What is the difference between deed of trust and note?

What is the difference between deed of trust and note?

The Deed of Trust is the document that grants the lender the rights to take the property if the loan is not repaid. The Deed and the Deed of Trust need to be recorded in the recording office of the property’s county or town, while the Note is returned to the lender.

Does a deed of trust require a promissory note?

A deed of trust often requires a promissory note, but the promissory note is a specific document type. While a deed of trust describes the terms of debt as secured by a property, a promissory note acts as a promise that the borrower will pay the debt. A borrower signs the promissory note in favor of a lender.

Is a deed of trust legally binding?

A Declaration of Trust (also known as a Deed of Trust) is a legally binding document in which the legal owners of the property declare that they hold the property on trust for the beneficial owners and sets out the shares in which the beneficial interests are held.

Do you need a deed of trust with a note?

A Deed of Trust (or Trust Deed) which puts the loan on the Payor’s property must accompany the Note.(Read our Deeds of Trust page, for all the basic facts) The Note and Deed of Trust must have a “Trustee” – a disinterested third party who is called upon to issue the Reconveyance when the loan is paid in full.

How does a deed of trust work in real estate?

In real estate, a Deed transfers title of ownership and gives the new owner the rights to use the property. Click here to find out more about Deeds and the different types there are. The Note (or Promissory Note) is a contract where a party makes a promise to pay a sum of money to another party under specific terms.

What happens if you don’t pay a deed of trust?

The Note itself has virtually nothing to do with the property. If the borrower does not pay the agreed amount, the lender can sue “under the Note” and obtain remedies for breaching the contract. The Deed of Trust is the document that grants the lender the rights to take the property if the loan is not repaid.

What’s the difference between a note and a deed?

The Note is signed by the people who agree to pay the debt (the people that will be making the mortgage payments). The Deed and the Deed of Trust are signed by those who will own the property that is being mortgaged. Typically in a residential settlement, the signers of the Note and the Deed of Trust are the same, but this is not always the case.

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