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If the person you sold residential or commercial property to on an owner finance 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 genuine estate loan, and the person who owes you the cash does not pay the loan, you might require 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 might lead to a suit or bankruptcy.

Good to understand: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The customer merely transfers the residential or commercial property back to the lending institution and the lending institution cancels the financial obligation. This is in some cases described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent claims and insolvency.

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

Note: Remember, that many mortgage business will decline a Deed in Lieu of Foreclosure. If you owe money to a mortgage business, a Deed in Lieu is seldom an option. Regulations might require a mortgage business to foreclosure even though the Borrower no longer desires 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, member of the family, or a private lender, you might have the ability to transfer the residential or commercial property back to the loan provider and cancel the financial obligation utilizing a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower must agree. The loan provider must agree to accept the residential or commercial property AND the customer must agree to the residential or commercial property, return the keys, and vacate the residential or commercial property.

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

A Borrower might buy 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 procedure. It is a waste of money for a Debtor to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's written 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 debtor file personal bankruptcy. In this case, the Borrower should let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

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

Good to understand: Sometimes the parties may concur to transform the loan to a rental agreement. 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 just a much shorter method of stating Deed in Lieu of Foreclosure. Homeowners accept sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the homeowner is no longer obliged to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complex document and must be prepared by a legal representative. This is an official legal file 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 need to be explained 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 unsettled 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 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 maintains the right to perform 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, child 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 maintains the right to foreclosure its lien on the residential or commercial property which ought to "erase" or get rid of any liens submitted 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 needed after the Lender accepts a Deed in Lieu to eliminate liens or clear title, the costs for the foreclosure must be substantially less because the Borrower has actually concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower should not have the ability to declare 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 might cost approximately $1500 or more. If the Borrower files a suit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal costs along might skyrocket, 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 fees 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 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 ranked 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 Office. We prepare all files for any property transaction in Texas.