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Unformatted text preview: ed. A trust deed is a security device which is both a contract and a conveyance, pledging property as a guarantee for repayment of a debt. “Bare legal title” is conveyed by a trustor to a trustee for the lender's benefit. In case of default, the trustee has the power to foreclose out of court at the request of the beneficiary. 8-10 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 8: FINANCING INSTRUMENTS
CHARACTERISTICS OF TRUST DEED
Parties – In addition to the borrower and lender, the trust deed involves a third party, the trustee. • Trustor – The borrower. The owner or buyer who deeds bare legal title of property securing the loan to a trustee to be held as security until the trustor has performed the obligation to the lender under the terms of the deed of trust Beneficiary – The lender. The holder of the promissory note and of the trust deed guaranteeing repayment. Benefits from the “trust” Trustee – A neutral third party. Holder, in trust, of the “bare legal title” with the power of sale described above. • • Effect of Title – Bare (or naked) Legal Title is transferred by the trust deed to a trustee (intermediary between trustor and beneficiary) who has “power of sale” in the event of default by the trustor. Equitable title remains with the trustor, who can also give a junior trust deed (or deeds). Recordation – Recording of the trust deed is permitted and recommended; it establishes priority. Recording is not required to make a trust deed effective. • Short Form – So that only the front page of a trust deed need be recorded, most trust deeds are written as a “Short Form Deed of Trust and Assignment of Rents,” which makes reference to information contained on the reverse side which has been previously recorded in the same county. Fictitious Deed of Trust – This is a device used to put all standard provisions of any given lender or title company, etc., on the public record in any c...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10