A Deed of Trust involves at least three parties: the Grantor
(Borrower), Lender and Trustee. The Deed
of Trust transfers ownership of the property to the Trustee who holds the
property "in Trust" for the Grantor until the Lender is paid in
full. Should the Grantor fail to pay the
debt as required under the terms of the Deed of Trust, the Trustee may
foreclose on the property and distribute the loan proceeds to the Lender. Any excess amounts would belong to the
Grantor. Once a Borrower has satisfied the terms of the Deed of Trust, the Lender must execute a Deed of Release reconveying the property to Grantor.
Avoid Probate
Deed of Trust
A "Deed of Trust" is a legal instrument that
grants a Lender a Security Interest in real estate. The Security Interest creates a lien on the
property on behalf of the Lender and gives the Lender the right to foreclose on
the property should the Grantor of the Deed of Trust fail to satisfy the terms
of the loan. A Deed of Trust and a
Mortgage are similar in the rights they grant the Lender.
Deed of Release
A Deed of Release (also known as a Deed of Reconveyance) is a legal
instrument executed by a lien holder (Lender) to release a lien on real
property. A Lender holding a lien on real property in the form of a Mortgage or
Deed of Trust must execute a Deed of Release once the Lender has been paid in
full by the Grantor of the Deed of Trust. In most states, Lenders are required
to execute a Deed of Release within a certain time period after the loan is
paid off.
A Deed of Release reconveys all rights granted to a trustee
under a Deed of Trust back to the Grantor. Once the Grantor has repaid the Lender all
amounts owed under a Deed of Trust, the Deed of Release is executed to clear
the title from the Lender's lien.
How to Execute a Deed of Release or Reconveyance
Before the trustee of a Deed of Trust will execute a Deed of
Release, the promissory note held by the Lender must be paid in full. Once the Note is paid in full, the Lender is
required to execute a Deed of Release pursuant to the laws of the state where the
property is located. The Deed of Release
must:
(1) Contain a notation that the Promissory Note has been
paid in full;
(2) Be in a form acceptable to all parties involved;
(2) Contain signatures of all parties involved;
(3) Be recorded by the Lender in the official public records
in the county where the property is located;
The borrower should request a copy of the recorded Deed of
Release and keep the copy for his or her records.
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