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Deed of Trust
The instrument used in many states that takes the place of a common law mortgage, by which a trustor places the legal title to real property with a trustee to secure the repayment of money to the beneficiary or the performance of other conditions.
A deed of trust is a legal document for a borrower to pledge certain real property or collateral as guarantee for the repayment of a loan.
It differs from a mortgage in a few ways.
For one thing, instead of two parties to the transaction there are three. There is the borrower who signs the trust deed and who is called the trustor. There is the third, neutral party, to whom trustor deeds the property as security for the payment of the debt, who is called the trustee.
And then there's the lender who is the beneficiary, the one who benefits from the pledge agreement in that in the event of a default the trustee can sell the property and transfer the money obtained at the sale to lender as payment of the debt.
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