Do I pay Delaware transfer tax on a sheriff sale or a deed in lieu of foreclosure?

Delaware's realty transfer tax chapter lists exempt conveyances in section 5401. Among them are sheriff foreclosure sales and deeds from a mortgagor given in lieu of foreclosure. If your lender takes the house at a sheriff sale, or accepts a deed in lieu, the transfer tax does not apply under that provision. Ask your attorney how it works if there are second mortgages or liens that also need to be resolved.

If you sell the house to a buyer while still behind on the loan, the conveyance is a normal one. The tax is apportioned equally between grantor and grantee under section 5402, and the burden of paying falls on the grantor unless the parties agree otherwise under section 5412. A tax bill at closing comes out of the proceeds, which matters when equity is thin.

People facing foreclosure sometimes assume a deed in lieu must be cheaper than a sale. The tax is one piece. The deed in lieu also depends on the lender agreeing, on how junior liens are handled and on credit and tax consequences. Mediation in Delaware can discuss a deed in lieu as one outcome, as the Attorney General's program page lists it among the exit options.

Compare a short sale, a deed in lieu and a regular sale with a housing counselor and an attorney. This page is general information and not legal advice. Ask each option for the net cost, including any tax, deficiency risk and timing.

Homeowners behind on a mortgage sometimes ask for a number they can plan around. Kaizen Home Buyers buys houses for cash, as-is, with no repairs and no agent commission. We can make an offer within 24 hours and close in 14 to 30 days, or on the date you choose. Call 267-329-0084.