What is a Trustee's Deed Upon Sale?

Simply put, a Trustee's Deed Upon Sale, also known as a Trustee's Deed Under Sale or merely a Trustee's Deed, is a deed of foreclosure. A Trustee's Deed Upon Sale is prepared after the foreclosure sale of a property and recorded in the land records of the county in which the property is located. The Trustee's Deed transfers the property to the buyer who purchased the foreclosed property.

What is a Trustee?

A Trustee is a person or an entity that holds property for the benefit of another. When you borrow money against your property from a bank, you are granting that bank a lien against your property in the amount that you borrowed. This means that the bank has an interest in your property. Banks will often use law firms or lawyers as Trustees who will hold this interest on behalf of the bank.

What is a Trustee's Sale?

When you miss payments on your mortgage, you go into default, and the bank will authorize the Trustee to begin foreclosure proceedings, enforcing the lien that it holds on your property and recovering its money. The Trustee will send out a notice of default and publish notices of the upcoming foreclosure sale, also known as a Trustee's sale. Eventually, if you do not redeem the property by becoming current on your payments, the Trustee will sell the property.

What is a Trustee's Deed?

Once the Trustee has exercised his right to sell the property in order to recover the money owed to the bank, a deed is prepared, which transfers the property from the Trustee to the new owner who bought the property at the foreclosure sale. This deed is called a Trustee's Deed Upon Sale. The deed is recorded in the land records of the county where the property is located and the buyer at sale officially becomes the new owner of the property.

What Can I Do to Avoid Foreclosure?

Talk to the bank. If you begin to get behind on your mortgage payments, it is absolutely crucial that you begin a dialog with your lender. Often, a bank will modify the terms of the loan so that you can continue to make your payments. Most banks would rather work with their customers so that those customers can pay their loans. If a house is sold at foreclosure sale, there is no guarantee that the bank will not lose money on the sale.

What if I Declare Bankruptcy?

Bankruptcy will delay a foreclosure sale, but it may not stop the sale from occurring. The bank would simply have to ask the bankruptcy judge for permission to sell your property, and permission to sell is often granted.

Resources

• The HUD guide to avoiding foreclosure
• Freddie Mac's guide to avoiding foreclosure
• RealtyTrac's foreclsoure FAQs