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Trust deed Vs. warranty deed

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FrankinAz

Junior Member
Arizona

I've put an offer in on a property. In a conversation with the selling real estate agent I asked which title company which led to her mentioning that it will be a trust deed. I'm a cash buyer so there are no lenders or bank involved. I questioned the trust deed but she said it's the same as a warranty deed which I questioned (in my mind) and did some research later that day.

From what I've read, a trust deed is for a trustee to hold legal ownership, acting as a third party to another or others who have a financial interest in the property. Reading in between the lines it looks like any of the other parties can, a year down the road, put a claim against the property. Am I correct on that assumption? The recorders office lists the last deed issued in 2014 as a warranty deed but in 2016 the property went into a trust with a third party who in 2019 recorded an intent to hold a trustee sale on the parcel.

I'll know tomorrow if they accepted my offer at which point they will require a deposit to open escrow. My offer is substantial but less than the asking price or property value by a fair amount. I want the property, 4 acres, steel framed home and a 3000 sq ft steel two story shop with an apartment, both less than 15 years old. Being a car nut it's a dream home but should I back off if they won't offer me a warranty deed?

Thank you in advance for your time .. Frank
 


Taxing Matters

Overtaxed Member
Being a car nut it's a dream home but should I back off if they won't offer me a warranty deed?

Thank you in advance for your time .. Frank
If it is a deed of trust, that's essentially like a mortgage. The seller wouldn't be involved in a deed of trust if it's a cash deal. You typically want a warranty deed. Note that you can have both a warranty deed and a deed of trust in the same deal. I suggest you get a lawyer to assist you to read the proposed purchase agreement and deed and make sure you are getting what you want.
 

adjusterjack

Senior Member
I want the property, 4 acres, steel framed home and a 3000 sq ft steel two story shop
As a fellow car nut I'm sitting here drooling over that. However, I downsized from a 1 acre, 5 car accessory garage to a 1/3 acre 3 car accessory garage so I won't be competing with you for that property. ;)

In a conversation with the selling real estate agent I asked which title company which led to her mentioning that it will be a trust deed.
She's clueless. No need to back off. Just verify everything she tells you.
 

LdiJ

Senior Member
As a fellow car nut I'm sitting here drooling over that. However, I downsized from a 1 acre, 5 car accessory garage to a 1/3 acre 3 car accessory garage so I won't be competing with you for that property. ;)



She's clueless. No need to back off. Just verify everything she tells you.
If she tries to insist that it not go through a title company, then you need to insist that it does. Hopefully she is just clueless but there may be something that a title company would uncover that the seller doesn't want you to know.
 

zddoodah

Active Member
In a conversation with the selling real estate agent I asked which title company which led to her mentioning that it will be a trust deed.
Huh? To what does "it" refer in this sentence?


I questioned the trust deed but she said it's the same as a warranty deed which I questioned (in my mind) and did some research later that day.
When you say you "questioned the trust deed," does that mean you ask the agent to explain what she was talking about?


From what I've read, a trust deed is for a trustee to hold legal ownership, acting as a third party to another or others who have a financial interest in the property. Reading in between the lines it looks like any of the other parties can, a year down the road, put a claim against the property. Am I correct on that assumption?
It would be foolish to try and analyze this situation without knowing how title to this property is held. Also, it is possible that the agent said "trustee's deed" instead of "trust deed"?

If you really want the property but aren't comfortable with what you've been told to this point, you should retain legal counsel to advise you.
 

FrankinAz

Junior Member
Huh? To what does "it" refer in this sentence?

The sale is going through an established title company. In telling me which title company she also mentioned the deed (it) would be a trust deed.


When you say you "questioned the trust deed," does that mean you ask the agent to explain what she was talking about?

To a point, yes. Her response was that the deed is the same as a warranty deed and the title company does the same research. In my mind, I questioned that the deeds are the same.

It would be foolish to try and analyze this situation without knowing how title to this property is held. Also, it is possible that the agent said "trustee's deed" instead of "trust deed"?

I just checked the online recorders office and it is listed as a deed of trust.

If you really want the property but aren't comfortable with what you've been told to this point, you should retain legal counsel to advise you.
Yes, I'll see what happens with the offer and if it's accepted I will insist on a warranty deed or seek council
 

FlyingRon

Senior Member
Frankly, it is your discretion to use a title company. I wouldn't even take a GIFT of property from my sainted aunt without a proper title search and an owner's title insurance policy to back that up. The title company will be able to perform all these things for you and also prepare the proper deed conveyances. In some states your attorney can arrange the same.

Further, while YOU generally make your own decisions in a cash sale that would have been mandated by your lender if you had a mortgage in play, some of what they would require (title search, title insurance, and a proper escrow of the funds pending the release of other liens and proper deed filing) are things you definitely should want to do.
 

zddoodah

Active Member
I just checked the online recorders office and it is listed as a deed of trust.
A deed of trust is a document that creates a lien against a piece of property. It is most commonly used by lenders who take liens against real property as security for payment of a loan. While there are some technical distinctions, it is, for all practical purposes, synonymous with the term "mortgage."

A deed of trust is not used to convey title to real property from one person/entity to another, so you're either misreading things or getting bad information from someone.

Your reference in your original post to a trustee's sale tells me that you're dealing with property that was foreclosed pursuant to a deed of trust since the last step in the foreclosure process is a trustee's sale. Yet another good reason to seek legal counsel.
 

FlyingRon

Senior Member
I'm not even sure that it being a foreclosure describes what the poster says here. A foreclosure sale, be it ordered by the court or done by the trustee, is almost certainly supposed to be an open (usually auction) thing, not a private negotiation with one buyer. What often happens is that the lender ends up bidding what they have in it at the auction. It's then handled as REO and sold just like any other property being marketted.
 

doucar

Junior Member
If the property was sold at a trustees sale, it may well be transferred by a trustee's deed or a deed from the trustee. Unfortunately for the OP it is not a general warranty deed, all the more reason he needs to get owners title insurance.
 

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