Deed of Trust
Definition - What does Deed of Trust mean?
A deed of trust is a legally binding written agreement in which a borrower of money agrees to offer land to a thirty party (a trustee), who acts on behalf of the lender. The trustee holds the land until the borrower repays the loan to the seller. If the borrower pays the loan on time, then they retain the possession of the land. If they fail to make the payments, then the trustee sells the property and repays the loan with the proceeds. If there is money left after that, then it goes back to the borrower.
Justipedia explains Deed of Trust
Essentially, a deed of trust is when a borrower uses a piece of land as collateral when they take out a loan. The trustee is simply the party who manages the collateral until the issue is resolved. The borrower only loses the property if they fail to repay the loan on time. However, if they manage to repay the loan by the due date, then they get to keep the property. It is a way to reduce the lender's risk in giving the loan. This creates incentive for the lender to give the loan