What is a Deed of Trust?May 5, 2016
A deed of trust, also known as a trust deed, is a deed used to transfer the legal title of real property to a trustee. The trustee will hold the property as security for a loan while the equitable title will remain with the borrower. The borrower is often called the trustor, in this situation.
A deed of trust is much like a mortgage because the real property is used as collateral to secure a loan. In some states, it’s used instead of a mortgage.
In this situation, the borrower is known as the trustor, the lender is known as the beneficiary and the trustee is a third, independent party holding the legal title for the property. If the trustor (borrower) defaults on the deal, the trustee’s main job is to hold a public auction and sell the property for the beneficiary (the lender).
In the event a deed of trust will be transferred, it’s much like a mortgage. The deed of trust has to be documented in county records. This is done with an assignment of deed of trust document.
Do you have a Mortgage or a Deed of Trust?
If you’re not sure if you have a mortgage or a deed of trust, you can look at the documents you were given during closing. These documents may state whether it’s a mortgage or a deed of trust. If you’re still unsure, contact your mortgage servicer, which is the company you send your payments to every month. You can also check the local land records office in your area for the recorded document.