What is a deed in lieu of foreclosure?

Minneapolis real estate attorney John Koneck discusses what a deed in lieu of foreclosure is.

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Phone: (612) 492-7038

Transcript:

In a workout process or, more generally, in a troubled loan situation where the collateral for the loan, the security that the lender has for the loan is real estate, sometimes the way that is resolved if the borrower can’t pay back the lender is the borrower will give a deed to the real estate that the lender has a mortgage on to the lender. And so what a deed in lieu of foreclosure means is the borrower will deed the property to the lender instead of forcing the lender to go through a foreclosure in order to get the property. And that’s it in a nutshell. And the reasons a lender might want to do it or might not want to do it or the reasons a borrower might want to do it or might not want to do it are complicated. And I would say it’s not uncommon for there to be a deed in lieu of foreclosure, but mostly that isn’t the way these disputes are resolved.