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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 may be an excellent alternative to take the residential or back and cancel the loan.

If you have a secured realty loan, and the individual 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 used to the loan.

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

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

Basically, the customer just provides the residential or commercial property back. The borrower indications a Deed in Lieu of Foreclosure, gives you the keys and vacates.

Note: Remember, that many mortgage companies will decline 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 require a mortgage business to foreclosure despite the fact that 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 cash to a friend, relative, or a personal lender, you may have the ability 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 parties, Lender and Borrower should concur. The lender needs to accept accept the residential or commercial property AND the debtor must concur to transfer the residential or commercial property, return the keys, and vacate the residential or commercial property.

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

A Customer might buy a Deed in Lieu of Foreclosure, sign it and mail it, but the mortgage business can contradict the deed and continue with the foreclosure and eviction 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 written approval.

Good to understand: Private lenders might prefer 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 should let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers usually prefer to use a Deed in Lieu. It might keep the loan default off of their credit reports and it might prevent an eviction. The Borrower and Lender can just settle on an orderly move out of the residential or commercial property.

Good to understand: Sometimes the celebrations might accept convert the loan to a rental contract. 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 simply a much shorter way of saying Deed in Lieu of Foreclosure. Homeowners consent to sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the house owner is no longer obligated to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complicated document and ought to be prepared by a legal representative. This is a formal legal file utilized to give up realty 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 legally 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 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 in complete of the unpaid 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 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 might be 2nd liens, home enhancement liens, judgment liens, child 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 retains the right to foreclosure its lien on the residential or commercial property which must "wipe out" or remove 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 needed after the Lender accepts a Deed in Lieu to get rid of liens or clear title, the costs for the foreclosure need to be considerably less since the Borrower has actually agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower must not be able to submit for Federal Bankruptcy Protection to stop the sale of the residential or commercial property.

A contested foreclosure on a loan not owned by a mortgage company might cost as much as $1500 or more. If the Borrower files a claim to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal charges along might escalate, plus the Borrower will stay 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 usually about $38.

Deed in lieu of foreclosure gotten ready for $350

Do you have concerns 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 Firm.

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