Deeds of trust, explained.The loan, the trustee and the release.

The Code of Virginia sets out a form a deed of trust may follow, or match in effect, and its working clause is a conveyance. The owner, called the grantor, grants the property to a trustee, and the grant is made in trust to secure the debts the instrument describes.

the following property (here describe it): In trust to secure (here describe the debts to be secured or the sureties to be indemnified and insert covenants or any other provisions the parties may agree upon).

Va. Code 55.1-316, the statutory deed of trust form

Putting a trustee in the middle changes who holds what. The grant runs to the trustee, not to the lender, and it is made in trust, to secure the debt. The Code then gives the trustee defined duties if that debt goes unpaid. Va. Code 55.1-320 says every deed of trust is in the nature of a contract, construed according to its terms so far as they do not conflict with the law. Where the instrument is silent, the same section reads in a list of duties, rights and obligations, and several of them come up further down this page.

The one-paragraph meaning sits in the deed of trust glossary entry. If your question is the practical one, what the instrument recorded against your own land means for you as its owner, what a deed of trust means for an owner takes it up. When the person owed is the seller of the land rather than a bank, the arrangement has a name of its own, and seller financing on land covers it. This guide stays with the instrument itself, in the order its life runs.

Until a deed of trust is in the land records, the law treats it as void against two kinds of outsiders. Va. Code 55.1-407 lists deeds of trust alongside written contracts and deeds as instruments that are void as to purchasers for value without notice, and as to lien creditors, until they are recorded in the county or city where the property lies.

The same section adds that the mere possession of real estate is not, by itself, notice to a purchaser for value of the possessor's interest. The land records, not whoever happens to be on the ground, are where a buyer's title search looks, and that is why a recorded deed of trust surfaces when the land is sold again. What an owner faces when selling land that still carries a loan or unpaid taxes is taken up in selling land with a lien or back taxes.

Recording carries a tax of its own, separate from the taxes on the deed that conveyed the land. Its rate, and where that charge sits among the other closing costs of a sale, are the subject of who pays closing costs in Virginia.

Where the deed of trust does not provide otherwise, 55.1-320 sets out what a default puts in motion. On a default in paying the debt at maturity or the interest when due, or on a breach of a covenant, and at the request of any beneficiary, the trustee must declare the whole debt due at once, and may take possession of the property and sell it at auction.

Before that sale, Va. Code 55.1-321 requires written notice on top of the newspaper advertisement. The trustee or the party secured gives notice of the time, date and place of the proposed sale, by personal delivery or by mail, to:

• the present owner, at the last known address in the secured party's records;
• a subordinate lienholder holding a note secured by a deed of trust recorded, with its address, at least 75 days before the sale where the property is owner-occupied residential real estate, or at least 30 days before it for all other deeds of trust;
• an assignee of such a note, where the assignment and the assignee's address are recorded within the same 75-day or 30-day limits;
• certain condominium unit owners', property owners' and proprietary lessees' associations that have filed liens.

The statute also says what counts as sufficient compliance. Mailing a copy of the advertisement, or a notice with the same information, to the owner by certified or registered mail, and to the lienholders and associations by ordinary mail, no less than 60 days before the sale for a deed of trust on owner-occupied residential real estate, or 14 days before it for all other deeds of trust, is enough. Either way, the sale cannot go forward unless the trustee has proof that the notice was sent.

The ending everyone plans for is payment, and the Code provides two papers for it, one from the trustee and one from the lender.

The first is the trustee's. When all the debts and obligations the deed placed on the grantor are discharged other than by a trustee's sale, including any expenses incurred in preparing for a sale, Va. Code 55.1-324 has the trustee execute and deliver a deed of release on the grantor's request and at the grantor's own cost.

The second is the lien creditor's: a recordable certificate of satisfaction under Va. Code 55.1-339, owed after the debt is paid and, for a credit line deed of trust, only on the narrower terms the credit line section above describes. The deadline that statute sets, and the penalty for missing it, sit with the owner's practical questions about a deed of trust, taken up in the answer this guide pointed to at the start.

The settlement agent's place in that rule fits the Code's list of settlement services, which includes ordering loan checks and payoffs. The release is what a later title search finds, in the same land records as the instrument it answers. The deed that carries title in the first place is a different paper, followed from promise to recording in how a Virginia deed conveys land.