In real estate, what is the role of a third-party trustee in a deed of trust?

The role of a third-party trustee in a deed of trust is to hold the legal title to the property as a security for the loan. This arrangement involves three parties: the borrower (trustor), the lender (beneficiary), and the trustee. The trustee acts as an independent third party who holds the title until the loan is repaid. If the borrower defaults on the loan, the trustee has the authority to initiate the foreclosure process, thereby allowing the lender to recover the investment.

By holding title, the trustee protects the interests of all parties involved, ensuring that the lender has a claim to the property in the event of default while also safeguarding the borrower's rights until the loan obligation is fulfilled. This function is essential in real estate transactions involving financing, as it provides a clear legal framework for securing loans against real property.