Deed in Lieu Explained

A deed in lieu, also known as a "deed in lieu of foreclosure" is a legal document under which a person with a mortgage gives property in exchange for being released from obligations under a mortgage. This option is usually done when a person is unable to pay his or her mortgage and therefore offers the value of the property instead of cash payments in order to pay off the debt owed on the property.

How a Deed in Lieu Works

The deed in lieu of foreclosure usually arises where a homeowner is in jeopardy of losing his or her home. The deed in lieu of foreclosure is only permitted where both the mortgagee (the bank or other entity who gave the mortgage) and the mortgagor (the person who has the mortgage) agrees to the transaction. Moreover, the transaction must be in writing, must be voluntary and the value of the property must be for fair market value.

Problems with a Deed in Lieu

Occasionally, problems arise when the value of the property does not meet the fair market value. As a result, the property is not subject to deed in lieu of foreclosure.

Getting Legal Help

If you are considering a deed in lieu of foreclosure, it is important to consult with an experienced real estate attorney. The attorney can not only review your particular situation in order to determine whether this is an appropriate remedy for you, but also the attorney can help to preserve any rights you may have.