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Deed of Trust
Practical Law Glossary Item 2-580-1787 (Approx. 3 pages)
Glossary
Deed of Trust
An instrument that transfers legal title in real property to a trustee to hold as security for a loan made by a lender to a borrower. The borrower retains equitable title to the real property.
A deed of trust typically involves three parties:
- The borrower (the trustor or grantor).
- The beneficiary (the lender).
- The trustee (an independent third party, often the title company).
When the debt is fully repaid, the beneficiary directs the trustee to reconvey legal title to the real property back to the borrower. Unlike a mortgage, a deed of trust can be foreclosed either by judicial sale or power of sale.
For state-specific requirements relating to deeds of trust, see Real Estate Finance: State Q&A Tool.