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Deed-in-lieu of foreclosure was approved. I just recd a full reconveyence from the title co-still liable for house?

Tempe, AZ |

My deed-in-lieu of forclosure was approved 6-29-2012. I just received a Full Reconveyence from the title company (recorded at Maricopa County Recorders office on October 15, 2012) that the deed of trust has been fully paid and the deed of trust surrended to the trustee for cancellation. I am still legally liable for the house? Is it okay to let the property insurance expire on October 29, 2012?

Attorney Answers 1


Absent something to the contrary set forth in the deed in lieu document, such as an agreement to continue to insure the property (unlikely since you are no longer the owner and thus do not have an insurable interest), you are no longer legally liable to maintain the house (that is now the bank's obligation) and it seems to me you could cancel your insurance tomorrow (why are you waiting the extra week?)

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Thank you.

John Fyke

John Fyke


Furthermore, it is recommended, if you haven't already, to seek advice from a CPA as to any potential tax liability for debt foregiveness. In the event you failed to secure "waiver of deficiency" in the deed in lieu approval it is likely in your best interest to seek legal advice as to any potential deficiency liability (the difference between the amount you owed and the fair market value of the home). If all of the money borrowed constituted purchase money, i.e. it was all used to purchase the home, it is unlikely (but still possible) that the lender will pursue you for the deficiency. If the money borrowed was used for something other than purchasing the home, than there is a strong possibility that the lender will pursue the deficiency unless the "waiver of deficiency" was negotiated. As explained before, you are encouraged to seek legal advice if you have not already done so.

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