Deeds in Lieu of Foreclosure

Deed in Lieu in Chain of Title

A subsequent conveyance of real property that includes a deed in lieu appearing of record in the chain of title which does not contain language the same or similar to that shown above may be acceptable provided the statutory period for expiration of the lien of such mortgage has expired or the mortgage has been satisfied of record. If the statutory period has not expired or a satisfaction has not been recorded, a corrective deed may be required. 

 

If, however, the mortgagee/grantee under the deed in lieu, subsequently conveys title to a third party by warranty deed, the necessity for the former mortgagee to also record a satisfaction of mortgage may be moot, in that conveying under general warranty essentially warrants full title and the then-mortgagee grantee/now-grantor can no longer claim that title was subject to such mortgage. Consult applicable state laws conserving the effect of such a warranty of title. It is always the preferred practice to require a release or satisfaction of the mortgage to property clear the record and avoid any possibility of a future problem.