The latest question in the local real estate market seems to be about the Deed-In-Lieu of Foreclosure and how it can help. A Deed-In-Lieu of Foreclosure was traditionally a release of all liability on a mortgage note, provided that the borrower hand the deed to the lender and leave the home in “broom swept” condition. Lately, some lenders have offered cash incentives to borrowers who are willing to accept a Deed-In-Lieu rather than allowing the property to go to Trustee Sale. The problem in Nevada is that the Deed-In-Lieu of Foreclosure does not necessarily mean receiving a full release of all liability on the mortgage note. In fact, absent specific deficiency release language, the lender may pursue the deficiency for up to six years with a Deed-In-Lieu, whereas a first priority lender may only go after the deficiency for six months on an actual foreclosure.
Kelle L. Kuebler, Attorney*