Deeds of Trusts are commonly misunderstood by most of the public. Even though the name includes trust, those documents are only nominally trusts, and the law governing them has little in common with trust law.
Deeds of trust are actually lending documents. In many states, when someone buys a home and borrows money from a bank to do so, they sign a promissory note secured by a mortgage. The mortgage acts as a security device giving the lender an interest in the home to guarantee the lender gets repaid, if not by the borrower, then by selling the home in a foreclosure.
The same thing happens in California, however, instead of a mortgage, the common practice is to use a “deed of trust”. The deed of trust is a simpler method by which the lender can, if unpaid, foreclose on the property, but it doesn’t take as long as foreclosing on a mortgage, nor is it as expensive as foreclosing on a mortgage. This is done by creating a quasi-trust relationship on behalf of the lender which can foreclose the loan if unpaid by notifying the trustee appointed in the deed of trust (usually a title insurance company/escrow company) who then goes through an abbreviated process not involving the courts to sell the property.
So in summary, any question you might have pertaining to a deed of trust ought not to be addressed to an estate planning/trust attorney. Instead those questions should be addressed to a real estate attorney.
- The Lessons from Lisa Marie - March 28, 2023
- Living Trust Bank Accounts and FDIC Insurance (VIDEO) - March 21, 2023
- Show Your Love by Creating an Estate Plan - March 3, 2023
