The borrower conveys title and the lender accepts it in full or partial satisfaction. The transaction avoids foreclosure costs and delay, but the lender takes title subject to junior liens rather than extinguishing them.
Junior liens survive the conveyance.
Alternative Names:
Deed in Lieu|DIL
Why it Matters?
Survival of junior liens is the decisive difference from foreclosure, since a foreclosure sale extinguishes subordinate interests while a deed in lieu leaves them attached to the title the lender receives. Title searches confirming the absence of junior encumbrances are therefore essential before accepting. Where junior liens exist, foreclosure remains necessary regardless of the borrower's cooperation.
Frequently Confused with
Related terms
Frequently asked questions
What is the decisive difference from foreclosure?
When does foreclosure remain necessary?
