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Real property

deed in lieu of foreclosure

A deed in lieu of foreclosure—often referred to as a deed in lieu—is a deed by which a borrower (mortgagor) transfers fee simple title to a lender (mortgagee) to satisfy a mortgage debt.

A deed in lieu of foreclosure is a substitute for the foreclosure process and a delinquent debtor or mortgagor may avoid paying a deficiency balance (if the home is worth less than the amount owed) and may lessen the impact on their credit report by signing a deed in lieu.

In Minnesota, a deed in lieu of foreclosure is a legal instrument where a homeowner voluntarily transfers the ownership of their property to the lender to satisfy the outstanding mortgage debt and avoid the foreclosure process. This option can be beneficial for both parties as it allows the borrower to avoid the negative consequences of a foreclosure on their credit history, and it can expedite the process for the lender compared to a traditional foreclosure. Minnesota law typically requires that both parties enter into the agreement voluntarily and with a clear understanding of the terms. The lender may or may not agree to forgive any deficiency balance, which is the difference between the sale proceeds and the amount owed. Borrowers considering a deed in lieu of foreclosure should consult with an attorney to understand the potential tax implications and ensure that the agreement includes a release of any deficiency liability.

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Real property

deed in lieu of foreclosure

Individual & Family Legal Plan

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Minnesota State Code

Minnesota State Code

Real property

deed in lieu of foreclosure

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