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

If you have a secured genuine estate loan, and the person who owes you the cash does not pay the loan, you may require 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 expensive and could lead to a claim or bankruptcy.

Good to understand: An alternative to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower simply moves the residential or commercial property back to the lending institution and the lending institution cancels the financial obligation. This is sometimes referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent suits and bankruptcy.

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

Note: Keep in mind, that most mortgage business will decline a Deed in Lieu of Foreclosure. If you to a mortgage company, a Deed in Lieu is rarely 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 reside in the residential or commercial property anymore.

On the other hand, if you owe money to a good friend, household member, or a private lending institution, you might be able to move the residential or commercial property back to the loan provider and cancel the financial obligation using a Deed in Lieu of Foreclosure.

But all parties, Lender and Borrower need to concur. The lender must accept accept the residential or commercial property AND the debtor should accept move the residential or commercial property, return the secrets, and vacate the residential or commercial property.

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

A Borrower may 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 process. It is a waste of cash for a Borrower to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's composed approval.

Good to know: Private lending institutions may choose a Deed in Lieu of Foreclosure since they get the residential or commercial property back quickly without danger of being sued or having the customer file personal bankruptcy. In this case, the Borrower should let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

Borrowers typically choose to utilize 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 know: Sometimes the parties might accept convert the loan to a rental arrangement. 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 simply a much shorter way of saying Deed in Lieu of Foreclosure. Homeowners concur to sign a deed in lieu to prevent 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 a complex file and must be prepared by a lawyer. This is an official legal file utilized to surrender 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 explained 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 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 lawfully accepting the residential or commercial property as payment completely of the overdue 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 conduct 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 second liens, home enhancement liens, judgment liens, child 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 retains 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 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 ought to be considerably less since the Borrower has actually agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower ought to not be able to declare Federal Bankruptcy Protection to stop the sale of the residential or commercial property.

A contested foreclosure on a loan not owned by a mortgage business might cost approximately $1500 or more. If the Borrower submits a suit 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 costs are normally about $38.

Deed in lieu of foreclosure prepared 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 Office.

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