Also known as: trust deeds · deed of trust · deeds of trust
Written by attorneys · grounded in primary & secondary sources — see below
A security instrument by which real property is pledged to secure payment of a debt or performance of an obligation. Title is conveyed to a trustee to hold for the benefit of the lender until the debt is paid. The borrower retains possession and the right to redeem.
Atlas Manufacturing borrowed funds from Metro Bank to buy equipment and executed a deed of trust on its factory naming Harper as trustee for the bank's benefit. The deed stated it was given solely as security. Atlas stayed in possession and made payments for two years before defaulting. Metro then initiated foreclosure to satisfy the unpaid debt.
Field Kitchen defaulted on its senior obligation to Prime Restaurant Corporation. The deed of trust contained power-of-sale language. Prime directed the trustee to conduct a nonjudicial sale that generated surplus proceeds after satisfying the senior debt. Plains Food, holding a junior lien terminated by the sale, claimed a share of the surplus in order of priority.
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Lake Wind obtained construction financing from Dusk Wind secured by a trust deed containing a dragnet clause covering all future credit. After a tax lien attached, Dusk Wind made an unrelated acquisition loan to Lake Wind. Lake Wind defaulted on both obligations. Dusk Wind asserted that the later loan also enjoyed priority over the intervening tax lien.
Two joint tenants executed a trust deed on tenancy property to secure a loan. One joint tenant died. The surviving joint tenant claimed the property free of the encumbrance. The court held that the mortgage lien attached only to the deceased tenant's interest, which ended at death, so the lien expired with that interest.
A husband transferred real estate to himself as trustee under an inter vivos deed of trust during marriage. After his death the widow elected her statutory share of his estate. She sought to include the trust assets in the estate for calculating her share. The court determined whether the trust property formed part of the probate estate subject to the election.
Joint tenants held property subject to a trust deed. One tenant sought to terminate the joint tenancy without a strawman conveyance. The court examined whether a direct transfer could sever the tenancy when a security instrument already encumbered the property. The ruling clarified the method available to end the joint ownership.
A deed of trust is a type of mortgage. Title is conveyed to a trustee to hold for the lender's benefit until the debt is paid, while the borrower retains possession and the right to redeem. Upon default the lender may foreclose to satisfy the obligation.
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Yes. The mortgage or statute dictates whether judicial, power-of-sale, or strict foreclosure applies. The chosen procedure affects notice, sale, and redemption rights but the underlying security interest remains the same.
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Priority of future advances depends on state statute and mortgage terms. Some jurisdictions require advances to be optional or obligatory within a stated maximum. Others give priority only to advances made before notice of intervening liens.
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A mortgage or trust deed lien attaches only to the interest of the joint tenant who granted it. When that tenant dies the interest ceases and the lien expires with it, leaving the surviving joint tenant free of the encumbrance.
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A court may determine that assets transferred to an inter vivos trust during marriage are reachable for the elective share calculation when the trust was created to avoid the statutory share.
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…expired with it.” (Accord, Hamel v. Gootkin (1962) 202 Cal.App.2d 27 [20 Cal.Rptr. 372] (applying the Nogarr holding to a trust deed).) As these decisions demonstrate, a joint tenant may, during his lifetime, grant certain rights in the joint property without severing the tenancy. But when such a joint tenant dies his…