Are there advantages to a deed in lieu of foreclosure?

On Behalf of | Oct 29, 2020 | Firm News |

A deed in lieu of foreclosure is a drastic measure used to avoid the cost and time involved in the foreclosure process. Your lender agrees to release you from all your obligations under the mortgage, and you agree to deed the property back to the lender.

Typically, you should only pursue a deed in lieu of foreclosure as a last resort, when alternatives such as loan modification and short sale are no longer available. While a deed in lieu means that you lose ownership of the property, it still offers you advantages over foreclosure.


According to Investopedia, a foreclosure may involve officials showing up at the door to evict you when you are not yet ready. While you may still need to vacate the property with a deed in lieu of foreclosure, you and your lender arrange this ahead of time so there are no unpleasant surprises of that nature.


While a deed in lieu of foreclosure becomes a part of the public record, the process is usually less visible to the public. This may be important if you wish to continue your current business or start a new one. Customers might form an unfavorable opinion of you if they know that you went through a foreclosure on a commercial property in the past.

Possibility of leasing property

With a deed in lieu of foreclosure, you may not have to vacate the property after losing ownership of it, at least not right away. A lender who saves on the expenses involved in foreclosure may be willing to allow you to lease the property on a short-term basis. This buys you more time to make alternative arrangements for yourself and your business.