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If the person you sold residential or commercial property to on an owner financing loan no longer desires the residential or commercial property or can no longer pay 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 person who owes you the money does not pay the loan, you might require to foreclose your lien by selling the residential or commercial property at public auction. The cash gotten at the auction is applied to the loan.

A foreclosure can be pricey and could result in a lawsuit or insolvency.

Good to understand: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The customer just transfers the residential or commercial property back to the lending institution and the loan provider cancels the debt. This is sometimes described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent lawsuits and insolvency.

Basically, the borrower simply gives the residential or commercial property back. The customer signs a Deed in Lieu of Foreclosure, offers you the secrets and vacates.

Note: Keep in mind, that a lot of mortgage companies will decline a Deed in Lieu of Foreclosure. If you owe money to a mortgage company, a Deed in Lieu is seldom an alternative. Regulations might require a mortgage company to foreclosure even though the Borrower no longer wants the residential or commercial property and does not reside in the residential or commercial property any longer.

On the other hand, if you owe money to a pal, relative, or a personal lender, you might be able to move the residential or commercial property back to the lending institution and cancel the debt using a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower need to agree. The lending institution should accept accept the residential or commercial property AND the customer should concur to move the residential or commercial property, return the keys, and leave the residential or commercial property.

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

A Borrower might purchase a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company has the right to decline to accept the deed and continue with the foreclosure and eviction procedure. It is a waste of money for a Borrower to spend for a Deed in Lieu of Foreclosure without first getting the Lender's composed authorization.

Good to know: Private lenders may choose a Deed in Lieu of Foreclosure since they get the residential or commercial property back quickly without danger of being taken legal action against or having the customer file personal bankruptcy. In this case, the Borrower needs to let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers usually prefer to utilize a Deed in Lieu. It might keep the loan default off of their credit reports and it might prevent an expulsion. The Borrower and Lender can simply agree on an orderly relocation out of the residential or commercial property.

Good to know: Sometimes the parties might accept transform 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 consent to sign a deed in lieu to avoid 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 should be prepared by a lawyer. This is an official legal document used to surrender genuine estate 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 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 unsettled 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 maintains the right to perform a "Friendly Foreclosure" after accepting the Deed in Lieu if other liens are discovered on the title to the residential or commercial property. These other liens might be second 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 keeps the right to foreclosure its lien on the residential or commercial property which must "clean out" or get rid of any liens submitted 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 ought to be significantly less because the Borrower has actually agreed not to or otherwise challenge the foreclosure. Also, the Borrower should not be able 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 may cost as much as $1500 or more. If the Borrower files a suit to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal costs along might increase, plus the Borrower will remain 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 directly at scott@texaspropertydeeds.com. Or call 972-960-1850.

R. Scott Steinbach is accredited 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 ranked for Highest Level of Professional Excellence.
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Texas Residential Or Commercial Property Deeds is a service of The Steinbach Law Office.

The Steinbach Law Firm is a Texas Real Estate Law Firm. We prepare all documents for any realty transaction in Texas.
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