Who Appoints the Trustee on a Deed of Trust?

A borrower, or settlor, appoints a trustee as a security on monies borrowed for the purchase of property. This action is performed on behalf of the lender. The trustee holds the title to the property until the debt is paid.

Agreement

Three parties must agree to the appointment of the trustee: the lender or beneficiary, the borrower, and the trustee.

Significance

The lender, borrower and trustee each have a defined role in the Deed of Trust. The document states what will happen if either party defaults.

Trustee

The trustee is a neutral third party appointed to hold the title of the property until full payment of the loan. In case of default, the trustee will sell the property to recover the amount still owed.

Trustor

The borrower agrees to have a trustee keep the title of the property as a measure of good faith that the borrower intends to comply with the terms of the loan.

Lender

The lender wants assurance that a borrower will pay the loan back as agreed upon. If the borrower defaults, the lender wants assurance that the property will be sold to recover the amount still owed.

References

• Who Appoints Trustees