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If the individual you offered residential or commercial property to on an owner financing 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 might be an excellent option to take the residential or commercial property back and cancel the loan.

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

A foreclosure can be pricey and might result in a lawsuit or bankruptcy.

Good to know: A choice to a public auction is a Deed in Lieu of Foreclosure. The customer 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 avoid suits and bankruptcy.

Basically, the customer merely gives the residential or commercial property back. The borrower indications a Deed in Lieu of Foreclosure, provides you the secrets and moves out.

Note: Remember, that many mortgage business will not accept a Deed in Lieu of Foreclosure. If you owe cash to a mortgage business, a Deed in Lieu is seldom an option. Regulations may require a mortgage business to foreclosure despite the fact that 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 cash to a good friend, relative, or a private lender, you may have the ability to transfer the residential or commercial property back to the loan provider and cancel the debt utilizing a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower must agree. The loan provider needs to consent to accept the residential or commercial property AND the customer should consent to 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 send by mail the mortgage company a Deed in Lieu of Foreclosure and expect the loan to be canceled.

A Borrower may purchase a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company deserves to decline to accept the deed and continue with the foreclosure and expulsion procedure. It is a waste of money for a Borrower to pay for a Deed in Lieu of Foreclosure without first getting the Lender's written permission.

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

Borrowers usually prefer to use 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 merely agree on an orderly relocation out of the residential or commercial property.

Good to know: Sometimes the parties may concur 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 just a shorter method of stating Deed in Lieu of Foreclosure. Homeowners concur 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 a complex file and should be prepared by an attorney. This is an official legal document utilized 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 require to be described in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is legally transferring 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 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 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 retains 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 may be second liens, home enhancement liens, judgment liens, kid 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 maintains the right to foreclosure its lien on the residential or commercial property which must "erase" 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 eliminate liens or clear title, the charges for the foreclosure must be considerably less since the Borrower has concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower ought to 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 approximately $1500 or more. If the Borrower submits a lawsuit to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal fees along might increase, 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 fees are normally about $38.

Deed in lieu of foreclosure gotten ready for $350

Do you have concerns 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 certified 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.

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

The Steinbach Law Practice is a Texas Real Estate Law Firm. We prepare all files for any real estate transaction in Texas.