Deed of Trust
Deed of Trust Generator
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Signature Requirements
E-Signature with Notarization
Deeds of trust are valid with electronic signatures under the ESIGN Act and UETA. Notarization is required for recording with the county recorder's office. The trustor (borrower) must sign before a notary public who verifies identity and acknowledges the signature. The beneficiary and trustee signatures are typically not notarized.
Sample Deed of Trust Generated by Legal Tank
Deed of Trust
Parties
This Deed of Trust (the "Deed of Trust") is made and executed by [____________] (the "Trustor" or "Borrower"), whose address is [____________], to [____________] (the "Trustee"), whose address is [____________], for the benefit of [____________] (the "Beneficiary" or "Lender"), whose address is [____________]. Trustor hereby irrevocably grants, transfers, and assigns to Trustee, IN TRUST, WITH POWER OF SALE, the Property described herein, for the purpose of securing the obligations set forth in Article III.
Trustee accepts the trust created hereby and agrees to perform the duties of Trustee as set forth in this Deed of Trust and as required by applicable law. Trustee shall act in a fiduciary capacity and shall exercise the powers granted herein in a commercially reasonable manner. Beneficiary may, at any time and without cause, substitute a successor Trustee by recording a substitution of trustee in the official records of the county in which the Property is located.
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Property
Trustor hereby grants and conveys to Trustee, in trust, the following described real property situated in the County of [____________], State of [____________] (the "Property"): [INSERT FULL LEGAL DESCRIPTION]. TOGETHER WITH all buildings, improvements, and fixtures now or hereafter erected on the Property; all easements, appurtenances, and water and mineral rights; all rents, royalties, issues, profits, and income of the Property; and all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims.
The Property also includes all equipment, apparatus, and fixtures of every kind now or hereafter attached to or used in connection with the Property, including heating, air conditioning, plumbing, ventilating, electrical, lighting, and fire protection equipment, and all replacements and additions thereto. All of the foregoing, together with the Property, are referred to herein as the "Trust Property." Trustor warrants that Trustor is the lawful owner of the Trust Property and has the right to grant and convey the same.
Obligation Secured
This Deed of Trust is given to secure the following obligations (collectively, the "Secured Obligations"): (a) the payment of the indebtedness evidenced by that certain Promissory Note of even date herewith in the principal amount of [$__________] (the "Note"), executed by Trustor in favor of Beneficiary, including all extensions, modifications, and renewals thereof; (b) the performance of each and every obligation, covenant, and agreement of Trustor contained in this Deed of Trust, the Note, and any other Loan Documents; and (c) all future advances and expenditures made by Beneficiary under the terms of this Deed of Trust or applicable law.
The lien of this Deed of Trust shall secure not only the existing indebtedness described above, but also any and all future advances, whether obligatory or optional, made by Beneficiary to or for the benefit of Trustor within twenty (20) years from the date hereof, plus interest thereon, to the maximum amount permitted by applicable law. The total amount of indebtedness secured hereby, exclusive of interest, shall not exceed [$__________] at any one time.
Payment Terms
Trustor shall pay the principal and interest on the Secured Obligations as and when due in accordance with the terms of the Note. All payments shall be applied first to accrued and unpaid interest, then to the outstanding principal balance, and then to any other amounts due under the Loan Documents, unless Beneficiary elects a different order of application. Trustor shall make all payments at the address specified by Beneficiary or at such other place as Beneficiary may designate in writing.
If any payment due under the Note is not received by Beneficiary within [____] days after its due date, Trustor shall pay a late charge of [____]% of the overdue amount or [$__________], whichever is [greater / lesser], to compensate Beneficiary for the additional administrative costs of processing delinquent payments. The imposition of a late charge shall not constitute a waiver of Beneficiary's right to declare a default under this Deed of Trust or to exercise any other remedy available hereunder or at law.
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Insurance and Taxes
Trustor shall maintain hazard insurance on the improvements situated on the Trust Property in an amount not less than the full replacement cost thereof, with a loss payable clause naming Beneficiary as mortgagee and first loss payee. Such insurance shall be issued by an insurer licensed in the State of [____________] with a financial strength rating of not less than A-VII by A.M. Best Company. Trustor shall deliver certificates of insurance and renewal policies to Beneficiary not fewer than thirty (30) days prior to the expiration of any existing policy.
Trustor shall pay all real property taxes, general and special assessments, ground rents, and other charges levied or assessed against the Trust Property before delinquency and shall furnish Beneficiary with evidence of such payments upon request. If Trustor fails to make any payment required under this Article, Beneficiary may, but shall not be obligated to, make such payment on Trustor's behalf, and any amounts so advanced shall be added to the Secured Obligations, shall bear interest at the default rate specified in the Note, and shall be immediately due and payable.
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Maintenance and Preservation
Trustor shall maintain the Trust Property in good condition and repair and shall not commit or permit any waste, impairment, or deterioration thereof. Trustor shall not alter, remove, or demolish any improvement on the Trust Property without the prior written consent of Beneficiary. Trustor shall comply with all applicable laws, ordinances, regulations, covenants, conditions, and restrictions affecting the Trust Property, and shall not permit any use of the Trust Property that would violate any such law or regulation or that would void or make voidable any insurance required by this Deed of Trust.
Trustor shall not initiate, join in, or consent to any change in any zoning ordinance, private restrictive covenant, or other public or private restriction that would reduce the value or utility of the Trust Property without the prior written consent of Beneficiary. Trustor shall promptly notify Beneficiary of any condemnation proceeding, any proceeding by a governmental authority affecting the Trust Property, or any material casualty loss or damage to the Trust Property.
Default
Each of the following events shall constitute an "Event of Default" under this Deed of Trust: (a) failure of Trustor to make any payment required under the Note or this Deed of Trust within [____] days after such payment becomes due; (b) breach by Trustor of any covenant, representation, or warranty contained in this Deed of Trust or any other Loan Document, which breach remains uncured for [____] days after written notice from Beneficiary; (c) the filing of a voluntary or involuntary petition in bankruptcy by or against Trustor under Title 11 of the United States Code; (d) the appointment of a receiver, trustee, or custodian for all or any portion of Trustor's property; or (e) the occurrence of a transfer or encumbrance of the Trust Property without the prior written consent of Beneficiary, in violation of any due-on-sale or due-on-encumbrance clause contained herein.
Upon the occurrence of an Event of Default, Beneficiary may, at its option and without further notice or demand (except as required by applicable law), declare the entire unpaid principal balance of the Note, together with all accrued interest and other amounts owing under the Loan Documents, immediately due and payable (the "Acceleration"). The exercise of any remedy by Beneficiary shall not preclude the concurrent or subsequent exercise of any other remedy provided herein, in the Loan Documents, or at law or in equity.
Foreclosure and Power of Sale
Upon the occurrence of an Event of Default, Beneficiary may instruct Trustee to exercise the power of sale granted herein and to sell the Trust Property at public auction in accordance with the applicable nonjudicial foreclosure statutes of the State of [____________]. Trustee shall give all notices required by law, including a Notice of Default and Election to Sell, a Notice of Trustee's Sale, and any other notices required by applicable state statutes. The sale shall be conducted in the time, place, and manner prescribed by law.
At any such sale, Trustee shall sell the Trust Property to the highest bidder for cash in lawful money of the United States. Beneficiary may bid at the sale and may credit against its bid all or any portion of the Secured Obligations then outstanding. Trustee shall execute and deliver to the purchaser a trustee's deed conveying the Trust Property, which deed shall be prima facie evidence of the truth of the recitals made therein regarding the default, the giving of notices, and the conduct of the sale. The recitals in any trustee's deed shall be conclusive proof of the matters stated therein.
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Reconveyance
Upon written request of Beneficiary stating that all sums secured by this Deed of Trust have been paid in full and that all Secured Obligations have been satisfied, Trustee shall reconvey the Trust Property to Trustor, or to such person or persons as may be legally entitled thereto, by executing and recording a full reconveyance. Beneficiary shall deliver a request for reconveyance to Trustee within [____] days after satisfaction of all Secured Obligations, together with the original Note and this Deed of Trust marked "Paid in Full."
The reconveyance shall be at the expense of Trustor (or the person requesting it). Trustee shall have no liability for the sufficiency or accuracy of the reconveyance, except for Trustee's own willful misconduct or gross negligence. The reconveyance shall operate to release and discharge the lien of this Deed of Trust and to revest in Trustor all right, title, and interest in the Trust Property previously conveyed to Trustee hereunder.
Governing Law
This Deed of Trust shall be governed by and construed in accordance with the laws of the State of [____________], including all applicable statutes governing deeds of trust, nonjudicial foreclosure, and real property security instruments. To the extent that federal law preempts state law, including the provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Garn-St. Germain Depository Institutions Act of 1982, such federal law shall govern.
If any provision of this Deed of Trust conflicts with applicable law, such conflict shall not affect the validity of the remaining provisions. Time is of the essence with respect to all obligations of Trustor under this Deed of Trust. This Deed of Trust shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and assigns, subject to the restrictions on transfer set forth herein.
What Is a Deed of Trust?
A deed of trust is a real estate security instrument that involves three parties - the trustor (borrower), the beneficiary (lender), and a neutral trustee - and serves as an alternative to a traditional mortgage for securing a loan with real property. The trustor conveys bare legal title to the trustee, who holds it as security for the loan. When the loan is paid in full, the trustee reconveys title to the trustor through a deed of reconveyance. If the trustor defaults, the trustee has the power of sale, enabling a non-judicial foreclosure that is typically faster and less expensive than the judicial foreclosure required with a traditional mortgage.
Approximately 20 states use deeds of trust as the primary security instrument for real estate loans, while the remaining states use mortgages. States using deeds of trust include California, Texas, Virginia, Colorado, and Arizona, among others. The key advantage of a deed of trust for lenders is the non-judicial foreclosure process, which allows the trustee to sell the property at a public auction after providing statutory notice to the borrower without filing a lawsuit. This process is governed by state statutes that prescribe specific notice requirements, waiting periods, and sale procedures. The entire non-judicial foreclosure typically takes three to six months, compared to one to three years for judicial foreclosure on a mortgage.
The deed of trust works in tandem with a Promissory note form, which contains the borrower's promise to repay the loan, the interest rate, payment schedule, and other financial terms. The deed of trust is the security instrument that pledges the property as collateral, while the promissory note is the debt instrument that creates the payment obligation. Both documents are executed at the loan closing, but only the deed of trust is recorded with the county recorder. Federal lending regulations, including the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), impose disclosure requirements that apply to deeds of trust used in consumer lending transactions.
Key provisions in a deed of trust include the acceleration clause (allowing the lender to demand full payment upon default), the due-on-sale clause (allowing the lender to call the loan if the property is transferred without lender consent), the assignment of rents (giving the lender the right to collect rental income upon default), and the borrower's covenants to maintain the property, pay taxes and insurance, and comply with all applicable laws. When the loan is satisfied, the beneficiary must instruct the trustee to execute and record a reconveyance, releasing the lien and returning legal title to the borrower. State laws impose deadlines for completing the reconveyance process.
| Feature | Deed of Trust | Mortgage |
|---|---|---|
| Number of Parties | Three (trustor, beneficiary, trustee) | Two (mortgagor, mortgagee) |
| Foreclosure Method | Non-judicial (power of sale) | Judicial (court proceeding) |
| Foreclosure Timeline | 3-6 months typically | 1-3 years typically |
| Right of Redemption | Usually limited to before sale | Statutory redemption after sale |
| States Using | ~20 states (CA, TX, VA, CO) | ~30 states (NY, FL, NJ, OH) |
Why You Need a Deed of Trust
You are making a private real estate loan and need a security instrument that allows non-judicial foreclosure in the event of borrower default, providing faster and less expensive remedies than a traditional mortgage. Browse our free deed of trust template to review the standard three-party structure before generating your document.
A seller is financing the sale of property and needs to secure the buyer's payment obligation with a recorded lien that preserves the power of sale for efficient recovery if the buyer defaults.
Your lending institution is originating residential loans in a deed-of-trust state and needs compliant security instruments that satisfy both state recording requirements and federal consumer lending regulations. Get a quote for your deed of trust to ensure TILA and RESPA compliance for institutional lenders.
You are refinancing an existing loan and need a new deed of trust to replace the prior lien, coordinated with a new Sample promissory note documenting the refinanced terms.
An investor is providing a hard money loan secured by real property and needs a deed of trust with an assignment of rents to protect their investment in the event of borrower default. The loan terms should be documented in a loan agreement alongside the security instrument.
Related Real Estate Documents
Deed of Trust is often used alongside other real estate documents. Depending on your situation, you may also need:
Key Sections in a Deed of Trust
Parties Identification
Names and addresses of the trustor (borrower), beneficiary (lender), and trustee (neutral third party). The trustee must be an entity authorized by state law to serve in that capacity.
Property Description and Security
Legal description of the property being pledged as security, including the assessor's parcel number. The deed of trust creates a lien on the described property that secures the borrower's repayment obligation.
Loan Terms Reference
References the accompanying promissory note including the principal amount, interest rate, maturity date, and payment schedule. The deed of trust secures the obligations described in the note.
Power of Sale
Grants the trustee the power to sell the property at public auction if the borrower defaults, enabling non-judicial foreclosure. This clause is the primary distinction between a deed of trust and a mortgage.
Borrower Covenants
The borrower's obligations to maintain the property, pay property taxes and insurance, not commit waste, comply with HOA rules, and maintain the property's value as collateral.
Default and Acceleration
Defines what constitutes a default and the lender's right to accelerate the full loan balance upon default. This section includes notice and cure period requirements prescribed by state law.
Reconveyance
Establishes the process for the trustee to reconvey legal title back to the borrower upon full payment of the loan, including the timeline and requirements for recording the reconveyance deed.
Deed of Trust Legal Requirements
The deed of trust must be notarized and recorded with the county recorder to create a valid lien against the property and establish priority over subsequent interests.
Non-judicial foreclosure procedures are governed by state statutes that prescribe specific notice requirements, waiting periods, right-to-cure windows, and sale procedures that must be strictly followed.
TILA requires lenders to provide borrowers with specific disclosures about the loan terms, APR, and total cost of credit, and grants borrowers a three-day right to rescind for refinance transactions on their primary residence.
RESPA requires lenders to provide a Loan Estimate and Closing Disclosure for most residential mortgage transactions, and prohibits certain practices such as kickbacks and unearned fees.
State usury laws limit the maximum interest rate that can be charged on loans secured by deeds of trust, and exceeding these limits can render the loan terms unenforceable or subject the lender to penalties.
Common Deed of Trust Mistakes to Avoid
Selecting a trustee that is not authorized by state law to serve in that capacity, which can invalidate the non-judicial foreclosure power and force the lender into costly judicial proceedings. Always verify trustee eligibility before executing the deed of trust. In states that use a traditional mortgage agreement instead, trustee selection is not applicable.
Failing to record the deed of trust promptly after execution, which can result in the lien being subordinate to subsequently recorded interests and reducing the lender's security position.
Omitting the power of sale clause or using language that does not meet the state's statutory requirements, eliminating the primary advantage of using a deed of trust over a mortgage.
Not including required TILA and RESPA disclosures for consumer loans, which can result in the borrower having the right to rescind the transaction for up to three years. Under 15 U.S.C. § 1635, the extended three-year rescission window applies whenever the required disclosures were never provided.
Using a deed of trust in a mortgage-only state where the three-party structure is not recognized, potentially creating an unenforceable security instrument.
Frequently Asked Questions About Deed of Trusts
What is a deed of trust?
What is the difference between a deed of trust and a mortgage?
What are the three parties in a deed of trust?
Which states use deeds of trust?
What happens when a deed of trust is paid off?
Can a deed of trust be foreclosed?
What is a reconveyance deed?
Does a deed of trust need to be recorded?
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