Deeds of Trust are security types that pledge real property so that a loan can be secured. They are more like mortgages in providing the lender security in exchange for the loan needed. Deeds of trust are also known as trust deeds and they involve three parties; the borrower, the lender and a trustee. The documents, deeds and notes demonstrate the amount owed and the terms and conditions of repaying it. They are mandatory documents for all who wish to use their real estate properties to secure a loan.
How they work
In general, lenders provide loans to borrowers for specific amounts in exchange for a promissory note from the borrower to the lender. Through a trust deed, borrowers will then transfer the real property interest to a trustee who then holds this interest till the debt has been fully repaid. Once the loan is completely repaid, the borrowers get their titles back from the trustee. In case the payments are defaulted or missed on the given loan, then the lender is at liberty to start the foreclosure process on the real estate property to obtain title to property or repayment.
How trust deeds differ from mortgages
They may both work in the same way because they pledge property to secure a long and lender have permission to foreclosure property. However, they still have some difference, especially on how the foreclosure occurs. Under mortgages, lender foreclosure on property using the judicial foreclosure that focuses on court system, whereas in Deeds of Trust, lenders can foreclose on the property without having to go through the court system. Trust deeds usually work on foreclosure by power of sale where they grant third party trustee right to sell property when there is default in stipulated repayment.
Where are deeds of trust applicable?
Not all states recognize trust deeds and for this reason you may start by checking your jurisdiction and find out what the law says about the use of trust deeds. They may also be overlapped with mortgages with come contracts containing provisions similar to the deeds of trust. It would be a good idea to have a lawyer help you determine how appropriate a deed of trust is for your property interests.
Why you may need a lawyer
Deeds of trust attract legal issues and they remain to be very useful documents. If you are a borrower who has intentions of protecting your property and regaining the title in the future, then it is best that you stick with a lawyer to help you through the legal issues that are associated with the trust deeds. A lawyer can help review trust document so you get assurance that your interests are protected appropriately. In case there arises a title dispute, the lawyer can also legally represent you in court. It is also possible for your lawyer to guide you when you want to invest in trust deeds. Such an investment can bring in high returns, but only when you make the right decisions.