What is a deed of trust?

A deed of trust is a legal document used in residential real estate law in California. It is similar to a mortgage and is used to secure a loan to purchase real estate. When obtaining a loan to purchase residential property, instead of signing a mortgage, the borrower signs a deed of trust. The deed of trust is then recorded with the county, transferring the title of the property to a trustee who holds the property as security for the loan. The deed of trust also contains the terms of the loan. A deed of trust also states that the lender can start foreclosure proceedings if the borrower fails to make payments according to the terms agreed upon in the deed of trust. If the borrower defaults on the loan, the trustee can sell the property to pay off the loan. In California, foreclosure proceedings must be judicially approved in court. That means the borrower has the opportunity to make their case in court and ask for additional time to cure the loan and avoid foreclosure. This can provide more flexibility and protection for the borrower when compared to a mortgage, which usually provides fewer consumer protections. Therefore, a deed of trust is a valuable tool for borrowers in California because it can provide more consumer protections than a mortgage. It is, however, important to understand all the terms of the deed of trust and make sure the borrower can make their payments.

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What is a deed of trust?

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