Select your state

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 Colorado, a deed in lieu of foreclosure is a legal instrument where a homeowner voluntarily transfers 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: the borrower may avoid the negative consequences of a foreclosure on their credit report and potentially be relieved from the obligation to pay any deficiency balance if the property's value is less than the mortgage debt. For the lender, it can be a quicker and less costly resolution compared to foreclosure. However, it's important to note that lenders are not obligated to accept a deed in lieu of foreclosure, and it may have tax implications for the borrower. Additionally, if there are any junior liens or other encumbrances on the property, the lender may be less inclined to accept a deed in lieu. Borrowers considering this option should consult with an attorney to understand the full legal and financial implications.

Legal Articles

State Statutes

Individual & Family Legal Plan

As a LegalFix member, you'll get expert legal services from a local law firm that treats you like an important client. Don't wait—be prepared for life's inevitable legal challenges starting today. And ask your employer, credit union, or membership group about preferred pricing opportunities.

Real property

deed in lieu of foreclosure

Individual & Family Legal Plan

Articles

Colorado State Code

Colorado State Code

Real property

deed in lieu of foreclosure

Articles