馃攳
Trust Deed (Deed of Trust) | Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
[0]
hey everyone my name is paul vachesky
[2]
and welcome to the real estate classroom
[4]
youtube channel before we get started
[6]
please do me a favor give this video a
[7]
thumbs up hit that red subscribe button
[9]
click on the notification bell
[11]
in today's video we're going to discuss
[13]
what's called a deed of trust or
[15]
sometimes called a trust deed depending
[19]
on what part of the country you're
[21]
operating in
[22]
now i did a previous video on excuse me
[25]
the
[26]
promissory note and a mortgage
[30]
uh promissory note the mortgage and
[32]
adida trust
[33]
all kind of go hand in hand together so
[35]
if you have not
[37]
uh if you have not watched that video
[39]
yet i highly recommend that you go watch
[42]
that video first then come back to this
[44]
one
[45]
that will make this video make so much
[48]
more sense i'm going to put a link right
[49]
up here in the upper right hand corner
[51]
of your screen
[53]
to that video so that's my
[54]
recommendation all right so are you
[56]
ready let's talk about
[58]
deeds of trust in this video
[61]
[Music]
[68]
so what is a deed of trust well like the
[70]
mortgage it is establishing
[72]
the collateral if you will for
[75]
the loan that the borrower is getting
[78]
from the bank
[79]
and depending on the state that the
[81]
property is located in
[83]
we're going to use a mortgage which we
[84]
talked about in that previous video
[86]
or we're going to use a d to trust all
[89]
right so in this video we're going to
[92]
discuss some key real estate terms that
[94]
you have to know
[95]
deed of trust trustee trust or
[99]
beneficiary equitable title
[103]
legal title deed of reconveyance
[106]
and non-judicial foreclosure those are
[109]
the key terms that we're going to
[111]
discuss in this video
[112]
so let's start with the definition of a
[115]
deed of trust and i have it on your
[117]
screen here
[118]
adida trust is an agreement it's an
[120]
actual document
[122]
between the lender and the borrower to
[124]
give the property to
[125]
a third party a neutral third party
[129]
who will serve as the trustee now the
[132]
borrower is the trustor
[134]
that's their legal name and the
[136]
disinterested third party
[138]
is called the trustee the trustee holds
[142]
title remember title and real estate is
[145]
ownership so the trustee holds
[147]
ownership to the property they actually
[150]
hold legal title to the property until
[154]
the borrower pays the debt off
[156]
during the period of repayment
[159]
the borrower has what's known as
[162]
equitable title and and the
[166]
trustee holds legal title
[170]
all right important distinction to
[172]
remember
[175]
when you're studying for your licensing
[176]
exam here's the way i like to explain it
[179]
if someone has legal title they have the
[181]
right to sell it or the right to
[183]
transfer title to somebody else
[185]
equitable title
[186]
simply means you have a future ownership
[188]
interest and you currently have the
[190]
right to
[191]
possess and the right to use adida trust
[195]
is a three-party relationship so
[199]
if you if you watch the the mortgage a
[202]
promissory note and mortgage video we
[204]
said the mortgage is a two-party
[206]
relationship where you have the
[207]
mortgagor who's the borrower
[209]
and the mortgagee who's the lender
[213]
when we're using adida trust it's a
[215]
three-party system
[217]
or a three-party relationship where we
[219]
have the trustor
[221]
who's the owner or borrower
[224]
we have the trustee who is the neutral
[227]
disinterested third party
[229]
typically they're attorneys or escrow
[231]
companies
[232]
and then we have the beneficiary who is
[234]
the lender
[236]
so what is the process here um well step
[239]
number one
[240]
the trustor who is the owner or the
[243]
borrower
[244]
uh they have a they have legal title in
[247]
that property
[248]
so they're going to transfer that legal
[250]
title literally using the deed to trust
[254]
to a trustee which is a disinterested
[257]
third party so they're actually
[259]
transferring ownership to that trustee
[264]
all right step two is upon transfer of
[267]
that
[268]
title remember the trustee that
[270]
disinterested third
[272]
party uh they actually now hold legal
[275]
title
[276]
and the trustor who is the borrower
[280]
they now have what's called equitable
[282]
title and remember
[284]
legal title gives somebody the right to
[286]
transfer title
[288]
and the equitable title allows
[291]
for use and occupy and possession all
[294]
right
[294]
so step two upon transfer of title the
[297]
trustee now has
[298]
legal title and the trust or has
[300]
equitable title
[301]
step three if the trust or
[304]
remember the trust or is the borrower if
[307]
the trustor
[308]
fulfills the terms of the agreement they
[310]
have paid off their
[311]
note uh they have no more payments then
[314]
the trustee is going to
[316]
reconvey ownership or title back to the
[320]
trust or
[321]
like it was in the very beginning and
[323]
they're going to use what's called a
[325]
deed of re-conveyance the deed of
[328]
reconveyance
[329]
will transfer or reconvey that ownership
[331]
back to the trust or
[333]
let's look at step four now if the trust
[336]
or who's the borrower
[338]
if they default on payments um
[341]
and a foreclosure has to happen here's
[343]
what happens
[344]
the beneficiary who is the bank that
[347]
borrowed the money
[349]
they're going to notify the trustee and
[351]
say listen
[353]
the the trustor has not made
[356]
the payments so please foreclose on the
[359]
property so the trustee who has
[361]
legal title to the property will then
[364]
use a process called a
[366]
non-judicial foreclosure we're going to
[369]
talk more about that in a minute
[371]
but that's if the trust trust or
[373]
defaults on payments
[376]
a lot of legal terms here but you just
[378]
have to know who they are
[380]
you have to know that the trustor is the
[383]
borrower or the owner of the property
[385]
you have to know the trustee is a
[386]
disinterested third party you have to
[388]
know
[389]
the beneficiary is the lender you just
[392]
have to know this process that i have
[394]
outlined on the screen
[395]
otherwise you really won't understand or
[397]
grasp the
[398]
trust the deed of trust process
[402]
all right so what's contained in that
[405]
deed of trust i did this for the
[407]
mortgage video where we pointed out what
[409]
kind of language and provisions and
[411]
clauses are included in that mortgage
[413]
well
[413]
the deed of trust is the same thing now
[415]
understand this
[416]
like the mortgage there's a promissory
[418]
note and then the mortgage the
[420]
promissory note is the promise to repay
[422]
a debt the mortgage is the collateral or
[424]
security for the loan in case of default
[429]
a trustee is kind of the same way where
[432]
the more the promissory note is a
[433]
promise to repay and the deed of trust
[435]
was the mechanism to
[437]
secure the collateral in case there's a
[440]
default now a promissory note
[442]
remember promissory note mortgage and
[444]
deed of trust are all
[445]
separate distinct individual instruments
[449]
but also like the mortgage in the
[451]
promissory note where they can be
[453]
combined into one we can do the same
[455]
thing here
[455]
many times that does happen well where
[457]
the adida trust and the promissory note
[459]
are combined into
[461]
one but they are technically two legally
[463]
distinct separate instruments
[466]
so what are we going to find in the deed
[467]
of trust we're going to find escrow
[469]
account
[470]
requirements and remember that escrow
[472]
account
[473]
we discussed this in a previous video
[475]
pays for the borrower's taxes
[477]
property taxes and insurance on behalf
[480]
of
[481]
the the borrower it'll have uh processes
[485]
if there
[486]
should be a default of payments how
[489]
payments
[489]
are applied number five
[493]
hazard insurance requirements number six
[496]
maintenance requirements
[498]
in fact a lot of people don't realize
[500]
that if as a borrower
[502]
if you aren't maintaining the property
[506]
the the the lender can actually go in
[509]
and
[509]
and go through the process of
[511]
foreclosure to secure that
[514]
that property because it's not being
[515]
maintained it's losing its value
[517]
number seven mortgage insurance
[519]
requirements if any
[521]
number eight it describes what happens
[523]
if the property is condemned
[525]
by a governmental body
[530]
number nine acceleration remedies and
[533]
then number 10
[534]
it had typically has an alienation or
[536]
what we call a do
[538]
on sale clause and it's going to have a
[540]
whole bunch of other stuff but these are
[542]
the main things
[543]
that i think you should know for
[544]
illustrative purposes now the deed of
[546]
trust
[547]
versus a mortgage now i assume you've
[550]
already watched the mortgage video
[551]
so some this will make sense if you have
[554]
so why do we have a d to trust or why
[556]
you know originally it was all just
[557]
mortgages and promissory notes um
[561]
and then many states in most states
[562]
actually today we use the deed of trust
[564]
process
[565]
why is that because adida trust for
[568]
the lender on the lender's behalf is
[571]
much more efficient
[572]
and much much easier to foreclose upon
[575]
default of the borrower's payments
[579]
for example in a deed of trust state and
[582]
this is varying a little bit
[584]
but in additive trust state foreclosure
[587]
can happen within
[588]
a couple of months in a mortgage state
[591]
it could literally take
[592]
years for the lender to get the property
[596]
back through the foreclosure process
[598]
so from the lender's point of view it's
[600]
much more
[601]
efficient and beneficial to use a deed
[604]
of trust
[605]
number two a mortgage as we talked about
[608]
is a two-party relationship
[610]
which has the mortgagee and the
[611]
mortgagor adida trust is a
[614]
three-party relationship trustor
[617]
trustee and the beneficiary number three
[620]
depends on the state where you're
[622]
located meaning some states are mortgage
[624]
states
[624]
and most states are actually the deed of
[626]
trust state
[628]
number four mortgage
[631]
the mortgagor who is the borrower
[634]
actually retains legal title
[637]
and the lender who's the mortgagee
[640]
places a lien against the property
[643]
in a deed of trust the trustor
[648]
receives equitable title now remember
[651]
the trust door
[652]
is the borrower they have what's called
[654]
equitable title
[656]
the right to use and possess and they
[658]
have a future ownership interest
[660]
and the trustee who is the neutral third
[663]
party
[664]
uh holds the legal title that that's the
[668]
difference here
[670]
and then number five the mortgage uh
[673]
when we're talking about a mortgage a
[674]
mortgage if the lender has to foreclose
[677]
must use what's called a judicial
[679]
foreclosure process
[680]
where they actually have to go to court
[683]
adida trust
[684]
it's non-judicial foreclosure they don't
[686]
have to go to court
[688]
the trustee upon notification of the
[691]
beneficiary which is the bank
[693]
of default they go to what's called a
[696]
trust
[697]
sale maybe or a trustee sale i'm sorry
[700]
with two e's trusty sale
[702]
and maybe you've heard about um homes
[704]
being
[705]
sold at the courtroom stairs that's
[708]
literally what happens and it's called a
[710]
trustee sale
[712]
now before we go very important to
[714]
remember that you
[716]
understand these three concepts the
[719]
promissory note the mortgage
[721]
and the deed of trust you have to
[724]
understand the processes you have to
[726]
understand
[727]
who's legally called what because the
[730]
mortgage
[731]
the borrower and the lender have
[732]
different terms the deed of trust
[735]
those parties are called something
[737]
different but you have to know them for
[739]
the real estate exam because i guarantee
[741]
you
[742]
you're going to have some of these on
[744]
your exam and you have to know them
[746]
so all right if you're going to continue
[748]
studying and you have
[749]
not watched the promissory note mortgage
[752]
uh video yet to my right i'll have the
[755]
link for you
[756]
and if you have not if you have not
[758]
subscribed please do so i'm trying to
[759]
grow the channel click the little circle
[761]
and always we love comments
[762]
we love questions put them down in the
[764]
comments section of the channel
[766]
i'll see you in the next video
Most Recent Videos:
You can go back to the homepage right here: Homepage