While countless Texans have borrowed money from a lender to purchase real estate, many are unaware that Texas is a “deed of trust” state. A deed of trust is the legal device for affirming the delegated responsibilities of a property. Like a mortgage, a deed of trust is executed when someone gets a loan from a bank to finance the purchase of a property. The single asset of the trust is the purchased property. Though a deed of trust is similar to a mortgage, there are some differences that all real estate owners and potential buyers in Texas should be aware of. In order to have a better understanding of this legal agreement, review the following most common questions and answers about the deed of trust in Texas.
Who Can Be a Trustee?
In a deed of trust, the lending source, such as a bank, is the “beneficiary” and the borrower is what is known as the “obligor.” In addition to these roles, there also must be a “trustee” who is usually appointed by the beneficiary. This is usually an escrow company. Even though a trustee can be any person who is willing to take on the responsibilities of the role, institutional lenders typically only choose companies that specialize in trustee services.
What Are the Powers and Duties of the Trustee?
Being a trustee of a deed of trust comes with ample authority and responsibility. One of the main duties of the trustee is to see that the borrower’s monthly payments are made as required, but the trustee is also given a large amount of power over the property as a whole. For the most part, all deeds of trust grant the trustee power of foreclosure and allow him or her to sell the properly if the loan should go into default. One of the principal differences is that the trustee can sell a property without having to go through the judicial process of foreclosure.
What Are the Differences Between Mortgages and a Deed of Trust?
While being similar to a deed of trust, mortgages are a two-way transaction. A mortgage is used when a lender obtains a lien on the property being mortgaged in exchange for a loan. Unlike a deed of trust, a mortgage is a two-party transaction and there is no third-party trustee. Mortgages also require judicial foreclosure, which means the lender has to file a lawsuit and go through the courts in order to foreclose on the property.
Can a Trustee Be Fired?
Deeds of trust in Texas usually contain clauses in case the trustee does not fulfill his or her obligations. Under these circumstances, the lender can select a new trustee. If everything goes smoothly, the powers and duties of trustee expire when a loan is fully paid off.
Sometimes disputes occur between the parties in a real estate transaction. If you are in a dispute involving a deed of trust, the real estate litigation attorneys at Bennett, Weston, LaJone, and Turner, P.C. can provide assistance. Contact us at (214) 691-1776.