Florida Law Advisers, P.A., is a law firm in the Tampa Bay area, Florida. We offer legal services in your Foreclosure lawsuit. We understand that homeowners in Florida in the Tampa area sometimes find themselves in difficult situations with making monthly payments of mortgage loans and are unable to act upon foreclosure alternatives. We are here to assist you with mortgage payment options and guide you through the legal process to close delinquent mortgage loans. A deed in lieu of foreclosure is one of the options for mortgage debts in which a homeowner voluntarily gives the title of the property to the mortgage company. A deed in lieu of foreclosure can help Florida homeowners interested in walking away from the property to avoid the consequences of foreclosure notices and tax liens.
In some cases, lenders will accept a deed in lieu of foreclosure to avoid the legal costs and time associated with filing for foreclosure. If you are considering negotiating a deed in lieu of foreclosure with your lender, Florida Law Advisers, P.A., can help. We offer free consultations with our experienced foreclosure defense attorneys. During this consultation, we will review your situation and advise you on the best course of action and alternative to foreclosure. Contact us today to schedule your free consultation on the formal foreclosure sale or loan modification options.
A deed in lieu of foreclosure is a legal procedure that allows a homeowner to transfer ownership of their property to the mortgage lender or loan servicer to satisfy the outstanding debt on the mortgage. While this may seem like a straightforward solution, there are a few potential complications that homeowners should be aware of before moving ahead with foreclosure proceedings.
Firstly, the lender is not required to accept a deed in lieu of foreclosure and may instead insist on foreclosing on the property, especially if exit options are limited for the borrower. Secondly, even if the lender does accept the deed, the homeowner may still be responsible for any deficiency balance on the mortgage. As such, it is important to speak with an experienced law firm like Florida Law Advisers, P.A., before taking any action on mortgage modifications. With good advice from our experienced attorney, a deed in lieu of a foreclosure can be an effective way to resolve an outstanding mortgage balance. Still, it is not always a simple process. There are strict requirements on the outstanding balance, grace period, days delinquent, and a waiting period for the delinquent borrower.
At Florida Law Advisers, P.A., our Bankruptcy attorney or foreclosure defense lawyer will approach lenders aggressively to obtain agreements that will prevent our clients from facing the risk of a deficiency judgment and subsequently requiring credit repair. Our professional foreclosure lawyers team has years of experience protecting Florida homeowners and aggressively fighting greedy mortgage lenders. In most cases, we can negotiate with the lender to get additional time in foreclosure mediation or obtain a deed in lieu of a foreclosure agreement that releases the property owner from any further liability. If you are facing foreclosure of your principal residence or vacation property, we encourage you to contact Florida Law Advisers, P.A., as soon as possible for a free consultation.
Tax Consequences in Deed in Lieu of Foreclosure
If you are considering a deed in lieu of foreclosure, it is important to be aware of the potential tax consequences in Florida. In most cases, the lender will forgive a debt, which is considered a cancellation of debt by the Internal Revenue Service (IRS). If the loan balance exceeds the home’s market value, the lender can issue a 1099C for the difference between the home’s market value and your mortgage balance. You may also be responsible for capital gains taxes if the value of your home has increased since you purchased it. For these reasons, it is essential to consult with an experienced tax advisor in deed in lieu of foreclosure before proceeding.
In many cases, the 1099C form will be issued to report this forgiven debt to the IRS as income. As a result, the homeowner may be required to pay unpaid property taxes on the amount of debt forgiven. While this added tax liability can be significant, it is important to note that not all deeds in lieu of foreclosures will result in the lender issuing a 1099C. If you are considering a deed in lieu of foreclosure, we recommend you speak with a Tampa foreclosure defense attorney to see if you may be exposed to this additional tax liability.
Consult With a Foreclosure Defense Attorneys of Florida Law Advisers, P.A., About a Deed in Lieu of Foreclosure
At Florida Law Advisers, P.A., we help our clients navigate the foreclosure process and make the best decisions for their families living in the State of Florida or other states or outside the country. Our foreclosure attorneys have years of experience in Foreclosure Law, helping homeowners in all types of foreclosure defense and deed in lieu of foreclosure matters. We will explain all the legal options and applicable foreclosure actions and alternatives to foreclosure available so that you can make an informed decision and avoid unwanted surprises with mortgages and credit reports later on.
Whether you want to keep your home and prevent foreclosure, or walk away from the property without being responsible for any of the debt, Florida Law Advisers, P.A., can help.
Our Tampa foreclosure defense lawyers have extensive experience in state and federal courts. They will carefully evaluate your situation, advise you of your options, and develop a comprehensive legal strategy to help you reach your goals.
Contact us today to schedule a consultation with one of our experienced foreclosure attorneys.
Frequently Asked Questions
Deed in lieu is a method that can be used to avoid a foreclosure on your record. The homeowner agrees to give the bank deed to the house in exchange for the bank not filing foreclosure. Neither party can force a deed in lieu, it must be agreed upon by the homeowner and mortgage company.
Yes, in some respects a deed in lieu may be less harmful than having a foreclosure on your credit report. Each lender will have their own underwriting guidelines and view deed in lieu/ foreclosure differently. Therefore, you should inquire about your bank’s specific rules regarding deed in lieu.
Possibly, a deed in lieu does not necessarily remove your liability from the loan. Even though you voluntarily gave the bank the property, they may still hold you responsible for the loan balance. Therefore, you should review the deed in lieu documents to see if the bank will be waiving the loan balance.
In many respects, bankruptcy is more helpful to homeowners than a deed in lieu. For instance, in bankruptcy you can remove your liability on the loan. On the other hand, a deed in lieu does not necessarily release you from the debt. Additionally, there may be tax consequences, such as a 1099C with a deed in lieu. Bankruptcy does not carry the risk of a 1099C being issued by the bank.