How to Acquire Property via Deed in Lieu of Foreclosure
It is less expensive to accept a deed in lieu of foreclosure if you financed property for someone. The deed in lieu allows you to take possession of the property without taking the purchaser to court, which also lessens the time it takes to regain control of your property. To accept a deed-in-lieu of foreclosure, there can be no liens -- other than the one you hold -- on the property and you and the purchaser must voluntarily agree to the exchange.
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Instructions
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Consult an attorney to determine the laws in your state and any tax consequences you face from accepting a deed in lieu of foreclosure. In states such as Washington as of this article's publication, you could face tax consequences if you return any of the purchaser's equity.
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Write a contract specifying the details of your agreement. Include the details of the original purchase agreement, how much the purchaser owes on the loans including any additional amounts accrued after the purchaser defaulted on the loan and whether you intend to forgive any debt not recovered when you sell the property to someone else.
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Ask the purchaser to sign the agreement and any other documents required by your state such as a bill of sale or quitclaim deed. Receive the keys to the property and file the deed in lieu with the county clerk to record the title in your name.
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Tips & Warnings
Sign all documents in front of a notary public.
Give the purchaser a letter confirming that you canceled the debt after you accept the deed in lieu. If you use an escrow company to facilitate the transaction, the company sends the purchaser the confirmation and records your deed.
States such as Kentucky limit the time you have to record your new deed.
