Deed of Trust

Trust Deeds are the the Most Common Instrument Used in Financing Real Estate

In real estate, a trust deed or deed of trust, is a document wherein specific financial interest in the title to real property is held by a trustee, which holds it as security for a loan. When the loan is fully paid, the monetary claim on the title is transferred to the borrower by reconveyance. If the borrower defaults on the loan, the trustee has the right to foreclose on and transfer title to the lender or sell the property to pay the lender from the proceeds

Trust deeds are the the most common instrument used in the financing of real estate purchases in Alaska, Arizona, California, Colorado, Idaho, Illinois, Mississippi, Missouri, Montana, North Carolina, Texas, Virginia, and West Virginia whereas most other states use mortgages. Deeds of trust can also be for loans made for other purposes but where real estate is used for collateral.

Layers of trust deeds

There are three parties to a deed of trust, the borrower, trustee, and beneficiary, as opposed to a mortgage with which there are only two parties, the borrower and the lender.

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