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