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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 spend for the residential or commercial property, a Deed in Lieu of Foreclosure might be a good alternative to take the residential or commercial property back and cancel the loan.

If you have a protected real estate loan, and the person who owes you the cash does not pay the loan, you might need to foreclose your lien by offering the residential or commercial property at public auction. The cash gotten at the auction is used to the loan.

A foreclosure can be costly and could result in a lawsuit or personal bankruptcy.

Good to know: An alternative to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower simply transfers the residential or commercial property back to the lending institution and the lender cancels the debt. This is often referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid claims and bankruptcy.

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

Note: Keep in mind, that many mortgage companies will not accept a Deed in Lieu of Foreclosure. If you owe money to a mortgage company, a Deed in Lieu is hardly ever an alternative. Regulations might require a mortgage company to foreclosure although the Borrower no longer wants the residential or commercial property and does not live in the residential or commercial property any longer.

On the other hand, if you owe money to a pal, household member, or a private loan provider, you might be able to move the residential or commercial property back to the loan provider and cancel the financial obligation utilizing a Deed in Lieu of Foreclosure.

But all parties, Lender and Borrower should concur. The lender needs to agree to accept the residential or commercial property AND the debtor should consent to transfer the residential or commercial property, return the secrets, and vacate the residential or commercial property.

Without this mutual contract, there can be no legitimate Deed in Lieu of Foreclosure. A Debtor can not simply mail the mortgage company a Deed in Lieu of Foreclosure and expect the loan to be canceled.

A Borrower might acquire a Deed in Lieu of Foreclosure, sign it and mail it, but the mortgage company has the right to decline to accept the deed and continue with the foreclosure and eviction process. It is a waste of cash for a Debtor to spend for a Deed in Lieu of Foreclosure without first getting the Lender's written approval.

Good to understand: Private lending institutions might prefer a Deed in Lieu of Foreclosure since they get the residential or commercial property back quickly without threat of being sued or having the borrower file personal bankruptcy. In this case, the Borrower must let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

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

Good to know: Sometimes the parties might agree to transform the loan to a rental arrangement. The Borrower transfers the residential or commercial property back to the Lender and after that rents it from the Lender.

deed in lieu

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

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complicated file and should be prepared by a lawyer. This is an official legal document utilized 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 require to be described 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 overdue balance owed on the Promissory Note protected by the residential or commercial property.

By accepting the Deed in Lieu of Foreclosure, the Lender is lawfully accepting the residential or commercial property as payment completely of the overdue 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 conduct 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 might be second liens, home improvement liens, judgment liens, child support 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 retains the right to foreclosure its lien on the residential or commercial property which need to "erase" 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 required after the Lender accepts a Deed in Lieu to eliminate liens or clear title, the fees for the foreclosure should be significantly less because the Borrower has actually agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower must 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 business may cost up to $1500 or more. If the Borrower files a claim to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal costs along might escalate, plus the Borrower will remain in the residential or commercial property without paying for the residential or commercial property.

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

Deed in lieu of foreclosure gotten ready for $350

Do you have questions 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 accredited 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 rated for Highest Level of Professional Excellence.
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Texas Residential Or Commercial Property Deeds is a service of The Steinbach Law Practice.

The Steinbach Law Firm is a Texas Real Estate Law Office. We prepare all files for any property transaction in Texas.