Understanding Trust Deeds
A Trust Deed is a legal document wherein the real property’s legal title is moved to the custody of a trustee. This particular deed is usually held as collateral for a debt between a debtor and lender. The debtor serves as the trustor while the lender is known as the beneficiary. On the other hand, the trustee serves as a third party that holds the trust deed to ensure that the deal between the lender and beneficiary are acted accordingly.
The purpose of enacting this strategic investment is to let the debtor acquire money from the lender to purchase a property.
Here’s how it actually works: you, the debtor, quote the amount of cash to the seller. The seller then performs a grant deed providing the property to the trustor. Next, the trustor can quickly perform a trust deed moving the property to the trustee to be detained in trust for the beneficiary.
A Trust Deed is more advantageous than a mortgage in the part of the lenders. This is due to the fact that the trustee has the capacity to foreclose on the real estate property in the event that the debtor fails to pay the loan.
Trust Deeds differ from mortgages, because they actually include three parties: the debtor, the lender, and the trustee. A mortgage, on the other hand, only involves two parties, the mortgagor and the mortgagee. Trust Deeds are commonly used as a means in funding real estate purchases in several American states, such as Missouri, Nevada, and Colorado.