What is a Trustor in Real Estate Lending and Property Rights?

I love explaining real estate concepts, and the role of a trustor is one that often creates confusion. Let's clear things up and make this easy to understand!

Trustor: A trustor is the property owner who borrows money and transfers their property rights to a trustee through a deed of trust. The trustor remains responsible for making loan payments and maintains the right to use the property until the loan is either paid off or defaulted upon.

Introduction to Trustors in Real Estate

Think of a trustor as the star player in a carefully choreographed real estate transaction. You might be a trustor right now and not even know it! If you've borrowed money to buy property in certain states, you're likely a trustor.

The magic happens through a three-party relationship:

• The trustor (that's you, the borrower)

• The trustee (who holds the legal title)

• The beneficiary (your lender)

Role and Responsibilities of a Trustor

Being a trustor comes with specific duties. Your main responsibilities include:

• Making your monthly loan payments on time

• Keeping your property in good condition

• Staying current on property taxes

• Maintaining proper insurance coverage

But it's not all about obligations - you get significant rights too! You can live in the property, rent it out, or sell it (though the deed of trust stays with the property until the loan is paid off).

Deed of Trust Dynamics

A deed of trust works differently from a mortgage. While mortgages involve two parties, deeds of trust bring three to the table. This affects everything from paperwork to foreclosure processes.

The transfer of property rights might sound scary, but don't worry - you're still the owner in practical terms. You keep what's called "equitable title," which means you get to use the property as you see fit. Once you pay off the loan, full legal title comes back to you automatically.

Common Situations Involving Trustors

You'll find trustors in various scenarios:

• First-time home buyers

• Real estate investors purchasing rental properties

• Business owners buying commercial spaces

If financial troubles pop up, trustors have options. Missing payments doesn't immediately mean losing your property. You might qualify for loan modifications or other workout plans.

Protecting Trustor Interests

Your rights as a trustor include:

• The right to correct a default (right of redemption)

• The right to receive proper notices about your loan

• Protection through legal due process

Smart trustors keep excellent records, maintain open communication with their lender, and don't hesitate to seek legal advice when needed.

Common Questions About Trustors

• Q: Can I sell my property as a trustor? Yes! You can sell, but the loan must be paid off during the sale process.

• Q: What happens if a trustor passes away? The property typically passes to heirs, but the deed of trust remains in effect.

• Q: Can I refinance as a trustor? Absolutely! Many trustors refinance to get better terms or tap into equity.

• Q: How am I different from a mortgagor? The main difference is the number of parties involved in your loan agreement.

Working with Real Estate Professionals

Navigating property ownership requires solid guidance from professionals who understand the nuances of real estate transactions. Bellhaven Real Estate specializes in helping property owners make informed decisions about their real estate investments.

Ready to explore property ownership with confidence? Contact Bellhaven Real Estate for expert guidance in your real estate journey.