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If the individual you offered residential or commercial property to on an owner finance 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 an excellent choice to take the residential or commercial property back and cancel the loan.

If you have actually a protected realty 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 used to the loan.

A foreclosure can be costly and might result in a suit or bankruptcy.

Good to know: An alternative to a public auction foreclosure is a Deed in Lieu of Foreclosure. The customer simply moves the residential or commercial property back to the loan provider and the lending institution cancels the debt. This is in some cases described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent lawsuits and bankruptcy.

Basically, the debtor simply provides the residential or commercial property back. The debtor signs a Deed in Lieu of Foreclosure, offers you the keys and moves out.

Note: Bear in mind, that many mortgage companies will not accept a Deed in Lieu of Foreclosure. If you owe cash to a mortgage business, a Deed in Lieu is hardly ever an option. Regulations might require a mortgage business to foreclosure although 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 buddy, relative, or a personal loan provider, you might have the ability to transfer the residential or commercial property back to the lender and cancel the financial obligation using a Deed in Lieu of Foreclosure.

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

Without this mutual agreement, there can be no legitimate Deed in Lieu of Foreclosure. A Debtor can not just mail the mortgage business a Deed in Lieu of Foreclosure and expect the loan to be canceled.

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

Good to understand: Private loan providers might choose a Deed in Lieu of Foreclosure due to the fact that they get the residential or commercial property back rapidly without danger of being sued or having the debtor file bankruptcy. In this case, the Borrower must let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers generally 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 just concur on an organized move out of the residential or commercial property.

Good to know: Sometimes the celebrations may accept transform 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 just a shorter method of stating 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 obligated to repay the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complex file and needs to be prepared by a lawyer. This is an official legal document used to give up real estate 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 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 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 carry out 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 improvement 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 ought to "wipe out" or remove any liens filed after the Lender's lien

Other liens may 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 remove liens or clear title, the charges for the foreclosure need to be considerably less because the Borrower has concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower needs to 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 up to $1500 or more. If the Borrower files a lawsuit to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal costs along might increase, 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 charges 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 straight at scott@texaspropertydeeds.com. Or call 972-960-1850.

R. Scott Steinbach is accredited 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 documents for any realty deal in Texas.