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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 South Dakota, a deed in lieu of foreclosure is a legal instrument where a borrower voluntarily transfers ownership of their property to the lender to satisfy the outstanding mortgage debt and avoid the foreclosure process. This arrangement can be beneficial for both parties as it allows the borrower to avoid the negative consequences of a foreclosure on their credit report and potentially absolve them from paying any deficiency balance if the property's value is less than the debt owed. For the lender, it provides a quicker and often less expensive resolution compared to foreclosure proceedings. 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. Borrowers considering this option should consult with an attorney to understand the specific legal and financial implications and to 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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South-Dakota State Code

Real property

deed in lieu of foreclosure

South-Dakota State Code

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