As with any legal document, it is important to ensure this information is accurate before signing a deed of trust at closing. The promissory note is held by the lender until the loan is paid in full, and generally is not recorded with the county recorder or registrar of titles (sometimes also referred to as the county clerk, register of deeds, or land registry) whereas a deed of trust is recorded.Ī deed of trust should include key information about the transaction.
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The promissory note includes the interest rate, the payment amounts and terms, and the buyer's promise to pay the lender the amount borrowed plus interest. The deed of trust is what secures the promissory note. The deed of trust is the security for the amount loaned to finance the real estate purchase, and is secured by the underlying piece of real estate. With a deed of trust, a third-party trustee holds the equitable title to the real property secured by the deed.ĭeeds of trust are used in conjunction with promissory notes. A mortgage agreement is between two parties: the borrower and the lender. While both a deed of trust and a mortgage provide a security interest for the lender in the property, the lender does not hold the security interest as is the case in a traditional mortgage. A mortgage agreement creates a lien against the real property, protecting the lender from a situation where the borrower defaults on their obligations. In some states, a deed of trust is used instead of a mortgage.
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