Deed of trust
A deed of trust is an instrument in which a property owner grants land to a trustee, in trust, to secure a debt. In Virginia it is recorded in the county or city where the property lies, and a later recorded release or certificate of satisfaction shows the debt paid.
Recorded behind the deed it usually follows
Pull the land records on a tract bought with a loan secured by the land, and two instruments usually sit close together in the book. The first is the deed that passed the land to the owner. The second, recorded behind it, is the deed of trust that put the same land up as security for the loan.
The two papers do opposite jobs. The deed moves title from a seller to a buyer. The deed of trust leaves the owner in place and grants the property to a trustee, who holds it in trust for the benefit of whoever is owed. The Code of Virginia supplies a model for it:
A deed of trust to secure debts or indemnify sureties may be in the following form, or to the same effect
Va. Code 55.1-316
In that form the grantor, the owner, grants a described property to the trustee in trust to secure described debts. A bank loan is the familiar case, but the same kind of instrument can secure a note a seller carries back when part of the price is paid over time, which is worked through in seller financing on land.
Recording is what gives the instrument its reach against outsiders: until it is recorded, Va. Code 55.1-407 makes it void as to purchasers for value without notice and lien creditors. That is why a title search finds it, and why a buyer's settlement cannot ignore it. What signing one commits an owner to, month to month, is the subject of what a deed of trust is and what it asks of an owner.
A trustee Virginia will accept, and a label for credit lines
Two details on the face of a Virginia deed of trust tell you something before you read a word of the loan terms.
The first is the trustee, whose name and street address the instrument must carry, and whom Va. Code 55.1-317 limits to a Virginia resident or an entity organized under Virginia or federal law, with an exception for property or debts that reach outside Virginia.
The second is a label. A credit line deed of trust secures money that may be advanced in the future, as with a line of credit drawn against land, and Va. Code 55.1-318 has it announce itself on its front page.
Neither detail tells you how a default is handled or what a trustee's sale involves. The full life of the instrument, from signing to release or sale, is laid out in deeds of trust explained. An installment arrangement, where the buyer pays the seller over time before the deed passes, is a different instrument again, defined under land contract.
Paid from the sale proceeds, then released of record
When land with a deed of trust on it is sold, paying off the secured loan is part of what settlement handles, and the paperwork that clears the record follows the payment.
Ordering loan payoffs is one of the settlement services named in Va. Code 55.1-1000. Once the debt is satisfied, the record is cleared by a second recorded paper: a trustee's deed of release under Va. Code 55.1-324, or a lien creditor's certificate of satisfaction under Va. Code 55.1-339. The original deed of trust stays in the book, and the release is what a later title search reads.
A payoff settles the debt. It does not decide which items stay with the property; that is a contract question, taken up in what conveys with a house in Virginia.
A deed of trust turned up in a title search on land you are selling or buying?
Send the county, the tax map number and the deed book and page the search turned up. Lowell will say where that instrument fits in the sale, and the terms themselves stay with an attorney. No cost, no obligation.
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Questions about this term
Does the maximum on a credit line deed of trust show what is owed?
No. Va. Code 55.1-318 has a credit line deed of trust state the maximum amount of principal to be secured at any one time, which is a ceiling written into the record rather than a balance. The amount owed on a given day is the lender's payoff figure, and on a sale, ordering loan payoffs is among the settlement services Va. Code 55.1-1000 lists.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 55.1-316: form of deed of trust Code of Virginia
- Va. Code 55.1-317: who may serve as trustee Code of Virginia
- Va. Code 55.1-318: credit line deeds of trust Code of Virginia
- Va. Code 55.1-324: deed of release on discharge Code of Virginia
- Va. Code 55.1-339: certificate of satisfaction and the 90-day forfeiture Code of Virginia
- Va. Code 55.1-407: instruments void as to purchasers and lien creditors until recorded Code of Virginia
- Va. Code 55.1-1000: definitions, including escrow, closing, or settlement services Code of Virginia