Who Holds the Title in a Deed of Trust in Arizona?
Are you familiar with the deed of trust? In Arizona, this is the primary financial security document that’s used when purchasing a home. While the deed of trust is similar to the mortgage, there are some notable differences to be aware of.
If you’re not sure how to differentiate the two, don’t worry. Today, our legal experts are explaining it all. Keep reading to learn who holds the title in a deed of trust in Arizona and everything else you need to know about this important document.
What is a Deed of Trust?
A deed of trust is a real estate security document. It is similar to a mortgage in the sense that it secures the borrower’s repayment of a loan made by the lender. However, unlike a mortgage, a deed of trust appoints a third-party trustee to hold the property’s title.
What Does a Deed of Trust Include?
Because this is a legally binding document, a deed of trust must include the following:
Original loan amount
Description of the property used as collateral
Full names of all parties involved
The inception and maturity date of the loan
Any fees (including late fees)
Provision and requirements of the mortgage
Legal procedures in case of default (like the power of sale clauses)
Acceleration and alienation clauses (to explain the borrower’s delinquency)
Any riders with clauses (adjustable-rate mortgage or prepayment penalties)
Who is Involved in a Deed of Trust?
So, who holds the title in a deed of trust in Arizona? As we mentioned, there are three parties involved. Here is a brief overview of their roles:
Grantor – The grantor is the person borrowing money.
Trustee – The trustee is a third-party representative who holds the property’s legal title until the loan is fully paid.
Beneficiary – The beneficiary is the party lending money to the borrower.
How Does a Deed of Trust Work?
Wondering how the deed of trust process works? It’s fairly simple. The borrower gives the lender a promissory note in exchange for the deed of trust. (The promissory note states the borrower’s promise to pay back their debt.) Then, once the borrower pays their debt in full, the trustee relinquishes the deed to them.
Deed of Trust vs. Mortgage
While they serve a similar purpose, deeds of trust and mortgages are not synonymous. Here are the key differences to keep in mind:
Foreclosure type – A deed of trust can undergo nonjudicial foreclosure, while mortgages must go through the courts.
Length of the foreclosure process – Mortgages take significantly more time and money to foreclose.
Involved parties – Deeds of trust require three parties (the lender, borrower, and trustee), while mortgages only have two (the lender and borrower).
Top Estate Planning Attorneys in Phoenix, AZ
If you came here to find out who holds the title in a deed of trust in Arizona, we hope that today’s blog post cleared things up. Navigating a deed of trust can be tricky, but working with a skilled estate planning attorney can help to streamline the process.
As one of the leading estate planning and probate law firms in Arizona and California, we would love to help. Contact our team today for a free legal consultation.
