Which deed is used in conveying title for trustee as security for a loan?

• A. Deed of Trust
• B. Deed in Trust
• C. Bargain & Sale Deed
• D. Quitclaim Deed

Answer: (A)

Trust deed is the instrument used to secure a loan by placing title in the hands of a trustee. In this arrangement the borrower (the trustor) conveys legal title to a trustee who holds it as security for the lender (the beneficiary). The borrower keeps equitable title and continues to use and occupy the property, while the lender’s security interest is the lien created by the trust deed. If the loan goes into default, the trustee can sell the property under the power of sale without going through a full court foreclosure in many jurisdictions, making the process faster and more efficient than a traditional mortgage. That efficiency and the clear security structure is why a deed of trust is used to convey title to a trustee for security purposes.

Bargain and sale deeds and quitclaim deeds don’t create this kind of security arrangement. A bargain and sale deed transfers title with few or no warranties, and a quitclaim deed simply conveys whatever interest the grantor has, with no assurance of a security interest. The term “deed in trust” appears in some places but the standard, widely used form for this security arrangement is the deed of trust.