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If the person you sold residential or commercial property to on an owner finance 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 choice to take the residential or commercial property back and cancel the loan.

If you have a secured real estate loan, and the individual who owes you the cash does not pay the loan, you may require to foreclose your lien by offering the residential or commercial property at public auction. The cash gotten at the auction is applied to the loan.

A foreclosure can be expensive and might result in a suit or insolvency.

Good to know: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor just moves the residential or commercial property back to the lending institution and the lending institution cancels the debt. This is often described as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid claims and personal bankruptcy.

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

Note: Bear in mind, that many mortgage business will not accept a Deed in Lieu of Foreclosure. If you owe money to a mortgage business, a Deed in Lieu is seldom an alternative. Regulations might need 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 any longer.

On the other hand, if you owe money to a good friend, family member, or a private lending institution, you may have the ability to transfer 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 lender must consent to accept the residential or commercial property AND the debtor should consent to transfer the residential or commercial property, return the keys, and abandon the residential or commercial property.

Without this shared agreement, there can be no legitimate Deed in Lieu of Foreclosure. A Borrower can not merely send by mail the mortgage business a Deed in Lieu of Foreclosure and expect the loan to be canceled.

A Borrower might buy a Deed in Lieu of Foreclosure, sign it and mail it, but the mortgage business deserves to contradict the deed and continue with the foreclosure and expulsion procedure. It is a waste of cash for a Debtor to spend for a Deed in Lieu of Foreclosure without very first getting the Lender's written authorization.

Good to understand: Private lending institutions may prefer a Deed in Lieu of Foreclosure due to the fact that 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 must let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers typically prefer to use a Deed in Lieu. It may keep the loan default off of their credit reports and it may prevent an expulsion. The Borrower and Lender can merely settle on an organized move out of the residential or commercial property.

Good to understand: Sometimes the celebrations may consent to convert the loan to a rental agreement. 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 way of saying Deed in Lieu of Foreclosure. Homeowners accept sign a deed in lieu to avoid foreclosure. When a seller accepts this deed, the homeowner is no longer obliged to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is an intricate file and ought to be prepared by a legal representative. This is an official legal file used to give up real estate 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 require to be explained in the Deed in Lieu of Foreclosure.

By signing the Deed in Lieu of Foreclosure, the Borrower is lawfully transferring 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 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 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, child assistance 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 maintains the right to foreclosure its lien on the residential or commercial property which must "erase" or eliminate any liens submitted 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 needed after the Lender accepts a Deed in Lieu to remove liens or clear title, the costs for the foreclosure ought to be considerably less because the Borrower has agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower needs 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 may cost as much as $1500 or more. If the Borrower files a suit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal costs along might skyrocket, 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 charges are generally 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 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 Practice.

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