Your Mortgage Blog

Posted on
June 1, 2023
by
Neena Vlamis

Deed Of Trust vs. Deed Differences

If you are in the homebuying process, it’s essential to understand the various legal documents involved. Two of the most important documents are a deed and a deed of trust. In this blog, we’ll explore what each document is and the differences between them.

What is a Deed?

A deed is a legal document that transfers ownership of a property from one party to another. The deed includes a description of the property, the names of the parties involved, and any encumbrances or liens on the property. The person transferring the property is known as the grantor, and the person receiving the property is known as the grantee. The deed is signed by the grantor and then recorded with the county or city where the property is located.

What is a Deed of Trust?

A deed of trust is a legal document used to secure a loan on a property. It’s commonly used in states that use a deed of trust system rather than a mortgage system. A deed of trust involves three parties: the borrower (known as the trustor), the lender (known as the beneficiary), and a third-party trustee. The borrower transfers the legal title of the property to the trustee, who holds the title until the loan is paid off. If the borrower defaults on the loan, the trustee can sell the property to pay off the debt.

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What is the Difference Between a Deed and a Deed of Trust?​

The primary difference between a deed and a deed of trust is the purpose of each document. A deed transfers ownership of a property from one party to another, while a deed of trust secures a loan on a property. Additionally, a deed is signed by the grantor and recorded with the county or city where the property is located, while a deed of trust involves three parties and is recorded with the county or city where the property is located.

Another key difference is the foreclosure process. In a deed of trust, the foreclosure process is typically faster and less expensive than a foreclosure involving a mortgage. This is because the trustee can sell the property quickly without going through a lengthy court process.

In conclusion, a deed and a deed of trust are both legal documents involved in a home purchase, but they serve different purposes. A deed transfers ownership of a property from one party to another, while a deed of trust secures a loan on a property. As a mortgage consultant, it’s essential to understand the differences between these documents and how they affect the homebuying process.

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