The Basics of Trust Deeds

 At this point you know that a trust deed is one of the safest investments you can make that offers you a high return, but what exactly is a trust deed?  A trust deed, or deed of trust is a document that is used to secure the debt on a home acting as a mortgage.  A trust deed is recorded as a lien on real property.  However, although a deed of trust acts like a mortgage, it is important that you understand there are differences between a mortgage and a deed of trust.  These differences will be discussed later on in this chapter.

A trust deed is used as security for a loan on real property, and the specifics regarding the loan are written in a promissory note.   A deed of trust is then documented at the county recorder’s office to legally notify the world that the property in question has now been pledged to secure a loan.

There are three parties involved in a trust deed:

	Beneficiary – Investor/Lender/note holder
	Trustor – Borrower
	Trustee – Third party selected by the investor who has the legal power to act on the investors behalf and hold title until the note has been paid

What secures a trust deed investment?

When making a trust deed investment, the deed of trust recorded against the borrower’s property title is what secures the lenders investment.  When making an investment in a deed of trust, the trustor (borrower) makes the property transfer, in trust, to the trustee (independent third party).  The trustee then holds the conditional title on the behalf of the beneficiary (investor/lender/note holder), and then either of the following takes place: