire a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company has the right to contradict the deed and continue with the foreclosure and expulsion process. It is a waste of cash for a Customer to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's composed authorization.

Good to know: Private lending institutions might prefer a Deed in Lieu of Foreclosure because they get the residential or commercial property back quickly without threat of being taken legal action against or having the debtor file bankruptcy. In this case, the Borrower ought to let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers generally prefer to utilize 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 settle on an orderly relocation out of the residential or commercial property.

Good to understand: Sometimes the parties may accept convert the loan to a rental arrangement. The Borrower transfers the residential or commercial property back to the Lender and after that leases it from the Lender.

deed in lieu

The term "Deed in Lieu" is simply a much shorter way of saying Deed in Lieu of Foreclosure. Homeowners agree to sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the homeowner is no longer obliged 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 a legal representative. This is a formal legal file used to surrender 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 need to be explained in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is lawfully moving title to the residential or commercial property back to the Lender in exchange for the cancelation of the unpaid balance owed on the Promissory Note protected 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 2nd liens, home enhancement liens, judgment liens, kid support liens and tax liens.

If other liens are discovered on the title to the residential or commercial property, the Lender with a Deed in Lieu of Foreclosure retains the right to foreclosure its lien on the residential or commercial property which must "eliminate" or eliminate any liens filed after the Lender's lien

Other liens may include 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 remove liens or clear title, the costs for the foreclosure ought to be substantially less since the Borrower has actually concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower ought to not have the ability to apply for Federal Bankruptcy Protection to stop the sale of the residential or commercial property.

An objected to foreclosure on a loan not owned by a mortgage company may cost approximately $1500 or more. If the Borrower submits a claim to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal fees along could increase, plus the Borrower will stay in the residential or commercial property without paying for the residential or commercial property.

A Deed in Lieu of Foreclosure costs $350. County recording fees are normally about $38.

Deed in lieu of foreclosure prepared for $350

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

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

Texas Residential Or Commercial Property Deeds is a service of The Steinbach Law Practice.

The Steinbach Law Practice is a Texas Real Estate Law Practice. We prepare all documents for any property deal in Texas.
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