Another concern would be that a deed of lieu of foreclosure can trigger federal and state tax liability. This occurs when debt is forgiven which the IRS treats the same as income. This may not happen if the person giving the deed of insolvent (under federal bankruptcy standards). You need good advice before proceeding.
A deed in lieu of foreclosure is just that: instead of going through the foreclosure process, you simply deed the property to the lender. There are certain risks involved, though. You might inevitably be responsible for any losses the lender incurs as any deficiency is not being forgiven when the property is transferred to the lender directly by deed. There are also other risks involved. Therefore, it is my opinion that you should seek the advice of an attorney prior to going forward with this foreclosure alternative, as there may be other options that might be more beneficial for you.
Thanks for question. The party filing foreclosure against you needs to accept deed in lieu of foreclosure.
This should be handled by an attorney representing you to ensure the transaction leaves you without any future liabilities.
