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What Is a Deed of Trust?

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TERMINOLOGY

A deed of trust is a document that is utilized in some states whenever a person purchases a piece of real estate. Here are the basics of the deed of trust and what it is used for.

Deed of Trust

The deed of trust is also sometimes referred to as a trust deed. Certain states utilize the deed of trust in place of a mortgage whenever you buy a house. Essentially, a deed of trust is a debt instrument that says an individual owes a certain amount of money to a lender. They will use the deed of trust to record tile to the property in the public records system. 

Parties

With a deed of trust, there are going to be 3 parties that are involved with the process. You have the beneficiary, the trustee and the trustor. The beneficiary is the party that is lending the money. The trustor is the one that is receiving the loan. The trustee is a party that has the right to foreclose on the property if the trustor does not repay the debt obligation.

Many times, a title company is going to be the trustee in this arrangement. The beneficiary is going to be the lender and the trustor is the purchaser of the home.