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If the individual you sold residential or commercial property to on an owner financing loan no longer wants 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 choice 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 may require to foreclose your lien by selling the residential or commercial property at public auction. The cash received at the auction is used to the loan.

A foreclosure can be expensive and might lead to a suit or personal bankruptcy.

Good to understand: An option to a public auction foreclosure is a Deed in Lieu of Foreclosure. The customer just moves the residential or commercial property back to the loan provider and the lending institution cancels the debt. This is in some cases described as a "friendly foreclosure" or a "voluntary foreclosure." It can prevent suits and insolvency.

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

Note: Bear in mind, that the majority of mortgage business will not accept a Deed in Lieu of Foreclosure. If you owe cash to a mortgage company, a Deed in Lieu is seldom a choice. Regulations may need a mortgage company 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 money to a buddy, household member, or a personal loan provider, you might have the ability to transfer the residential or commercial property back to the loan provider and cancel the financial obligation using a Deed in Lieu of Foreclosure.

But all parties, Lender and Borrower need to concur. The lender must accept accept the residential or commercial property AND the borrower must consent to transfer the residential or commercial property, return the secrets, and vacate the residential or commercial property.

Without this mutual agreement, there can be no valid Deed in Lieu of Foreclosure. A Customer can not just mail the mortgage company a Deed in Lieu of Foreclosure and anticipate the loan to be canceled.

A Borrower may acquire a Deed in Lieu of Foreclosure, sign it and mail it, however the mortgage company can refuse to accept the deed and continue with the foreclosure and expulsion procedure. It is a waste of cash for a Customer to spend for a Deed in Lieu of Foreclosure without very first getting the Lender's composed approval.

Good to understand: Private loan providers may choose 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 debtor file bankruptcy. In this case, the Borrower should let the Lender prepare and pay for the Deed in Lieu of Foreclosure.

Borrowers normally prefer to use a Deed in Lieu. It may keep the loan default off of their credit reports and it may prevent an eviction. The Borrower and Lender can merely agree on an orderly relocation out of the residential or commercial property.

Good to understand: Sometimes the parties might agree to 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 just a much shorter way of saying Deed in Lieu of Foreclosure. Homeowners concur to sign a deed in lieu to prevent foreclosure. When a seller accepts this deed, the property owner is no longer obliged to pay back the mortgage.

What is Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure is a complicated document and needs to be prepared by a legal representative. This is a formal legal file used 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 need 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 unpaid balance owed on the Promissory Note protected 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 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 retains 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 2nd liens, home enhancement liens, judgment liens, child 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 maintains the right to foreclosure its lien on the residential or commercial property which need to "erase" or remove any liens filed after the Lender's lien

Other liens might consist of the following:

Federal Tax Liens Judgment Liens Mechanic's Lien Home Equity Liens
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Even if a foreclosure is required after the Lender accepts a Deed in Lieu to remove liens or clear title, the charges for the foreclosure need to be substantially less since the Borrower has agreed not to contest or otherwise challenge the foreclosure. Also, the Borrower needs to not have the ability to declare 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 up to $1500 or more. If the Borrower files a lawsuit to stop the foreclosure, or files for Federal Bankruptcy Protection, the legal charges along could 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 costs 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 accredited 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.

Texas Residential Or Commercial Property Deeds is a service of The Office.

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