Deed of trust

From Real Estate

A deed of trust is similar to a mortgage, wherein a security instrument, normally real property, is given as security for a debt. However, in a deed of trust there are three parties to the instrument:

• the borrower
• the trustee
• the lender

In these transactions, the borrower transfers the legal title for the property to the trustee who holds the property (in trust) as security for the payment of the debt to the lender. If the borrower pays the debt as agreed, the deed of trust becomes void. If the borrower defaults in the payment of the debt, the trustee may sell the property at a public sale, under the terms of the deed of trust. A few states have begun in recent years to treat the deed of trust like a mortgage.

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