Deed of Trust

A "Deed of Trust" is a legal instrument that grants a Lender a Security Interest in real estate.  The Security Interest creates a lien on the property on behalf of the Lender and gives the Lender the right to foreclose on the property should the Grantor of the Deed of Trust fail to satisfy the terms of the loan.  A Deed of Trust and a Mortgage are similar in the rights they grant the Lender.

A Deed of Trust involves at least three parties: the Grantor (Borrower), Lender and Trustee.  The Deed of Trust transfers ownership of the property to the Trustee who holds the property "in Trust" for the Grantor until the Lender is paid in full.  Should the Grantor fail to pay the debt as required under the terms of the Deed of Trust, the Trustee may foreclose on the property and distribute the loan proceeds to the Lender.  Any excess amounts would belong to the Grantor.  Once a Borrower has satisfied the terms of the Deed of Trust, the Lender must execute a Deed of Release reconveying the property to Grantor.