Chapter 10: Deed of Trust

Deed of trust

A document that conveys legal title to a neutral third party as security for a debt

Assignment of rents

Establishes the lender's right to take possession and collect rents in the event of loan default

Advantages of the deed of trust

If a borrower defaults, the lender can take possession of the property to protect it and collect the rents, the time between default and foreclosure is short, the foreclosure process under power of sale provision is less expensive and complex than a court ordered foreclosure, title is already in the name of the trustee, and once the foreclosure sale takes place, there is no statutory redemption

Beneficiary

One for whose benefit a trust is created; the lender in a deed of trust arrangement

Trustor

One who creates a trust; the borrower in a deed of trust arrangement

Trustee

One who holds property in trust for another

Deed of trust satisfaction through

Reconveyance

Naked/bare title

Title that lacks the rights and privileges usually associated with ownership

3 parties involved when a note is secured by deed of trust

Trustor/grantor, lender/beneficiary, and neutral third party/trustee