Deed of Trust

What is a deed of trust used for? What is the purpose of a deed of trust?

A deed of trust has two purposes. A deed of trust is used to:

• transfer of interest in real estate property by a mortgagor or borrower to a mortgagee or the lender, and to
• secure the payment of the borrower's debt.

What is a deed of trust?

A deed of trust is an arrangement among three parties:

• the borrower (trutor),
• the lender (beneficiary), and
• a neutral party holding the title temporarily (trustee).

Many people mistakenly think that the lender is the trustee in a deed of trust. This is usually not the case. The lender is usually the beneficiary and the trustee is usually a neutral party such as an attorney.

Equitable title Vs. Legal title

In a deed of trust arrangement, the trustee holds the legal title of the property for the lender or the beneficiary. The borrower or the trustor has the equitable title to the real estate property and the possession of the property.

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