Trust Deed

Trust deed (commonly referred to as a deed of trust) is a type of secured real-estate transaction that some states like California and Massachusetts use instead of mortgages. See State Property Statutes.

To finance property renovations or other projects, borrowers can get money from lenders by giving the lender one or more promissory notes. As security for the promissory notes, the borrower transfers a real property interest to a third-party trustee. Should the borrower default on the terms of her loan, the trustee may take full control of the property to correct the borrower's default.

Usually, the trustee is a title company. In most states, the borrower actually transfers legal title to the trustee, who holds the property in trust for the use and benefit of the borrower. In other states, the trustee merely holds a lien on the property. See Estates and Trusts.