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If the individual you sold residential or commercial property to on an owner finance loan no longer wants the residential or commercial property or can no longer spend 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 secured genuine estate loan, and the individual who owes you the cash does not pay the loan, you might require to foreclose your lien by selling the residential or commercial property at public auction. The cash gotten at the auction is used to the loan.

A foreclosure can be costly and might result in a suit or bankruptcy.

Good to understand: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The debtor just transfers the residential or commercial property back to the loan provider and the lending institution cancels the debt. This is sometimes referred to as a "friendly foreclosure" or a "voluntary foreclosure." It can avoid lawsuits and insolvency.

Basically, the borrower just provides the residential or commercial property back. The customer signs a Deed in Lieu of Foreclosure, offers you the secrets and vacates.

Note: Remember, that most mortgage companies will not accept a Deed in Lieu of Foreclosure. If you owe money 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 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 cash to a good friend, relative, or a private loan provider, you might be able to move the residential or commercial property back to the lender and cancel the financial obligation using a Deed in Lieu of Foreclosure.

But all celebrations, Lender and Borrower need to concur. The loan provider should accept accept the residential or commercial property AND the borrower need to consent to transfer the residential or commercial property, return the secrets, and abandon the residential or commercial property.

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

A Borrower might acquire a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company deserves to decline to accept the deed and continue with the foreclosure and expulsion 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 know: Private lenders may choose a Deed in Lieu of Foreclosure since they get the residential or commercial property back rapidly without threat of being taken legal action against or having the debtor file personal bankruptcy. In this case, the Borrower should let the Lender prepare and spend for the Deed in Lieu of Foreclosure.

Borrowers typically prefer 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 simply settle on an orderly move out of the residential or commercial property.

Good to know: Sometimes the celebrations may concur to convert the loan to a rental contract. 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 just a shorter way of saying Deed in Lieu of Foreclosure. Homeowners consent to sign a deed in lieu to avoid foreclosure. When a seller accepts this deed, the homeowner is no longer obligated to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complex file and needs to be prepared by a legal representative. This is an official legal file utilized to surrender 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 described 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 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 complete 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 perform 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 improvement liens, judgment liens, kid support 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 should "eliminate" 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 fees for the foreclosure need to be substantially less due to the fact that the Borrower has concurred not to contest or otherwise challenge the foreclosure. Also, the Borrower must not be able to declare Federal Bankruptcy Protection to stop the sale of the residential or commercial property.
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An objected to foreclosure on a loan not owned by a mortgage business might cost approximately $1500 or more. If the Borrower files a lawsuit to stop the foreclosure, or apply for Federal Bankruptcy Protection, the legal fees along could escalate, 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 typically about $38.

Deed in lieu of foreclosure prepared for $350

Do you have concerns about a Deed in Lieu of Foreclosure? Email attorney 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 Office.

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