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If the individual you offered residential or commercial property to on an owner financing loan no longer desires the residential or commercial property or can no longer spend for the residential or commercial property, a Deed in Lieu of Foreclosure may be an excellent option to take the residential or commercial property back and cancel the loan.

If you have a protected realty loan, and the individual who owes you the cash does not pay the loan, you might require to your lien by offering 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 lead to a lawsuit or insolvency.

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 lender and the lender cancels the financial obligation. This is sometimes referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid lawsuits and bankruptcy.

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

Note: Remember, that many 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 an option. Regulations may require a mortgage company to foreclosure despite the fact that the Borrower no longer desires the residential or commercial property and does not reside in the residential or commercial property any longer.

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

But all celebrations, Lender and Borrower should agree. The lender should accept accept the residential or commercial property AND the customer must consent to transfer the residential or commercial property, return the secrets, and abandon the residential or commercial property.

Without this shared contract, there can be no legitimate Deed in Lieu of Foreclosure. A Borrower can not just mail the mortgage business a Deed in Lieu of Foreclosure and anticipate the loan to be canceled.

A Borrower might acquire a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company can refuse to accept the deed and continue with the foreclosure and expulsion procedure. It is a waste of money for a Debtor to spend for a Deed in Lieu of Foreclosure without first getting the Lender's written approval.

Good to know: Private lending institutions might choose a Deed in Lieu of Foreclosure since they get the residential or commercial property back rapidly without risk of being taken legal action against or having the customer file bankruptcy. In this case, the Borrower ought to let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers normally choose to utilize a Deed in Lieu. It might keep the loan default off of their credit reports and it may avoid an expulsion. The Borrower and Lender can merely agree on an organized move out of the residential or commercial property.

Good to know: Sometimes the parties might concur to convert the loan to a rental contract. The Borrower transfers the residential or commercial property back to the Lender and after that leases it from the Lender.

deed in lieu

The term "Deed in Lieu" is simply a much shorter method of saying Deed in Lieu of Foreclosure. Homeowners consent to sign a deed in lieu to prevent 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 complex document and should be prepared by an attorney. This is a formal legal file utilized 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 need to be described in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is legally 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 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 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 retains 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 might be second 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 keeps the right to foreclosure its lien on the residential or commercial property which must "eliminate" or eliminate 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 required after the Lender accepts a Deed in Lieu to get rid of liens or clear title, the fees for the foreclosure need to be substantially less because 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 business may cost approximately $1500 or more. If the Borrower files a suit to stop the foreclosure, or files for 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 costs are usually about $38.

Deed in lieu of foreclosure prepared 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 rated for Highest Level of Professional Excellence.
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