What is the difference between a trust deed and a deed of trust?
A trust deed and a deed of trust are both legal documents that are used in inheritance law in California. The main difference between the two is that a trust deed is used when property owners transfer ownership of the property to a trustee, usually a financial institution such as a bank. The trustee will then hold the property until the beneficiary of the trust pays off the loan. A deed of trust is a legal document that grants a third-party, usually a real estate lender, a security interest in real property. This security interest allows the lender to foreclose on the property if the borrower fails to make payments. The primary difference between the two documents is the party that holds the property. In a trust deed, the trustee holds the property until the beneficiary pays off the loan. In a deed of trust, the lender holds the security interest in the property. A trust deed is usually used when the borrower wants to transfer ownership of the property, and the deed of trust is usually used when the borrower wants to secure themselves against the possibility of defaulting on the loan. In California, if the borrower fails to make payments in a deed of trust, the lender will have the right to take legal action and foreclose on the property. This is not true for trust deeds, as the trust deed only grants the right to the trustee to hold the property until the beneficiary pays off the debt. Inheritance law can be complicated and it is important to make sure that you understand the difference between a trust deed and a deed of trust before signing any documents. A qualified lawyer should always be consulted in any inheritance law matters.
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