Deed of Trust
The security instrument used in non-judicial foreclosure states — a three-party instrument that allows a trustee to sell the property without court involvement.
A Deed of Trust is a security instrument used in approximately 30 states (primarily western and southern states) as an alternative to a Mortgage. Unlike a Mortgage (which involves two parties: borrower and lender), a Deed of Trust involves THREE parties: (1) the Trustor (borrower), (2) the Beneficiary (lender), and (3) the Trustee (a neutral third party, typically a title company, attorney, or trust company). Upon default, the Trustee is empowered to sell the property through a non-judicial foreclosure sale — no court involvement is required. The Deed of Trust contains a 'power of sale' clause that is the key to non-judicial foreclosure. The document is recorded in the county land records and includes: the legal description, the power of sale clause, the borrower's covenants, and the procedures for non-judicial foreclosure.
Purpose
- 1Create a security interest in the property using a three-party structure
- 2Enable non-judicial foreclosure through the power of sale clause
- 3Provide the Trustee with authority to sell the property upon default without court order
- 4Record the lender's security interest in the public land records
Who Prepares It
The lender's attorney or closing agent at loan origination. The borrower and trustee sign at closing. The Deed of Trust is recorded in the county land records.
When It Is Used
Used in non-judicial foreclosure states (CA, TX, AZ, NV, GA, CO, WA, OR, MO, and others) instead of a Mortgage. Created at origination and remains in effect until satisfaction or foreclosure.
Legal Effect
The Deed of Trust conveys legal title to the Trustee for the benefit of the Beneficiary. Upon default, the Trustee follows the non-judicial foreclosure procedures in the Deed of Trust and state law: record a Notice of Default, wait the statutory period (typically 90-120 days), record a Notice of Trustee Sale, conduct the sale. The sale extinguishes the borrower's interest (subject to redemption rights). The Deed of Trust must be properly recorded to perfect the security interest against third parties.
Common Mistakes
Homeowner Rights
Other Security Instruments Documents
Mortgage / Deed of Trust
The security instrument that pledges your property as collateral — understanding this document is essential to understanding how foreclosure works.
Satisfaction of Mortgage
The document that releases the mortgage lien after the loan is paid in full — and what happens when the lender fails to record it.
FHA Security Instrument
The FHA-specific Mortgage or Deed of Trust that incorporates HUD regulations and provides unique borrower protections.
VA Security Instrument
The VA-specific Mortgage or Deed of Trust for veteran home loans — incorporating unique SCRA protections and VA servicing requirements.
Condominium Rider
The Fannie Mae/Freddie Mac rider for condominium mortgages — incorporating HOA provisions, project assessments, and insurance requirements.
PUD Rider (Planned Unit Development)
The Fannie Mae/Freddie Mac rider for PUD mortgages — addressing HOA dues, community amenities, and association governance.
USDA Mortgage Documents
The USDA-specific mortgage instruments for Rural Development loans — incorporating RD regulations and providing unique loss mitigation options.
Frequently Asked Questions
Which states use Deeds of Trust vs. Mortgages?▼
Approximately 30 states use Deeds of Trust: CA, TX, AZ, NV, GA, CO, WA, OR, MO, TN, MS, AK, ID, MT, WY, UT, NC (primary), VA, WV, MD, DC, and others. About 20 states use Mortgages (judicial foreclosure): NY, NJ, FL, IL, PA, OH, IN, CT, ME, VT, NH, RI, MA, and others. Some states allow both instruments.
Can a non-judicial foreclosure be challenged in court?▼
Yes, but only through an affirmative lawsuit. You cannot simply file an Answer (as in judicial foreclosure) — there is no lawsuit to answer to. To challenge a non-judicial foreclosure, you typically file a lawsuit against the lender/trustee seeking a TRO and preliminary injunction to stop the sale, asserting claims such as wrongful foreclosure, lack of standing, dual tracking, or procedural defects. This requires proactive legal action before the sale date.
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