Deed of Trust – Glossary | RJP Estate Planning

Property & Real Estate

A three-party security instrument that allows a trustee to sell property at auction if the borrower defaults, without requiring court involvement.

A deed of trust is the standard security instrument for real estate loans in Arizona. A traditional mortgage involves only a borrower and a lender. A deed of trust adds a third party: the trustee. The trustee holds legal title to the property as security for the loan.

How It Works

When you borrow money to buy property in Arizona, you (the trustor) transfer legal title to a trustee. The trustee holds it for the benefit of the lender (the beneficiary). You keep possession and use of the property. When you pay off the loan, the trustee releases title back to you through a deed of reconveyance.

What Happens in Default

If you stop making payments, the trustee can sell the property at a public auction called a trustee sale. This process is governed by A.R.S. 33-807 through 33-811. The trustee must record a notice of sale and wait at least 91 days. Strict notice rules must be followed before selling. After the sale, the buyer receives a trustee's deed. It conveys title free of junior liens. The borrower has no right of redemption.