In a deed of trust, who holds the bare or naked title to the property during the loan term?

• A. The borrower
• B. The trustee
• C. The beneficiary
• D. The title company

Answer: (B)

In a deed of trust, the property is placed into a three-party arrangement where the trustee holds the legal title to the property as security for the loan. This is the “bare” or “naked” title, kept only to facilitate foreclosure if the borrower defaults. The borrower continues to have possession and uses the property and retains the equitable title, while the lender (the beneficiary) holds the right to be repaid and to enforce the loan. If the borrower fails to meet the loan terms, the trustee has the power to sell the property to satisfy the debt. The title company, meanwhile, provides title insurance but does not hold the title in trust.