A California deed of trust is very similar to a mortgage and quite different from other types of deeds used in the state of California. It’s not used to transfer ownership from one party to another, but rather to hold the property as collateral until the loan is paid off.
The deed of trust California form specifies that if the borrower, or landowner, doesn’t make the payments for the loan, the trustee is entitled to sell the property to pay the rest of the loan off. It’s written proof that until the last payment is made, the lender has an interest in that particular real estate property.
What Is a Deed of Trust in California?
The California deed of trust form is used when someone needs to get a loan and is the equivalent of a mortgage. Unlike the other deeds, the California deed of trust doesn’t transfer the property to a new owner; instead, the piece of real estate is held as security against the loan until the borrower makes all the payments.
Three parties are involved in California deeds of trust: the beneficiary, the borrower, and the trustee. The beneficiary is the lender, a person, or a company that grants the loan. The borrower is the owner of the property, which is used as collateral.
The trustee is a third party, usually a title or trust company, that holds the piece of real estate as collateral; if the borrower doesn’t pay back the loan, the trustee is entitled to sell the property and use the money to reimburse the beneficiary.
When and Why is a Deed of Trust Needed in California?
The state of California allows the use of a deed of trust instead of a mortgage, and as a result, the deed of trust form California is used quite frequently. When a person needs to get a loan, even if it is from a bank or other financing source, they can use a piece of real estate they own as a guarantee against the loan.
The fact is the deed of trust California is beneficial both for the borrower and the lender. The borrower knows that an impartial third party keeps their property as collateral and that they will have no problem getting it back once the loan is paid.
The beneficiary, on the other hand, has the certainty of receiving the money quickly in case the borrower cannot pay the installments. The advantage is that the trustee can sell the property and pay the lender without any court involvement. The California deed of trust gives them the right to sell and set the records straight.
The deed of trust form offers a simple and clear way of accessing loans if you own a piece of real estate that you can use as collateral, and at the same time of clearing the debt without the complications of a court trial.
Since a third party is involved, everything is clear and impartial. For all aspects to be crystal clear, the borrower also has to issue a promissory note and file it along with the deed of trust.
What Information Is Included in the California Deed of Trust Form?
The California deed of trust form is a very important document, given that it is written proof of how a loan and the collateral used to get it will be handled. Many essential aspects must be kept in mind when writing a deed of trust form.
It’s a document that helps the parties avoid a court trial, so all the information must be accurate and complete. It’s best to write it using the template we offer at CocoSign, but either way, these are the pieces of information that are mandatory in any California deed of trust:
- At the top part of the document, you must write the exact address where the deed must be sent after being recorded (that’s usually the address of the trustee); it’s a critical section, so make sure the address is valid
- The Assessor’s Parcel Number
- The effective date of the deed: the day, month, and year when the three parties enter the deed
- The identifying information of the debtor; that’s the person or business that owns the property and uses it as collateral to get a loan
- Trustor name
- The identifying information of the trustee, the company that will have authority over the real estate property until the loan is paid
- Mention what kind of entity the trustee is in the eyes of the government and the public
- The identifying information of the beneficiary, including the legal definition
- The location of the property used as collateral
- The legal description of the property
- Mention the sum of the loan
- Signatures of all parties involved
- A notary public handles the last part of the document and uses their state seal
Loans are easily contracted in the state of California using a deed of trust form that makes sure any future problem can be settled without court involvement. Since there are three parties involved and quite a lot of crucial information, the California deed of trust must be issued with a lot of care.
The best way to write it is with an efficient template, like the one we provide at CocoSign. You will find our deed of trust form, as well as all the other templates we offer, are user friendly and extremely useful.
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