I have heard if you take back a note, to have the buyers sign a deed in lieu of to be put in escrow. If I understood my attorney, he says this might not hold up in court because the deed has to be notarized and date of the signature is important. At the time of the signature, the note was not in default. Also, since there is a signed deed, who actually owns the property, and what happens if the buyers instruct the escrow officer to disregard previous instructions.
Re: Deed In Lieu Of…Escrow - Posted by John Merchant
Posted by John Merchant on August 31, 2008 at 11:26:58:
If borrower is motivated enough to give you a deed-in-lieu, to be held in escrow, then you’d want that deed signed, dated and notarized at the time it was signed.
Then escrow would hold it, pursuant to a signed agreement, by both you and the borrower to have escrow record it on a certain date in the future if the loan hasn’t been paid in full just as agreed.
It’d get you so involved with the title that the borrower would have a very expensive law suit on his hands trying to get you out of there, off the title, etc.
There’s no rule saying that a deed has to be recorded on the date given and I’ve seen some situations where the deed wasn’t, for lots of reasons, recorded for some years after it was given.
And your escrow officer would have no right to follow any subsequent, unilateral instructions by your borrower to disregard that deed and escrow would have to follow the original agreed directions to the letter.
One of the points was not answered, and frankly I have never considered. When the deed in lieu is signed and notarized, who actually owns the property. Does not a signed deed actully convey title?