What are trust deeds? In most of the country, it usually refers to an instrument that is recorded against a property to determine the owner of the property. If you have a trust deed in Illinois, for example, it is usually an indication that the seller who sold the property was a beneficiary of a land trust or living trust. Trust deeds are an instrument of conveyance in most of the country.   

In California, a trust deed is another name for a mortgage. It is not an instrument of conveyance but a recorded instrument that holds the property in as collateral. It is more commonly referred to as a deed of trust and is most exclusive to this state.   

A mortgage is a loan that a borrower receives in order to purchase a house. Most people cannot afford to pay cash for a home and need a mortgage. Years ago, you needed at least 50 percent down to get a mortgage. Today, it is much easier as you can get some mortgages with less than 5 percent down. There are also creative ways to finance your house using no money down.   

In California, a mortgage is called a deed of trust. The borrower and the lender enter into an agreement that is recorded against the property. The agreement between the two stipulates how much is being borrowed, when it must be paid back, how it must be paid back and the interest rate. There are other variables regarding the deed of trust, but these are the main points of the agreement.   

The instrument is recorded against the property. This way, the borrower cannot say that he owns the property outright. The recorded instrument is a matter of public record, along with the deed giving the buyer title to the property.   

When the buyer sells the property, he has to pay off the trust deed or deed of trust. He can do this with the proceeds of the sale of the property. He will most likely have to give the new buyer of the property a home that is unencumbered by any liens. A trust deed is a lien upon the property as it pretty much states that the owner owes money to someone.   

When the trust deed is paid off, either from the sale of the property or the good fortune of the borrower, a release is issued from the lender. The release is then recorded against the property and becomes a matter of record.   

Before signing a trust deed, many people retain an attorney to go over the document and explain to them just what they are signing. A trust deed is a legally binding, recorded document that has many recourses. If you are not sure what you are signing, you should make sure that you speak to an attorney.