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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 might be a good alternative to take the residential or commercial property back and cancel the loan.

If you have a protected realty loan, and the person who owes you the money does not pay the loan, you may 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 bankruptcy.

Good to understand: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor merely moves the residential or commercial property back to the lender and the lender cancels the debt. This is often described as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid lawsuits and personal bankruptcy.

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

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

On the other hand, if you owe money to a good friend, relative, or a personal lender, you might be able to transfer the residential or commercial property back to the loan provider and cancel the debt using a Deed in Lieu of Foreclosure.

But all parties, Lender and Borrower need to agree. The lending institution needs to agree to accept the residential or commercial property AND the borrower should accept move the residential or commercial property, return the keys, and abandon the residential or commercial property.

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

A Borrower may acquire 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 procedure. It is a waste of cash for a Borrower to pay for a Deed in Lieu of Foreclosure without first getting the Lender's written consent.

Good to know: Private lending institutions may choose a Deed in Lieu of Foreclosure because they get the residential or commercial property back quickly without risk of being sued 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 usually 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 agree on an orderly move out of the residential or commercial property.

Good to understand: Sometimes the celebrations may accept convert the loan to a rental agreement. 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 just a shorter method of stating Deed in Lieu of Foreclosure. Homeowners consent to sign a deed in lieu to avoid foreclosure. When a seller accepts this deed, the house 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 document and must be prepared by an attorney. This is an official legal document used to surrender realty 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 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 lawfully accepting the residential or commercial property as payment completely of the unsettled balance due on the promissory note.

Deed in Lieu of Foreclosure in Texas

Using a Deed in Lieu of Foreclosure in Texas, the Lender keeps 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 2nd liens, home enhancement liens, judgment liens, kid 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 retains the right to foreclosure its lien on the residential or commercial property which should "eliminate" or remove any liens submitted after the Lender's lien

Other liens might 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 eliminate liens or clear title, the fees for the foreclosure should be considerably less due to the fact that the Borrower has actually concurred not to contest 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.

An objected to foreclosure on a loan not owned by a mortgage company might cost up to $1500 or more. If the Borrower files a lawsuit to stop the foreclosure, or files for Federal Bankruptcy Protection, the legal charges along could escalate, plus the Borrower will stay in the residential or without paying for the residential or commercial property.

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

Deed in lieu of foreclosure gotten ready 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.

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 realty transaction in Texas.