Trust deeds – also referred to as deed of trust or trust agreements – are legally binding documents that transfer the legal ownership of property from the grantor (the person who is granting legal title) to a trustee. The transfer usually happens in exchange for money owed to the grantor or for some other advantage or service to the grantor. The trustee is typically a third party who holds the title or interest for the benefit of the grantor or some other beneficiary named in the trust deed.
Why Is a Trust Deed Needed?
Trust deeds are commonly used in real estate transactions to provide legal protection in the case of a loan default. When a grantor transfers legal title of their property to a trustee, the trustee holds the title until the loan is repaid in full. In the event that the borrower fails to make their payments, the trustee has the legal authority to foreclose on the property in order to pay off the debt.
Other common uses of a trust deed include: transferring ownership of land or property from one person to another; creating a trust fund for a minor or disabled person; creating a trust fund when family members are unable to oversee the assets; managing legacy gifts; creating contracts for services; investing in assets; and trusts established under the will of a testator.
How to Set Up a Trust Deed
Setting up a trust deed involves a number of documents, including the trust deed and the deed of assignment. Both documents must be signed by the grantor and the trustee and notarized. A grantor also needs to provide financial documentation proving that they have the ability and authority to transfer the legal title to the trustee. After these documents are signed and notarized, the grantor can transfer title of their property to the trustee and the trust deed is established.
Once a trust deed is set up, the grantor continues to have control over the property. They can enter into contracts, sign leases and buy or sell assets within the trust. In the event of a loan default, the trustee has the authority to foreclose on the property or take other legal action to collect the debt.
Conclusion
Trust deeds are an important legal document used in real estate transactions and other situations involving the transfer of legal title of a property from one person to another. They provide a layer of legal protection and assurance that the grantor’s rights are respected and the debt is collected in the event of a loan default. It is important to understand how trust deeds work and how to create one in order to protect your rights and interests.