Trust Deed Definition

The most common instrument of financing real estate purchases in California and some other states (most states use mortgages). The trust deed transfers the title to the property to a trustee -- often a title company -- who holds it as security for a loan. When the loan is paid off, the title is transferred (reconveyed) to the borrower. The trustee will not become involved in the arrangement unless the borrower defaults on the loan. At that point, the trustee can generally sell the property in a nonjudicial foreclosure and pay the lender from the proceeds.