What Are Trust Deeds?

There are literally hundreds of numbers of terms that are specific to the sale of real estate.

If you’re a prospective home buyer, you’re probably a little — or a lot — overwhelmed by it all. From brokers to loans to banks and paper work, you’re encountering jargon and ideas you’ve never heard of before. One term you may be hearing about is the trust deed (also referred to as the deed of trust). A trust deed is a document that records the most important aspects of the sale of your home, and is held in a public place. 

How Do Trust Deeds Work?

Trust deeds aren’t so much complex as they are complicated — that is, they’re not difficult to understand, there’s just a lot to process about them. A trust deed is comprised of three different players: the borrower, the lender, and the trustee.

This third-party trustee is usually a title company. Included in the trust deed are such facts as the stipulations of the mortgage; the amount of the original loan; a legal description of the home being purchased; the beginning date and maturity dates of the home loan; alienation and acceleration clauses; and the names and titles of the people and parties involved.

Who is the Trustee?

The third party involved in a trust deed is usually a title company.

A title company holds the title of your home in case of default. So, if you default on your mortgage payments, the title company will file what’s called a “notice of default.” When they do that, a 90-day period begins in which the borrower can try to come up with all the money they owe. If they can’t the title company gets to sell the house. 

To learn more about trust deeds, title companies and other aspects of real estate and home buying, be sure to consult with a financial adviser. You need to make sure you have plenty of good professional advice before you commit to any sort of major financial relationship.