The really nice young couple who bought a parcel from me, well they’re breaking up.
They still owe quite a bit on the note that I hold, but they are communicating and still up to date on their payments, so I’m proposing a deed in lieu.
This is my first one to take back.
I’ll call the title co in the morning to get their advice and reco’s.
What else should I be thinking about?
UPDATE:
got the title co checking for other liens
another land guy suggested this process instead:
First file a release of lien
then the warranty deed
Don’t tell your buyers that you’re filing a release of lien.
Just tell them to sign the warranty deed back to you… it’s simpler that the deed in lieu …
Why release the lien first?
To have the chain of title consistent.
1 the original deed and deed of trust are filed already,
2. Release of lien (looks like they paid it off)
3. warranty deed back to you( looks like you bought back
^ That sounds interesting, keeps chain of title clean. Any comments on that? thanks
Hey Scott, sorry to hear about the situation, but it sounds like you’re handling it well by staying proactive.
A few things to keep in mind beyond what the title company tells you:
Get it in writing - Even though they’re communicating well now, emotions can run high during breakups. Make sure everyone signs a deed in lieu agreement that clearly states they’re voluntarily transferring the property back to you in exchange for releasing them from the debt. This protects everyone if things get messy later.
Check for other liens - Have the title company run a quick search to make sure there aren’t any new liens, judgments, or other encumbrances that have attached to the property since you sold it. You want to make sure you’re getting the property back clean.
Tax implications - They might have tax consequences from the forgiven debt (it can be considered taxable income), so you might want to mention they should talk to a tax professional. Not your responsibility to solve, but giving them a heads up could save everyone headaches later.
Another thing to consider, since they’re still current on payments, you could also offer to let them sell it themselves if they want to try to recoup some of their equity. But if they just want out and you’re fine taking it back, deed in lieu is definitely the cleanest path forward.
A deed in lieu is way simpler and cheaper than foreclosure when everyone’s cooperating. Should be pretty straightforward with the title company’s help.
How much do they still owe vs. what you think the property is worth now? Just curious if you’re coming out ahead or behind on this one.
Thanks Sean, appreciate it! Got the title co running the search now.
They paid enough to cover my costs but I haven’t made much profit yet.
Good news is, a new lake opened nearby since then so there’s a lot more traffic and interest in the area, and the comps in the neighborhood have held solid compared to other areas.