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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 pay 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 genuine 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 received at the auction is applied to the loan.

A foreclosure can be expensive and could result in a suit or personal bankruptcy.

Good to know: A choice to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor simply moves the residential or commercial property back to the loan provider and the loan provider cancels the financial obligation. This is in some cases referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid suits and personal bankruptcy.

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

Note: Bear in mind, that a lot of mortgage companies will not accept a Deed in Lieu of Foreclosure. If you owe cash to a mortgage business, a Deed in Lieu is hardly ever an alternative. Regulations might need a mortgage business to foreclosure although the Borrower no longer wants the residential or commercial property and does not reside in the residential or anymore.

On the other hand, if you owe money to a friend, family member, or a personal loan provider, you might have the ability to move the residential or commercial property back to the loan provider and cancel the debt utilizing a Deed in Lieu of Foreclosure.

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

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

A Borrower may purchase a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company has the right to decline to accept the deed and continue with the foreclosure and eviction procedure. It is a waste of money for a Debtor to pay for a Deed in Lieu of Foreclosure without first getting the Lender's written permission.

Good to understand: Private lending institutions might prefer a Deed in Lieu of Foreclosure since they get the residential or commercial property back rapidly without danger of being taken legal action against or having the borrower file bankruptcy. In this case, the Borrower must let the Lender prepare and pay 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 may prevent an expulsion. The Borrower and Lender can simply settle on an orderly relocation out of the residential or commercial property.

Good to know: Sometimes the parties may consent to convert the loan to a rental arrangement. 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 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 repay the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is an intricate document and needs to be prepared by a legal representative. This is a formal legal document 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 require 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 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 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 keeps the right to perform 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 might be second 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 keeps the right to foreclosure its lien on the residential or commercial property which need to "wipe out" or eliminate 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 fees for the foreclosure ought to be substantially less because the Borrower has agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower should not be able 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 company may cost approximately $1500 or more. If the Borrower submits a suit to stop the foreclosure, or declare Federal Bankruptcy Protection, the legal costs along could escalate, 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 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 rated by Martindale-Hubble. Peer ranked for Highest Level of Professional Excellence.
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