Deed of Trust

In depth

A deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral trustee who holds bare legal title as security. On default, the trustee can sell the property through a non-judicial foreclosure process that is typically faster and cheaper than judicial foreclosure. Misconception: a deed of trust is not the same as a deed of conveyance; it transfers no ownership rights, only a security interest. Practically, deed-of-trust states like California, Texas, Virginia, and Colorado see most seller financing structured as either AITDs or purchase money deeds of trust. The shorter foreclosure timeline favors lenders and sellers but may reduce buyer cure opportunities. Always record promptly, and ensure the trustee is qualified under state law.