Deed of Trust
A Deed of Trust is a legal document, filed at the register of deeds office, that secures the lenders interest in the borrowers property in case of default by the borrower.
In most states, the Deed of Trust transfer "legal" ownership in the property to a Trustee. The Trustee then holds the property "in trust" for the benefit of both the lender and borrower. As long as the borrower pays his mortgage according to the terms of the Note, the Trustee takes no action. If the borrower breaches the terms of the Note, then the Trustee (or his substitute) will petition the court to have the property transferred to the lender.
What you need to Know
The document itself tends to be rather lengthy. It will contain several provisions pertaining to the procedures used during the foreclosure, fees, restriction on use of the property, among others.
For purposes of having this document signed an notarized, you should know:
1) The document identifies the parties;
2) It states the amount of the debt and it's term (years);
3) It identifies the property to be secured (legal description);
4) It contains foreclosure procedures and costs; and
5) It provides restrictions for use of the property (ie. you cannot use it for store hazardous material on the property, must be used for family residence etc.)
I would avoid any legal discussion with your client as to the terms of the document. That is, unless you are an attorney.
I would stick to the basics. Give an overview of what the client is signing, but do not get bogged down in the details. Leave that to the lender or attorneys.
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