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 used to create a security interest in real property as collateral for a loan. A deed of trust is similar to a mortgage, but a deed of trust grants legal title to the trustee while the property owner retains equitable title to the property. 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 “grantor” or “obligor.” In addition to these roles, there also must be a “trustee” who is usually appointed by the beneficiary. This can be an escrow company, an attorney, or another individual.
What Are the Differences Between Mortgages and a Deed of Trust?
While mortgages and deeds of trust give a lender similar secured interests in property, there are some key differences between the two. First, deeds of trust involve three parties, while mortgages are a two-party transaction. In a mortgage, the grantor (or borrower) grants a lien on the secured property to the lender. With a deed of trust, the borrower grants legal title to the appointed trustee, while only retaining equitable ownership of the property. Generally, if the borrower is making the required payments on time and complying with the other terms of the deed of trust, the borrower will not experience the difference between a deed of trust and a mortgage. However, the deed of trust trustee has ample authority and responsibility in relation to the secured property. Most deeds of trust grant the trustee power of foreclosure and allow him or her to sell the property if the loan should go into default. Foreclosure under a mortgage generally requires the lender to go through a judicial process before the lender has the ability to sell the property. However, the mortgage foreclosure process can be very unique in every state. Whether you will be a party to a deed of trust or a mortgage, it is important to understand your rights of foreclosure and the other terms under the legal document you are signing. Bennett Weston attorneys are licensed and knowledgeable in multiple states, and should you consider financing property in Texas or outside of Texas, the attorneys at Bennett Weston would be happy to help.
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.
If you are considering financing the purchase of real property or refinancing, or you’re having a dispute regarding a current 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 or tell us more about your case using the form below!
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