Q. Are there tax implications when an owner gives a lender a deed in lieu of foreclosure to avoid a foreclosure proceeding?
My answer included information about preforeclosure short sales, too, but the reporter chose not to include this information. Frankly, I haven't seen too many DILs. Many people are under the mistaken belief that accepting a Deed In Lieu of foreclosure is commonplace. But it's not. Not yet, anyway. Lenders would much rather entertain a preforeclosure short sale than take the deed, and take back the property without first an attempt to sell.