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Deed in Lieu of Foreclosure

Learn about deeds in lieu of foreclosure in Canadian real estate — what they are, how they work, and their benefits for borrowers and lenders.

Deed in Lieu of Foreclosure

August 08, 2025


What is a Deed in Lieu of Foreclosure?

A deed in lieu of foreclosure is a legal agreement where a borrower voluntarily transfers property ownership to the lender to avoid foreclosure.

Why Deeds in Lieu of Foreclosure Matter in Real Estate

In Canadian mortgage law, deeds in lieu of foreclosure allow borrowers to avoid the lengthy and costly foreclosure process while satisfying debt obligations.



Key points:
  • Requires lender agreement and clear title
  • May reduce negative impact on borrower’s credit
  • Can save time and expenses for both parties



Understanding deeds in lieu of foreclosure helps borrowers and lenders manage distressed properties effectively.

Example of a Deed in Lieu of Foreclosure in Action

The homeowner signed a deed in lieu of foreclosure, transferring the property to the bank to settle the mortgage debt.

Key Takeaways

  • Transfers property to lender instead of foreclosure
  • Requires borrower and lender consent
  • Can mitigate credit damage compared to foreclosure
  • Helps avoid lengthy legal proceedings
  • Must clear any junior liens or encumbrances

Related Terms

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

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