Deed In Lieu of Foreclosure Lawyers
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What Is a Deed in Lieu of Foreclosure?
A Deed in Lieu of Foreclosure, or “Deed in Lieu”, is a type of written instrument that legally transfers all interest in a home to the mortgage lender, for the purpose of satisfying outstanding debt payments. While the borrower may ultimately lose their rights to the home, it’s one way of avoiding foreclosure for the borrower, and is thus a type of foreclosure alternative.
For example, suppose that a person took out a mortgage for their home but was unable to make payments for several months. As a result, they are running the risk of losing their home through foreclosure. In this situation, they may wish to create a deed in lieu of foreclosure in order to avoid the foreclosure proceedings. This will allow them to avoid the time and costs associated with formal foreclosure hearings.
Why Should a Deed in Lieu of Foreclosure Be Used?
Whether or not to use a deed in lieu depends on many factors. In most case, such a deed is created when the debtor doesn’t have any more options in terms of selling their home at fair-market values, and when they can’t keep up with monthly payments.
There are many different advantages associated with deeds in lieu of foreclosure:
- For the Borrower:
- Allows them to avoid feelings of embarrassment associated with public knowledge of a foreclosure proceeding
- They may be released from all or most of their debt associated with the defaulted mortgage loan
- For the Lender:
- May benefit from a reduction in time in the overall debt settlement process, when compared to formal foreclosure proceedings
- May experience reductions in repossession costs
- May also benefit because the borrower usually won’t be filing for bankruptcy, which can add extra costs and time for both parties
What Else Should I Know With Regards to a Deed in Lieu of Foreclosure?
In order to be enforceable, the deed must be entered into on terms of good faith and compliance for both parties. That is, neither party may force or coerce the other into signing a deed in lieu of foreclosure. Also, the transfer must represent the entire fair market value of the property being transferred.
Lastly, a deed in lieu of foreclosure is basically a contract, and needs to satisfy all the requirements of a valid contract in order to be enforceable (such as being in writing, signed by both parties, etc...).
What If I Have a Dispute Over a Deed in Lieu of Foreclosure?
As mentioned, deeds in lieu are basically contracts, so if you are faced with a dispute over the deed, you may need to check to see that it’s valid under your state’s contract laws. For example, you may need to re-examine the conditions under which the agreement was formed. You may need the assistance of an attorney to make such assessments.
Should I Hire a Lawyer for Assistance with a Deed in Lieu of Foreclosure?
A deed in lieu of foreclosure can be very complicated. It is a major decision to enter into such an agreement, as it entails a transfer of your real property interests. If you are facing foreclosure, you may wish to contact an experienced real estate lawyer for advice on whether such a deed is ideal for you. Your attorney can help draft, review, and edit the deed, and can represent you in court if a lawsuit arises.
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Last Modified: 12-19-2014 02:55 PM PST
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