What Is a Deed of Trust in Real Estate?

A deed of trust is a real estate document that secures a property loan between a borrower and a lender using a neutral third party called a trustee. It functions like a mortgage but adds a layer of protection for both sides during the life of the loan.

šŸ¦ How a Deed of Trust Works

In a deed of trust, three parties are involved:

  • Borrower (Trustor): The person taking out the loan.
  • Lender (Beneficiary): The party providing the financing.
  • Trustee: A neutral third party who holds the legal title until the loan is paid in full.

Once the borrower repays the loan, the trustee releases the title to the borrower. If the borrower defaults, the trustee may sell the property through a non-judicial foreclosureā€”faster and less costly than a court-ordered process.

šŸ“„ Deed of Trust vs Mortgage

Both serve to secure a home loan, but a mortgage involves only two parties (borrower and lender). A deed of trust adds a third party, allowing foreclosure without court action in certain states. Thatā€™s why many western and southern states prefer deeds of trust instead of traditional mortgages.

Related deeds: Learn how a General Warranty Deed provides full title protection, a Special Warranty Deed limits guarantees, and a Quitclaim Deed transfers ownership without warranties.

šŸ” Why FSBO Sellers Should Understand Deeds of Trust

When selling for sale by owner (FSBO), understanding your stateā€™s deed requirements helps avoid closing delays. Listing through Brokerless.com ensures the correct documentsā€”whether a mortgage or deed of trustā€”are coordinated by licensed professionals, all without paying a 6% commission.