deedoftrust

A deed of trust is a security instrument used in real estate lending that involves three parties: the trustor (the borrower), the trustee, and the beneficiary (the lender). The trustor conveys legal title to the trustee to hold in trust for the benefit of the lender, while retaining equitable ownership and using a promissory note as the primary evidence of debt.

In most cases, the trust secures the repayment of the loan. If the borrower makes all payments and meets the terms of the note, the trustee transfers title back to the borrower. If the borrower defaults, the beneficiary can instruct the trustee to sell the property to satisfy the loan, typically through a non-judicial foreclosure known as a power of sale. This process generally proceeds without court action in jurisdictions that recognize deeds of trust.

Foreclosure steps usually include a notice of default and a notice of sale, followed by a public auction conducted by the trustee. Depending on state law, the borrower may have rights such as cure, reinstatement, or a redemption period before or after the sale, and the sale may or may not allow a deficiency judgment if the sale price does not cover the loan balance.

Compared with a mortgage, a deed of trust often allows faster foreclosure and lower costs, since it can be processed through the trustee without court involvement. The specific terms, procedures, and protections vary by state, so local law governs how the instrument is drafted and enforced.