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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 alternative to take the residential or commercial property back and cancel the loan.

If you have actually a protected property loan, and the person who owes you the money does not pay the loan, you might need 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 costly and could lead to a suit or personal bankruptcy.

Good to understand: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower merely transfers the residential or commercial property back to the lending institution and the lender cancels the financial obligation. This is sometimes described as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid lawsuits and insolvency.

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

Note: Remember, that the majority of mortgage business will decline a Deed in Lieu of Foreclosure. If you owe money to a mortgage business, a Deed in Lieu is rarely an option. 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 cash to a good friend, member of the family, or a private lending institution, you may have the ability 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 parties, Lender and Borrower must concur. The lender needs to accept accept the residential or commercial property AND the borrower must accept move the residential or commercial property, return the keys, and abandon the residential or commercial property.

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

A Debtor might purchase a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company can decline to accept the deed and continue with the foreclosure and expulsion procedure. It is a waste of money for a Customer to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's composed approval.

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

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

Good to understand: Sometimes the celebrations may accept transform 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 much shorter way of saying Deed in Lieu of Foreclosure. Homeowners agree to sign a deed in lieu to avoid foreclosure. When a seller accepts this deed, the house owner is no longer obligated to repay the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is an intricate document and should be prepared by a legal representative. This is a formal 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 lawfully 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 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 full 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 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 may be second liens, home improvement 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 keeps the right to foreclosure its lien on the residential or commercial property which must "eliminate" or remove 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 must be substantially less due to the fact that 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 might cost as much as $1500 or more. If the Borrower submits a suit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal costs along might skyrocket, 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 fees are generally 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 rated by Martindale-Hubble. Peer rated for Highest Level of Professional Excellence.

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

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