What is a deed of trust?

A deed of trust is a legal document used in real estate transactions that serves to secure a loan by transferring the title of the property to a trustee. This trustee holds the title on behalf of the lender and the borrower. Essentially, the property's title is held in trust until the borrower repays the loan in full. If the borrower defaults on the loan, the trustee has the authority to initiate foreclosure proceedings, which allows the lender to recover the outstanding amount by selling the property.

This arrangement is particularly common in certain states as an alternative to a mortgage. It streamlines the process of securing credit and provides a clear mechanism for the lender to reclaim the property if the borrower fails to meet their obligations. The emphasis on the transfer of title to a trustee distinguishes this document from other real estate agreements, making it specific to securing loans rather than transferring ownership or establishing leases.