Opinion ID: 2612946
Heading Depth: 1
Heading Rank: 2

Heading: the deed-in-lieu transaction is an accord and satisfaction which discharges the obligation of underlying loan contracts

Text: In the evidence adduced are documents titled agreement [5] , warranty deed [6] and estoppel affidavit. [7] Collectively these documents constitute a deed-in-lieu of foreclosure transaction. [8] The essence of this transaction is that Bank released Morrow and the guarantors from in personam liability for the indebtedness created by the loan agreements and in return accepted the deed to the property which stood as security for Morrow's loan. A mortgagor's conveyance of the mortgaged property to a mortgagee in satisfaction of the secured indebtedness is a legally proper transaction. If fair, without fraud, oppression, or unconscionable advantage, it will be sustained. [9] The common law regards this transaction form as an accord and satisfaction. [10] Historically, a settlement agreement of this nature is a bar [11] to all subsequent actions sought to be rested upon the underlying contracts, whether sounding ex contractu or ex delicto. [12] The quintessence of an accord and satisfaction is that, upon completed performance of the accord, there is a discharge of the contractual obligations spelled out in the original contract. [13] When a borrower defaults and the parties negotiate a settlement resulting in a deed-in-lieu of foreclosure, an accord and satisfaction arises. It operates to bar all subsequent causes of action for breach of promises set forth in the original loan documents,  i.e., those that sound ex contractu. [14] We hold today that accord and satisfaction is the proper legal characterization of the settlement evidenced by Bank/Morrow's deed-in-lieu of foreclosure documents.