If you are struggling to keep up on payments on your business property, something that you may need to consider is a deed in lieu. A deed in lieu is a legal document that passes on all interest in a property from the borrower to the lender. This helps satisfy a loan in order to prevent a foreclosure.
As a borrower who has hit on difficult economic times, a deed in lieu of foreclosure can be an excellent choice. This is one way that you can avoid a foreclosure and sign over the rights to the property to the bank.
The good thing about this method is that you won’t have a foreclosure on your record. However, when you agree to a deed in lieu of foreclosure, it does mean that you will need to hand over the keys to your home as well as the deed. You won’t continue to work or live in that property.
In exchange for giving up the deed, the bank or lender will then release you from any further mortgage obligations. This allows you to move on without the mortgage concerns you had in the past.
Is a deed in lieu of foreclosure the right choice for you?
A deed in lieu of foreclosure may be a good choice for you if you can’t sell a property for a profit, have fallen behind on payments and no longer want to retain the property. Lenders are generally open to accepting a deed in lieu of foreclosure, because it means that they don’t have to go through a drawn out foreclosure process.
This process also lets you start over sooner than if you went through the foreclosure process. You’ll have more control over the situation and potentially be in a better financial situation moving forward. You can generally walk away without having to pay the difference between what the home or business property is worth and the amount left on the mortgage. Sometimes, the lender will actually give you cash for choosing this option, which is called a “cash for keys” exchange.
This is one option to consider if you’re struggling to pay for a property. It may or may not be right for you, so think it through carefully.