A typical deed has a grantor and grantee. The grantor is the owner, or seller, of the real estate. The grantee is the person, or buyer, receiving the deed. After a deed is recorded, the grantee owns the property. A deed of trust has three parties known as the grantor, trustee and lender, or beneficiary. A deed of trust does not transfer ownership like a deed. The grantee in a deed of trust is either the trustee or the beneficiary.
The grantor can be either a person or an entity such as a corporation. The deed of trust is used to create a lien in favor of the mortgage lender. All owners of the real estate must sign the deed of trust. In some states, a non-owner spouse must also sign. Normally, the president and secretary of a corporation have the authority to bind the company.
The trustee in a deed of trust can be a person or a corporation. In some states the legal theory states that the trustee holds the property in trust as an owner. That means he is the grantee in the sense he owns the property. In reality, the trustee has no power or authority over the property as long as the grantor makes the mortgage payments on time. When the mortgage becomes delinquent the trustee has the power of sale, which means a foreclosure sale at public auction.
The beneficiary of a deed of trust is another name for the lender. It is the grantee in the sense the beneficiary holds a lien on the property. The beneficiary possesses the right to change the trustee by filing a substitution of trustee form. The beneficiary can also transfer the deed of trust for compensation to another party. None of that matters as long as the grantor lives up to his end of the bargain. That involves timely payments to the beneficiary.
In a normal deed the only way a grantor gets the property back is by another deed from the grantee. That does not occur with a deed of trust. When the mortgage is paid in full, the deed of trust is cancelled. The trustee has the power to cancel if authorized by the lender. The lender also possess the power of cancellation. After a deed of trust is paid and cancelled, there is no document transferring the property from the trustee to the grantor. The trustee's authority vanishes upon cancellation.
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- Cornell University Law School Legal Information Institute: Deed of Trust
- Carmel & Naccasha LLP: Managing Multiple Beneficiaries on Trust Deeds
- Forsyth County North Carolina Register of Deeds: Cancellation of Deeds of Trust
- County of Santa Clara Office of the Clerk Recorder: Definitions of Commonly Recorded Documents Deed of Trust/Mortgage
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