In real estate in the usa, a trust deed or deed of trust is a deed legal title in real property is transferred to your trustee, which holds it as security for a loan (debt) between a borrower and lender. The borrower is called the trustor, while the lender is called the beneficiary of the trust deed.
Trust deeds differ from mortgages because trust deeds always involve at least three parties, where the legal title is held by the third party, while in the circumstance of mortgages, the mortgagor gives the mortgagee legal title. In either case, fair title stays with the borrower.
A trust deed is normally recorded with the registrar or county clerk for the county where the property can be found as evidence of and security for the debt. The act of record supplies constructive notice the property has been encumbered. The beneficiary is required by law to promptly direct the trustee to transfer the property back to the trustor by reconveyance, hence releasing the security, when the debt is completely paid.
Trust deeds are the most typical instrument used in the financing of real estate purchases in Alaska, Arizona, Arkansas, California, Colorado, the District of Columbia, Idaho, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, North Carolina, Oregon, Tennessee, Texas, Utah, Virginia, Washington, and West Virginia, whereas most other states use mortgages. For loans made for other sorts of functions where real estate is merely offered as collateral, and are additionally used to secure performance of contracts apart from loans, deeds of trust may also be used besides purchases.