What is the primary purpose of a deed of trust in real estate transactions?

The primary purpose of a deed of trust in real estate transactions is to secure a loan with the property as collateral. This legal document involves three parties: the borrower (trustor), the lender (beneficiary), and the trusted third party (trustee). When a borrower takes out a mortgage or loan to purchase a property, the deed of trust is used to ensure that the lender has a claim to the property should the borrower default on the loan. By using the property as collateral, the lender has the right to take possession of it through a process known as foreclosure if the borrower fails to meet repayment obligations.

In contrast, transferring ownership of the property is typically achieved through a different legal document, such as a warranty deed or quitclaim deed. Establishing a legal claim against the property may involve various legal actions or documents but is not the primary function of a deed of trust. Outlining the conditions of sale relates more to purchase agreements rather than the security instrument that a deed of trust represents. Therefore, in a real estate context, the function of the deed of trust as a security instrument is critical for both the lender and the borrower.