What Is Trustee Deed?
A deed is a legal document that transfers ownership in real estate from a seller to a buyer. A trustee deed, or deed of trust, is used in some states instead of a mortgage.
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Trustee Deed
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When a buyer purchases property with a trustee deed, the deed conveys the property from the seller to a trustee (not the buyer). The trustee is an impartial third party, usually a title or escrow company. The trustee holds the deed as security until the buyer pays off his loan.
Possession
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The buyer, also called the borrower by the bank or other lender that funded his loan, still maintains equitable title to the property. This means that only the buyer/borrower has the legal right to possess and reside in his property.
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Default
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The trustee holds legal title to the property. This means that if the buyer/borrower ever stops making his loan payments and defaults on his loan, the trustee is authorized to begin a foreclosure proceeding. The trustee may sell the property and pay the lender with the proceeds. The buyer/borrower loses his possession rights upon completion of a foreclosure sale.
Satisfaction
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When a buyer/borrower makes all of his payments and the loan is satisfied, the trustee must transfer full legal title to the buyer.
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