Definition
A deed of trust is a financing document (primarily in western states) where the property secures the loan through a trustee. If you default, foreclosure is non-judicial and faster.
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Find my pathAbout this term
A deed of trust is a three-party instrument (trustor/borrower, trustee, beneficiary/lender) used to secure a loan. Unlike a mortgage where the lender holds a lien, in a deed of trust the trustee holds legal title and can conduct a non-judicial foreclosure if the borrower defaults. Deeds of trust are faster and cheaper to foreclose but provide less borrower protection than mortgages. When the loan is paid off, a reconveyance deed returns title to the borrower.
Pro Tip
Understand that deed of trust allows faster foreclosure. Ensure you understand payment obligations.
Example
The borrower signed a deed of trust pledging the property as security for the $300,000 loan.