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.

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.

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.