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If the person you sold residential or commercial property to on an owner finance 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 protected realty loan, and the person who owes you the cash does not pay the loan, you might require to foreclose your lien by selling the residential or commercial property at public auction. The cash received at the auction is applied to the loan.

A foreclosure can be expensive and might lead to a lawsuit or insolvency.

Good to know: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower just moves the residential or commercial property back to the lender and the lender cancels the debt. This is sometimes referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent claims and bankruptcy.

Basically, the borrower just offers the residential or commercial property back. The debtor indications a Deed in Lieu of Foreclosure, gives you the secrets and vacates.

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 may need 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 buddy, member of the family, or a private loan provider, you may be able to move the residential or commercial property back to the lender and cancel the financial obligation utilizing a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower must agree. The loan provider must concur to accept the residential or commercial property AND the borrower should concur to move 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 Debtor can not simply mail the mortgage company a Deed in Lieu of Foreclosure and expect the loan to be canceled.

A Borrower may buy a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company has the right to contradict the deed and continue with the foreclosure and eviction 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 composed permission.

Good to know: Private lenders might prefer a Deed in Lieu of Foreclosure since they get the residential or commercial property back quickly without threat of being taken legal action against or having the borrower file insolvency. In this case, the Borrower should let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

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

Good to know: Sometimes the celebrations might accept transform the loan to a rental arrangement. The Borrower transfers the residential or back to the Lender and then leases 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 accept sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the house owner 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 ought to be prepared by a legal representative. 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 unsettled balance owed on the Promissory Note protected 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 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 keeps 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 might be 2nd 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 should "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 required after the Lender accepts a Deed in Lieu to get rid of liens or clear title, the charges for the foreclosure need to be considerably less because the Borrower has agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower ought to 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 company might cost up to $1500 or more. If the Borrower submits a lawsuit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal charges along could 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 usually about $38.

Deed in lieu of foreclosure prepared for $350

Do you have questions about a Deed in Lieu of Foreclosure? Email attorney Scott Steinbach directly at scott@texaspropertydeeds.com. Or call 972-960-1850.

R. Scott Steinbach is certified 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 Office.

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