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

If you have a secured property loan, and the person 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 applied to the loan.

A foreclosure can be pricey and might lead to a claim or bankruptcy.

Good to understand: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The borrower simply moves the residential or commercial property back to the lender and the lending institution cancels the debt. This is often described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent claims and personal bankruptcy.

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

Note: Remember, that the majority of mortgage business will decline a Deed in Lieu of Foreclosure. If you owe cash to a mortgage business, a Deed in Lieu is hardly ever a choice. 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 cash to a friend, member of the family, or a personal lending institution, you may be able to move the residential or commercial property back to the lending institution and cancel the financial obligation utilizing a Deed in Lieu of Foreclosure.

But all parties, Lender and Borrower should agree. The lending institution should agree to accept the residential or commercial property AND the borrower should concur to transfer the residential or commercial property, return the secrets, and abandon the residential or commercial property.

Without this shared contract, there can be no valid Deed in Lieu of Foreclosure. A Customer can not merely send by mail the mortgage business a Deed in Lieu of Foreclosure and anticipate the loan to be canceled.

A Customer might acquire a Deed in Lieu of Foreclosure, sign it and mail it, but the mortgage company has the right to contradict the deed and continue with the foreclosure and eviction procedure. It is a waste of cash for a Debtor to pay for a Deed in Lieu of Foreclosure without very first getting the Lender's written approval.

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

Borrowers typically choose to utilize a Deed in Lieu. It might 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 relocation 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 then rents it from the Lender.

deed in lieu

The term "Deed in Lieu" is simply a shorter way of saying Deed in Lieu of Foreclosure. Homeowners consent to sign a deed in lieu to . 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 a formal legal file utilized to give up 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 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 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 retains the right to carry out 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 second liens, home enhancement liens, judgment liens, child support 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 need to "eliminate" or eliminate 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 needed after the Lender accepts a Deed in Lieu to eliminate liens or clear title, the fees for the foreclosure need to be significantly less since the Borrower has concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower needs to not have the ability to submit 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 business might cost as much as $1500 or more. If the Borrower files a suit to stop the foreclosure, or files for Federal Bankruptcy Protection, the legal fees along might skyrocket, plus the Borrower will remain in the residential or commercial property without paying for the residential or commercial property.

A Deed in Lieu of Foreclosure costs $350. County recording fees are normally about $38.

Deed in lieu of foreclosure gotten ready for $350

Do you have questions about a Deed in Lieu of Foreclosure? Email lawyer Scott Steinbach directly 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 rated for Highest Level of Professional Excellence.

Texas Residential Or Commercial Property Deeds is a service of The Steinbach Law Firm.

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