A Technical but Important Distinction
A deed of trust looks like a property transfer document. It involves real estate, it gets recorded, and it includes legal descriptions of the property. But under the law, it is not classified as a "deed" or a "contract" in the way those terms are used elsewhere in the statutes. This distinction affects how title companies, the county recorder's office, and taxing authorities treat these instruments.
A deed of trust shall not be considered a deed or contract under the provisions of title 42, chapter 10, article 2 or a contract for conveyance of real property under the provisions of title 33, chapter 6, article 3.
A.R.S. § 33-821Why This Classification Matters
Title 42 covers taxation. Chapter 10 deals with documentary transfer taxes and related provisions. By excluding deeds of trust from that definition, the law ensures that creating or releasing a deed of trust does not trigger transfer tax obligations. The borrower is not "selling" property to the trustee. The trustee holds bare legal title solely as a security device. This is fundamentally different from a traditional mortgage or other real estate transactions where ownership actually changes hands.
Similarly, Title 33, Chapter 6, Article 3 addresses contracts for the conveyance of real property. That includes equitable conversion and other rules that apply when someone agrees to sell or transfer land. A deed of trust is not a contract to convey property. It is a security instrument. By making this explicit, the statute prevents confusion about the borrower's rights and obligations.
How This Affects Families
For families managing Arizona real estate through an estate plan, this distinction reinforces that a deed of trust on property held in a living trust does not change the nature of ownership. The property remains in the trust. The deed of trust simply secures the underlying loan. When title companies process these documents, they treat them as security instruments, not as transfers of real property.
This classification also matters during foreclosure proceedings. Because a deed of trust is not a contract for sale under real estate law, the rules governing real estate transactions and property conveyances do not apply to it. The deed of trust follows its own set of rules under Chapter 6.1 of Title 33. Understanding this distinction helps families and their advisors navigate borrower default situations without applying the wrong set of legal rules.