A deed of trust is a document that records a lender's lien on a property as security towards a loan.

Similar to a mortgage, a deed of trust (aka a trust deed) spells out the lender's and borrower's responsibilities and covenants, and the process by which the lender may foreclose on the property if the borrower defaults on the loan; to be legally binding, it must usually be filed with the local (county/city) government courthouse.

The main legal difference between a deed of trust and a mortgage is that a mortgage is essentially a contract between two parties (the borrower and the lender) wherein the borrower retains full title to the property, and agrees to give that title to the lender if the borrower defaults on the loan; with a deed of trust, there are three parties–the borrower, the lender, and a trustee–and the deed of trust transfers title to the property from the borrower to the trustee, while allowing the borrower to retain “equitable title” in the property so that the borrower can live in and use the property as they see fit.

The practical difference that results is simple: with a mortgage, since a default involves a violation of a contract, a lender has to go to court in order to foreclose, which can be a long and drawn-out process; with a deed of trust, no court order is needed, making the foreclosure process much easier on lenders.

It is worth nothing that Virginia and DC are both “deed of trust” states, and Maryland uses both deeds of trust and mortgages, but mostly deeds of trust in the DC parts of the state–whenever anyone in the metro DC area refers to a mortgage, they are almost always actually referring to a loan secured by a deed of trust. As of the time of this writing, the breakdown of all states by use of deed of trust vs. mortgage is:

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