Can a Valid Trust Deed Be Executed by Someone Who Does Not Own the Property?
Land can be transferred in many ways and a deed of trust is just one way to do it. Deeds of trust are legal documents used in financing real estate properties. When a borrower purchases a property using money from a lending institution (a bank, for example), the borrower (or trustor) executes a deed of trust to a third party (or trustee). The trustee retains the legal title to the property as security until the debt is fully repaid to the lender. The complexities of a deed of trust may cause uncertainty about how it functions in the commercial properties market. As in any legal matter, the main concepts are important to understand the context of the question. In this case, real estate ownership is the matter at hand.
Other People Are Reading
-
Property and Its Importance
-
Property is anything that can be owned. The term "real property" refers to a piece of land and what is beneath and attached to it. Property ownership is a basic component of economic and commercial systems. The fact of being a property owner is commercially relevant because properties, particularly real properties, are valuable assets. Since they are expensive, credit and securities are usually required to purchase them. Property may also be used as collateral to secure a loan from a lending institution or bank.
Deed of Trust vs. a Mortgage
-
A deed of trust always involves three parties: the borrower, the lender and the trustee. The trustee is often a bank, a title company or an escrow company. A mortgage involves a similar transaction, but only requires two parties: the borrower and the lender. In this case, the lender (usually a bank) holds on to the property title until the mortgage has been paid.
Depending on the state, either a trust deed or a mortgage will be most commonly used. If a borrower defaults on his payments, foreclosure of the property takes less time if a deed of trust is used. Mortgages take more time because they require judicial foreclosure.
-
The Legal Title to the Property
-
The owner is the person or party who has the legal title to the property. A trust deed conveys that legal title to the trustee. Put simply, the trustee effectively owns your property, although you have the right to live on it and enjoy the use of it. Once you have fully paid the loan, the title is transferred back to you and you become the sole legal owner. Most economic and political systems protect property rights in this way, to promote the existence of valuable assets in the commercial market. The commercial market and the rights protecting property assets contribute to economic growth.
Owners Come First
-
Nobody can transfer (or sell) a property that isn't owned by him, or that he is not legally entitled -- under a valid trust deed, for example -- to transfer. In the event of a property foreclosure, it is essential to get a valid expression of will from the owner. In case a borrower defaults payment, the deed of trust could be released by the lender and the trustee instructed to sell the property. In other words, if you don't make your loan payments, the bank may instruct the trustee to take possession of your property and sell it to reclaim the remainder of your loan.
-
References
- Photo Credit Comstock Images/Comstock/Getty Images
