Trust Deed Vs. Deed
A deed is a legal instrument used to transfer title to a piece of property. A trust deed, also known as a deed of trust, by contrast, is a property transaction that serves roughly the same function as a mortgage. Only certain states use a deed of trust. For questions about specific real estate transactions, speak to a lawyer or real estate professional.
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Real Estate Deeds
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A deed transfers real estate title from one party, known as the "grantor," to another party, known as the "grantee." The grantor must execute the deed in writing and sign it, and then deliver it as well. "Deliver" isn't necessarily the physical delivery to the grantee; delivery is some showing by the grantor that he means for the deed to be legally effective right away. The grantor can also effectuate delivery by executing the deed and permanently handing it to a third party with directions to deliver the deed to the grantee once the grantee completes his responsibilities in the transfer.
Contents of Deed
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The party who prepares the deed must include certain information. A deed must describe the property in a way that legally identifies it. Deeds typically do so using a street address for a building, or a physical description or parcel number for land. Deeds also contain the promises made by each party as part of the transfer. Some types of deeds contain "warranties of title," which are various promises by the grantor that the property ownership he's conveying to the grantee is valid.
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Deed of Trust
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A deed of trust, like a mortgage, uses property to secure a loan. A property owner wishes to borrow money from a lender, and use his property as security. However, unlike a mortgage, the deed of trust uses a third party, known as a trustee. The property owner borrows money, but instead of transferring some portion of title to his property to the lender, he transfers that title to the trustee. This transfer gives the trustee the right to take the property from the property owner if the property owner fails to make required payments on his loan.
Trust Deed Default
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A deed of trust empowers the trustee to do a number of things if the property owner defaults on his agreement. Deeds of trust typically provide for a nonjudicial foreclosure, a foreclosure that does not require court proceedings. When foreclosure begins, most deeds of trust give the trustee the power to foreclose by sale in a proceeding known as a trustee's sale. Deeds of trust typically allow the trustee to manage the property, including collection of rent, during the interim period.
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