My husband and I bought a home in Reston a few weeks ago. At settlement we signed a lengthy document called a Deed of Trust. The settlement agent said that he was not allowed to explain the meaning of the document, but that if we made our mortgage payments we had nothing to worry about. We also received a copy of a Deed which the sellers signed.
I was reading copies of our settlement papers last evening and it seems to me that the sellers transferred ownership of the property to us, and we transferred ownership to Trustees.
Can you explain the difference between a Deed and a Deed of Trust, and who or what, are trustees? And why was the settlement agent not allowed to explain the Deed of Trust?
When you borrow money to buy real estate, the lender secures repayment of the loan by placing a Deed of Trust on the property. The Deed which you received from the Sellers conveyed full legal and equitable title to the property to you. The Deed of Trust which you signed conveyed legal title to the Trustees selected by your lender. The Trustees are empowered to institute foreclosure against the property if you default in repaying the loan. That means that they may sell the property to payoff your loan, after proper notice and publication as specified in the Deed of Trust and as required by statute.
The settlement agent was probably not a lawyer, or if he was a lawyer, he was working for a title or settlement company. A lawyer engaged in the private practice of law retained by you to handle the settlement would have been able to explain the document to you.
H. Kent Kidwell is a partner at the law firm of Kidwell, Kent & Curran in Fairfax City and president of Old Dominion Title Services, Inc. Readers may write to him at Woodson Square, 9695 C Main Street, Fairfax, Virginia 22031.