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If the individual you sold residential or commercial property to on an owner financing 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 an excellent option 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 money does not pay the loan, you may require to foreclose 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 expensive and might lead to a claim or personal bankruptcy.

Good to know: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor merely moves the residential or commercial property back to the loan provider and the lender cancels the financial obligation. This is often described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent lawsuits and insolvency.

Basically, the customer merely gives the residential or commercial property back. The debtor indications a Deed in Lieu of Foreclosure, provides you the secrets and vacates.

Note: Remember, that the majority of mortgage business will not accept a Deed in Lieu of Foreclosure. If you owe money to a mortgage business, a Deed in Lieu is hardly ever an option. Regulations may need a mortgage company to foreclosure despite the fact that the Borrower no longer wants 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, relative, or a personal loan provider, you might be able to move the residential or commercial property back to the loan provider and cancel the debt using a Deed in Lieu of Foreclosure.

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

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

A Customer might buy a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage business can refuse to accept the deed and continue with the foreclosure and eviction process. It is a waste of money for a Customer to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's composed approval.

Good to know: Private loan providers might choose a Deed in Lieu of Foreclosure because they get the residential or commercial property back rapidly without danger of being taken legal action against or having the customer file insolvency. In this case, the Borrower ought to let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

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

Good to understand: Sometimes the parties might consent to convert the loan to a rental arrangement. The Borrower transfers the residential or commercial property back to the Lender and then 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 agree to sign a deed in lieu to avoid 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 an intricate file and should be prepared by a lawyer. This is an official legal file 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 explained 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 protected 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 unsettled 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 found on the title to the residential or commercial property. These other liens may be 2nd liens, home improvement liens, judgment liens, liens and tax liens.

If other liens are discovered 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 "eliminate" 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 eliminate liens or clear title, the charges for the foreclosure ought to be substantially less due to the fact that the Borrower has actually 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.

A contested foreclosure on a loan not owned by a mortgage business may cost as much as $1500 or more. If the Borrower submits a suit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal fees along could skyrocket, 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 generally about $38.

Deed in lieu of foreclosure gotten ready for $350

Do you have questions about a Deed in Lieu of Foreclosure? Email attorney 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 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 Office is a Texas Real Estate Law Office. We prepare all documents for any realty deal in Texas.