DISCLAIMER: I am not an attorney. I do not know if any of the following is true. Proceed at your own risk.
First, determine if your distressed property is in a recourse state or non-recourse state by visiting the Nolo website or looking at this report from National Consumer Law Center.
In a recourse state
| Approach | Credit | Lawsuit | Taxes | Other costs |
|---|---|---|---|---|
| Deed-in-lieu | Low severity | May be sued for deficiency. | May owe taxes for deficiency | Low: notary fee for DIL document |
| Short sale | Medium severity | May be sued for deficiency. | May owe taxes for deficiency | High: real estate transaction fees can be substantial |
| Foreclosure | High severity | May be sued for deficiency | May owe taxes for deficiency | Low: postage to mail keys to lender |
In a non-recourse state
| Approach | Credit | Lawsuit | Taxes | Other costs |
|---|---|---|---|---|
| Deed-in-lieu | Low severity | Can not be sued for deficiency. | May owe taxes for deficiency | Low: notary fee for DIL document |
| Short sale | Medium severity | Can not be sued for deficiency. | May owe taxes for deficiency | High: real estate transaction fees can be substantial |
| Foreclosure | High severity | Can not be sued for deficiency | Deficiency amount is not taxable income | Low: postage to mail keys to lender |
Efficient Minds™ 