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If the individual you offered residential or commercial property to on an loan no longer wants 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 good alternative to take the residential or commercial property back and cancel the loan.

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

A foreclosure can be costly and could result in a claim or insolvency.

Good to know: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor just moves the residential or commercial property back to the lender and the lending institution cancels the debt. This is sometimes referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent suits and personal bankruptcy.

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

Note: Bear in mind, that the majority of mortgage companies will not accept a Deed in Lieu of Foreclosure. If you owe money to a mortgage business, a Deed in Lieu is rarely a choice. Regulations might require a mortgage company 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 money to a good friend, household member, or a private loan provider, 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 parties, Lender and Borrower must agree. The lending institution needs to consent to accept the residential or commercial property AND the customer must accept move the residential or commercial property, return the keys, and leave the residential or commercial property.

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

A Debtor might buy 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 eviction process. It is a waste of cash for a Borrower to spend for a Deed in Lieu of Foreclosure without very first getting the Lender's composed 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 risk of being sued or having the customer file insolvency. In this case, the Borrower ought to let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

Borrowers usually choose to utilize 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 just settle on an orderly move out of the residential or commercial property.

Good to understand: Sometimes the celebrations might concur to transform the loan to a rental contract. 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 simply a shorter method 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 homeowner is no longer bound to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complicated file and must be prepared by a legal representative. This is an official legal file used to give up 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 explained in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is lawfully transferring 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 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 2nd 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 retains the right to foreclosure its lien on the residential or commercial property which ought to "eliminate" or remove any liens filed after the Lender's lien

Other liens might include 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 need to be significantly less because the Borrower has actually agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower must 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 business may cost up to $1500 or more. If the Borrower files a suit to stop the foreclosure, or files for Federal Bankruptcy Protection, the legal fees along might escalate, plus the Borrower will stay in the residential or commercial property without paying 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 gotten ready for $350

Do you have concerns 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 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 ranked for Highest Level of Professional Excellence.

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

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