What they are

A Trust Deed is the collateral for a Note. The note is the borrowers promise to repay (also known as a promissory note). The Trust Deed is the security or collateral for the note. It is recorded in the county recorder's office and creates a lien on the borrower's property.

How they work

A deed of trust is a special kind of deed that is recorded in public records, where it tells everyone that there is a lien and ties the note to the property. It is used in place of a mortgage.

A deed of trust involves three parties. The trustor, the lender as the beneficiary, and a neutral third party as the trustee, who holds a type of temporary (but not full) title until the lien is paid.

The deed of trust is cancelled when the debt is paid. Until then, the trustee has the power to foreclose if the debt is not paid, without going through the court system, making it easier and quicker than foreclosing on a mortgage.