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Real Estate: What IS Trust Of Deed?
I live in the state of California. I am studying to earn my real estate license. I have a question in regards to a few deeds:
1. Deed Of Trust: Book says "the title is held by the trustee merely as security for a loan(lien) until such time as loan is paid off or until the borrower defaults his or her payments.
Not sure if I understand this. Does this mean the title is held under the banks name until loan is paid off? Please explain this in simple terms :)
What is a trustee to the trustor mean?
1 Answer
- Glenn SLv 77 years agoFavorite Answer
A Deed of Trust is a is a deed where legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender (usually a bank). The equitable title remains with the borrower. The borrower is referred to as the trustor, while the lender is referred to as the beneficiary of the deed of trust.
The note and TD is owned by the bank and payments are made by the buyer to the lender/bank. Should the borrower fail to make the payments to the lender/beneficiary would require the trustee to foreclose on the property by way of a Trustee Sale. The lender/beneficiary would require a minimum bid to get the property at auction the amount owed against the property including the remaining balance on the loan, unpaid interest, foreclosure costs, and any delinquent taxes owed. Generally the amount owed to the lender is more than the market value of the property and no one bids. In that case the lender takes the property back. Should a bidder bid more than is owed the winning bidder purchases the property. Any amount over the minimum bid is then returned to the borrower/trustor and the lender is paid all that is owed against the property.