Deed of Trust: Definition, How They Work
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What Is a Deed of Trust?
A deed of trust, also called a trust deed, is a legal agreement made at a property's closing. It is a type of secured real estate transaction used in some states in place of a mortgage. The individual purchasing a property and a lender make this agreement, which states that the property buyer will repay a loan. A third party, known as a trustee, holds the property's legal title until the loan gets paid in full.
A deed of trust is the security for a loan and gets recorded in public records. Some states will require a borrower to sign a deed of trust to take out a home loan, much like other states require signing a mortgage. Fundamental differences exist between deeds of trust and mortgages, however. For example, a deed of trust requires more people to be involved in the property sale than a mortgage would. Only a mortgage gets executed through the judicial system.
What Must a Deed of Trust Include?
To be considered a legally binding document, any deed of trust needs to cover several critical details. Required information includes the following:
- Original loan amount
- Description of the property used as collateral or security ( here is an article about using collateral for a loan)
- Names of all parties involved (such as trustor, beneficiary, and trustee)
- The inception date of the loan
- The maturity date of the loan
- Any fees, such as late fees
- Provision and requirements of the mortgage
- Legal procedures in case of default, such as a power of sale clause ( here is an article about power of sale)
- Acceleration and alienation clauses to explain when the homeowner is considered delinquent or what happens when the individual sells the property
- Any riders with clauses such as terms of an adjustable-rate mortgage or prepayment penalties
Who Is Involved With a Deed of Trust?
Three parties must be involved with any deed of trust:
- Trustor: This party is the borrower. A trustor is sometimes called an obligor.
- Trustee: As a third party to a deed of trust, the trustee holds the property's legal title.
- Beneficiary: This party is the lender.
A trustee represents neither the borrower nor the lender. Instead, the trustee is an entity that holds the power of sale in case a borrower defaults. The trustee is typically a title or escrow company.
How Does a Deed of Trust Work?
A borrower gives a lender one or more promissory notes in exchange for the deed of trust. Promissory notes are documents that the borrower signs which state the borrower's promise to pay back a debt. The promissory note will contain information such as the interest rate along with other obligations of the agreement.
After the borrower pays the deed in full, the trustee will reconvey the property to its buyer. A promissory note is marked as paid in full once the buyer pays the loan entirely, and the property buyer receives the deed.
A trustee may file a notice of default if the borrower does not pay following the terms of the promissory note. A trustee may also substitute a different trustee for handling foreclosure.
Deed of Trust Versus Mortgage
A deed of trust and a mortgage serve a similar purpose, but some key distinctions exist between the two types of legal documents.
Differences Between Deeds of Trusts and Mortgages
Significant differences between the two documents include the following:
- Foreclosure type: The foreclosure type a property owner faces will depend on whether the property owner has a deed of trust or mortgage. Someone who has a deed of trust typically faces a nonjudicial foreclosure, while a lender will need to go through the courts if a mortgage comes into play.
- Expense and length of foreclosure process: Since a lender will have to seek judicial foreclosure to take back a property using a mortgage loan, a mortgage generally takes more money and time for foreclosure proceedings. As a result, mortgage lenders tend to use deeds of trust in states that allow them. A lender will almost always spend less time and incur lower costs reclaiming a property when using a deed of trust instead of a mortgage.
- Parties involved: Only two parties, a borrower and a lender, are engaged in a mortgage contract. A deed of trust has a trustee, the neutral third party, involved in addition to the borrower and lender.
Similarities Between Deeds of Trusts and Mortgages
The two agreements also have a few significant similarities, including:
- Both agreements are distinct from loans: Neither a deed of trust nor a mortgage is a home loan. The loan states that a property owner will pay back a set amount of money to a lender, while both a deed of trust and a mortgage place a lien on a property.
- Both agreements allow for foreclosure: Both a deed of trust and mortgage give a lender a method of taking back a property via foreclosure. These agreements essentially state that if the borrower does not follow the loan terms, the lender can put the property into foreclosure.
- State law dictates both types of agreements: Both mortgages and foreclosure deeds are subject to state laws. The specific type of contract a lender must use will depend on what is legal in a particular state.
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Deed of Trust Versus Promissory Note
A deed of trust often requires a promissory note, but the promissory note is a specific document type. While a deed of trust describes the terms of debt as secured by a property, a promissory note acts as a promise that the borrower will pay the debt.
A borrower signs the promissory note in favor of a lender. The promissory note includes the loan's terms, such as payment obligations and the loan's interest rate. However, although the promissory note is usually a separate document, both a deed of trust and a mortgage can be legally considered a type of promissory note.
During the term of a loan, a lender keeps the promissory note, and the borrower only has a copy of the note. Once the borrower pays off the loan, the promissory note is marked as "paid in full." Then, the borrower receives the note with a recorded reconveyance deed.
Can You Use a Deed of Trust Anywhere?
State law governs the use of both deeds of trust and mortgages. Some states only legally allow mortgages, while other states only allow lenders to use deeds of trust. A few states will allow either type of contract. In these states, the lender gets to choose the type of agreement a borrower receives. Some states use neither mortgages nor deeds of trust but instead use other contracts such as security deeds for loan transactions to give lenders a security interest in the property.
Since state laws vary regarding the type of document you can use, it's always essential to consult with an experienced lawyer to discuss legal options and your state's requirements. A lawyer can also help ensure that you create and use a legally binding document that protects you in your specific situation regarding real estate transactions for residential or commercial property.
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Drew B.
Drew is an entrepreneurial business attorney with over twenty years of corporate, compliance and litigation experience. Drew currently has his own firm where he focuses on providing outsourced general counsel and compliance services (including mergers & acquisitions, collections, capital raising, real estate, business litigation, commercial contracts and employment matters). Drew has deep experience counseling clients in healthcare, medical device, pharmaceuticals, information technology, manufacturing, and services.
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Bobby H.
Bobby E. Hill, Jr. is a native of Tuscaloosa, Alabama and holds undergraduate degrees in music and business administration from Xavier University of Louisiana. He received his Juris Doctor from the University of Miami School of Law where he was a staff and articles editor for the school’s Race & Social Justice Law Review and a student attorney in the institution’s Immigration Clinic. In addition to freelancing, Bobby is currently a litigation associate at Johnson & Freeman, LLC, a boutique litigation firm in Atlanta, Georgia, where he practices in the firm's Condemnation, Probate, Real Estate Litigation, Real Estate Transactions, E-Discovery and Business and General Civil Litigation Practice areas. In this role, Bobby has acquired appreciable experience in drafting memoranda of law for partners and senior counsel, and all litigation related pleadings including pleadings related to dispositive motions, discovery, appeals, and other post-judgment relief.
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Allen L.
Clear, strategic legal guidance when you need it most—whether you're planning ahead or defending a position. Legal challenges shouldn't feel confusing or overwhelming. Whether you're building an estate plan, structuring a business, or navigating a dispute, my practice is built on clarity, care, and practical strategy. I work with clients who want real solutions—not just paperwork—through planning and advice that truly fits their goals, families, and businesses. Planning & Structure I focus on estate planning, asset protection, and business succession, helping individuals and entrepreneurs organize their assets, reduce risk, and prepare for every stage of life. Whether you're setting up your first living trust, shielding your business from liability, or updating an existing estate plan, you'll receive clear guidance, fixed-fee pricing, and responsive support from start to finish. Each plan I design is tailored to your real-world priorities: preserving wealth, avoiding unnecessary taxes and probate, and ensuring the people you love are protected when it matters most. I also focus on general business matters outlined below. Disputes & Defense When legal conflicts arise—disputed contracts, demand letters, settlement negotiations, or litigation decisions—I provide realistic risk assessment and strategic guidance. I help clients understand their actual exposure (not just best-case scenarios), identify leverage points, and navigate toward efficient resolution. If you're facing a legal claim or need to evaluate your position before responding, I can walk you through the realistic options and their costs. Services: Estate Planning & Asset Protection --Simple wills and powers of attorney --Living trusts for small estates --Buy-sell agreements for family businesses Business Formation & Agreements --LLC or S-Corp formation filings --Operating Agreements / Shareholder Agreements --Founder or Investor Agreements --Bylaws and Minutes templates --Registered agent setup guidance Contracts & Commercial Matters --Service Agreements (consulting, marketing, software, design, etc.) --Independent Contractor Agreements --Employment contracts and offer letters --Non-compete, non-solicitation, or confidentiality agreements --Employee handbooks or HR policy updates --Termination or severance agreements --NDAs (Non-Disclosure Agreements) --Partnership or Joint Venture Agreements --Sales or Vendor Contracts --Licensing or IP Agreements Terms and conditions SaaS Platforms --Terms of Service --Privacy Policy --Independent Contractor Agreements --Customer/User Agreements --Liability Waivers --Cancellation & Refund Policy --Non-Solicitation Clauses --Marketplace compliance documents Real Estate --Commercial lease drafting or review --Residential lease review --Purchase & sale agreements --Short-term rental (Airbnb) contracts --Property management agreements Professional Approach: I leverage modern legal research and writing technologies—including AI-assisted tools—to enhance the quality, speed, and clarity of my analysis. Like many legal professionals today, I use these tools to organize research, improve communication, and catch errors. On research tools: case law and statutory verification runs through a vLex/Fastcase subscription, and drafting and first-pass review is AI-assisted. Every analysis I provide is thoroughly reviewed and reflects my independent professional judgment as a licensed attorney. AI is a tool that supports my work; it does not replace it.
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Angelica McDonald, Esq. has singlehandedly established an in-demand law firm, won several accolades for her incredible work in her community and has her sights set on building a bi-coastal law practice that serves clients from her hometown to Hollywood. She is putting her city of Raeford, North Carolina on the map as the birthplace of the next legal superstar. And she is just at the onset of her career. An astute attorney, Angelica is sought after for her razor-sharp business acumen and her relentless litigation style. With a diverse background in entertainment, media and sports law, as well as business, she represents entrepreneurs and athletes on everything from complex contract negotiation to intellectual property matters, ensuring anything they’ve built is protected.
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I'm an attorney available to help individuals and small businesses in Georgia with initial business set-up, required filings, tax strategies, etc. I'm also available to draft, review, and negotiate contracts of many types, both personal and professional. I can draft and file real estate quit claims as well. My legal and business experience and expertise includes small business startups, information technology, technology innovation, real estate transactions, taxes, intellectual property, electrical engineering, the business of video game development, business requirements definition, technology consulting, technology companies, liability waivers and reduction strategies, and the electric utility industry. I work part-time for a local law firm and part-time in my solo practice. I'm also an adjunct professor teaching business law. In addition, I'm part owner, legal counsel to, and a board member of a virtual reality video game development company. I am a member of the Georgia Bar Association. Please reach out if you need attorney, documentation or consulting help in any of those areas!
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We are a boutique firm located in San Diego that handles civil litigation with a couple other areas of law.
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Browse Lawyers NowLawyer Reviews for Deed of Trust Projects
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"Great service. Thorough and responsive. I appreciated his expertise."
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"Anand provided excellent and responsive service. Highly recommend."
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"Thank you for taking your time to review my contract with me, answer all my questions and for making me comfortable and knowledgeable enough to continue in this land buying process!"
Real Estate
Deed of Trust
Illinois
Can a Deed of Trust be modified without the consent of all parties involved?
I recently purchased a property with the help of a mortgage loan, and a Deed of Trust was executed to secure the loan. However, I have come across some financial difficulties and am considering refinancing the mortgage to lower my monthly payments. I have been informed that the terms of the Deed of Trust may need to be modified in order for the refinancing to take place, but I am unsure whether all parties involved, including the lender and the trustee, need to provide their consent for such modifications to be made. Can a Deed of Trust be modified without the consent of all parties involved, or do I need to obtain their approval before proceeding with refinancing?
David U.
You must have their consent. In the general/miscellaneous provisions toward the bottom of the DOT, you should see a standard provision, stating that no amendment to the deed of trust will be valid unless evidenced by a fully executed written agreement.
Real Estate
Deed of Trust
North Carolina
I am looking for a Warranty Deed for the sale of property in St. Croix, USVI. All forms I locate are specific to one of the US 50 states.
State listed below as my state is not relevant ... I need a Warranty Deed form or written up for USVI property.
Jane C.
You will need to consult with a real estate attorney in USVI.
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
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