In a deed of trust, who is referred to as the beneficiary?

In a deed of trust, the beneficiary refers to the lender. This designation arises from the structure and purpose of the deed of trust, which is a legal instrument used in some states to secure a loan against real property. In this arrangement, the borrower, also known as the trustor, gives the lender (the beneficiary) a security interest in the property.

The relationship is set up so that if the borrower defaults on the loan, the beneficiary can instruct the trustee to initiate the process of foreclosure, thereby reclaiming the loaned amount through the sale of the property. The trustee, on the other hand, serves as a neutral third party who holds the legal title to the property in trust for the beneficiary until the loan is repaid in full or the property is otherwise disposed of through foreclosure. This structure helps to streamline the process of securing a loan, avoiding the need for a lengthy judicial foreclosure, and clarifies the roles and responsibilities of each party involved.

In this system, the real estate agent is not involved in the lending process and does not hold a financial interest in the property being financed, which distinguishes them from the parties laid out in the deed of trust.