Deed of Trust

A Deed of Trust is used when the legal title of a property is transferred to a 3rd party trustee who holds it as a security for a loan (debt) between a borrower and lender. The trustee holds the property for the lender who is named in the deed as the beneficiary.












This Deed of Trust (“Trust”) is dated the [ENTER DATE] (the “Effective Date”)


[Enter Name and Address of the person/persons who are the Borrowers] (the "Borrower"),


[Enter Name and Business Address of Trustee] ( the "Trustee"),


[Enter Name and Business Address of Lender] ( the "Lender"),


[Enter Name and Business Address of Gurantor] ( the "Guarantor"),


A. The Borrower is the legal owner of the property at [Enter Address of Property] in the county of [Enter County] and the state of California with a legal description of [Enter Legal Description from title documents] and with APN number [Enter APN number] (“the Property”).

B. The Lender has lent the Borrower an amount of $[Enter Amount of Loan] (the “Principal Amount”)

NOW THEREFORE in consideration of the Principal Amount lent to the Borrower by the Lender the receipt of which is hereby acknowledged by the Borrower and is evidenced by a Promissory Note dated [ENTER DATE] (the “Note”) the Borrower irrevocably grants, transfers and assigns to Trustee in trust, with power of sale, the Property.


TOGETHER WITH any easements and any structures, fittings or fixtures whether existing or added by alteration or improvement to the Property;

UNTIL such time as the the Borrower pays to the Lender on demand the Principal Amount, any interest before and after maturity and before and after default, and other fees pursuant to the Note and this Trust (the “Loan”);

AND the Borrower promises to pay the Loan to the Lender;


AND in order to set out their respective rights and obligations in respect of this Trust the parties do hereby agree as follows:




1.1 The Borrower agrees to pay the balance of the Loan by [Enter Date].

1.2 The Loan shall be repaid in monthly installments of $[ENTER AMOUNT] on [Enter day e.g. 1st/15th or last] day of each calendar month (“Periodic Payment”)

1.3 Payment shall be made to Lender and shall be deemed received by the Lender when made at the above noted Lender’s address or any other address provided to the Borrower to the Lender by notice from time to time.

1.4 All payments shall be applied in the following order of priority:

  1. Interest;

  2. the Principal Amount

  3. amounts due under clause 3.

However, if the Borrower is in default, then the Lender will apply any payments received during this period as the Lender chooses. If the Borrower is in default in payment of any amount including interest, interest will be payable on the interest and other arrears at the Interest Rate compounded monthly.

1.5 When not in default, the Borrower may prepay, without penalty, all or a portion of the Principal Amount and Interest earlier than it is due (i.e., make payment prior to the time that it is due). Partial prepayment will not postpone the due date of any subsequent payment or change the payment amount, unless the Lender otherwise agrees in writing. Rather, prepayments will first be applied to the interest calculated at the Interest Rate, and second to the Principal Amount.

1.6  The Borrower may be charged additional fees where the Borrower is in default under this Trust or for the protection of the Lender’s interest in this Trust. The absence of specific charges which may be levied against the Borrower idoes not preclude the Lender from charging making additional charges. However, the Lender shall not charge fees in their entirety which are prohibited by Applicable Law or at any rate prohibited by Applicable Law.

1.7  The Borrower agrees to pay all moneys payable pursuant to this Trust and all additional amounts secured by this Trust without abatement, set-off or counterclaim. Should the Borrower make any claim against the Lender either initially or by way of abatement, set-off or counterclaim, the Borrower agrees that any such claim will not reduce or postpone their obligation to make all payments as provided by this Trust.



2.1 The Borrower agrees to pay interest on the Principal Amount before and after maturity and before and after default at the rate of [Enter Percentage] % (the "Interest Rate").

2.1 The Interest Rate will be calculated from the Effective Date and shall accrue until the whole of the Principal Amount is paid.  



3.1 The Borrower will pay to Lender in addition to the Periodic Payment and at the same time and frequency an amount (the "Escrow Payment") to provide for payment for:

  1. any taxes, assessments, or other items which can take priority over this Trust as a lien or encumbrance on the Property;

  2. lease payments on the Property, where applicable;

  3. premiums for any and all insurance

(hereinafter referred to as the “Escrow Items”)


3.2 The Borrower shall provide the Lender with a true and accurate accounting of all amounts to be paid under this clause 3.

3.3 The Lender may waive the obligation of the Borrower to make the Escrow Payments. Where such waiver is provided the Borrower shall make payment for the Escrow Items directly to the relevant third party. Any such waiver shall be revocable at any time by the Lender.

3.4 Notwithstanding any waiver provided under clause 3.3 the Lender shall have the right to make payments to the relevant third parties in relation to the Escrow Items where the Borrower has failed to make the Escrow Payments or make such payments directly to the relevant third parties as the case may be. Where the Lender has made any such payments the Borrower shall repay the Lender for such amounts.

3.5 The Lender shall collect and hold any Escrow Payments in accordance with the Real Estate Settlement Procedures Act (the "RESPA"). The Lender will estimate the amount of the required Escrow Payments and will ensure that such Escrow Payments shall be applied in accordance with RESPA shall not exceed the maximum allowable amount under RESPA.

3.6 As prescribed under RESPA, where there is a surplus the Lender shall account to the Borrower for such surplus and shall if the surplus exceeds $50 make payment of the surplus to the Borrower within 30 days. Where there is a shortage or deficiency of amounts held in Escrow, the Lender must notify Borrower in writing and Borrower must pay to Lender the amount necessary to rectify such shortage.


4.1 Upon payment of all sums secured by this Trust, including the Principal Amount and Interest, and all other fees and charges under the Note and this Trust the Lender shall request the Trustee to execute a Deed of Reconveyance in favour of the Borrower and shall surrender this Trust and the Note to the Borrower.

4.2 The Trustee shall reconvey the Property without warranty.

4.3  The Lender may charge such person or persons a fee for reconveying the Property, but only if the fee is paid to a third party (such as the Trustee) for services rendered and the charging of the fee is permitted under Applicable Law.



5.1 The Trustee warrants, covenants and agrees that:

  1. it will preserve the title to the property

  2. it will preserve the integrity of this Trust

  3. it will not sell, transfer, assign, or otherwise dispose of all or part of the Property or any interest in the Property, without the Borrower's and Lender's prior written consent.

5.2 The Borrower warrants, covenants and agrees:

  1. it has good and marketable title to the Property;

  2. has all requisite authority to transfer the Property as contemplated by this Trust

  3. the Property is free from any and all encumbrances other than those contemplated under this Trust; and

  4. subject to clause 3 of this agreement, it will pay all relevant charges including but not limited to taxes, levies, and utilities in relation to the Property and comply with all other obligations that it may have to any third parties in relation to the Property.

5.3 Where the Borrower holds the Property under a Leasehold interest the Borrower in addition warrants, covenants and agrees:

  1. it has has a good, valid and subsisting lease (the "Lease") of the Property;

  2. all amounts due under the Lease and shall continue to be paid

  3. it is not otherwise in default under the Lease;

  4. it will continue to comply with all other obligations under the Lease; and

  5. it shall renew the Lease as necessary to comply with its obligations under this Trust but will not agree to any amendment of the Lease without the prior written consent of the both the Trustee and the Lender.


6.1 Borrower shall occupy, establish, and use the Property as the Borrower’s principal residence and shall continue to occupy the Property as Borrower’s principal residence unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld.

6.2 The Borrower shall have the responsibility to maintain the Property in reasonably good repair at all times and perform all repairs reasonably necessary to maintain or improve the condition of the Property.

6.3 The Borrower shall ensure that it does no acts, without the prior written consent of the Lender, that would diminish the value of the Property including but not limited to:

  1. allowing the Property to become or remain vacant; or

  2. demolish or materially alter the Property.

6.4 The Lender may inspect the Property where it provides to the Borrower at least [Enter number of hours] hours and not more than [Enter number of days] days notice of its intention to inspect the Property.

6.5 Except items generally accepted to be of normal household use the Borrower will not use, store, or permit the presence of any hazardous substances on the Property. Hazardous substances include pollutants, wastes, and those substances defined as toxic or hazardous substances by environmental law, as well as the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. The Borrower will promptly take all necessary remedial actions under federal, state, and local laws regarding hazardous substances.

6.6 The Borrower must insure the Property against loss by fire, hazards included within the term "extended coverage," and any other hazards including, but not limited to, earthquakes and floods, for which the Lender requires insurance. The insurance carrier providing the insurance will be chosen by the Borrower. However, the Lender will have the right to disapprove the Borrower's choice, but any disapproval shall not be unreasonable. The Lender shall be named as an additional insured on the policy and the policy shall include a clause stating that any loss is payable to the Lender.

6.7 Where the Borrower fails to insure the Property as described above the Lender may arrange an insurance policy on similar terms as those described in clause 6.6 at the cost of the Borrower. Where the Lender pays any such costs these shall be recovered pursuant to clause 10.3.

6.8 In the event of any loss in relation the Property the Borrower shall promptly inform the Lender of such loss and do all necessary acts to enable the Lender to obtain all insurance proceeds from the claim. The Lender reserves the right to request evidence in relation to all such claims

6.9 The insurance proceeds shall be applied in whole or in part, where feasible to the repair or replacement of the Property. Otherwise the insurance proceeds or any excess insurance proceeds shall be applied in the following order:

  1. to the amounts owing under this Trust;

  2. to the Borrower.



7.1 The Guarantor agrees:


  1. to guarantee the performance and release of all the Borrower's obligations under this Trust;

  1. where the Borrower fails to fulfil its obligations under this Trust to be bound as if it were the Borrower and to assume all obligations of the Borrower and obtain all rights and benefits of the Borrower;

  1. to indemnify and hold harmless the Lender against all claims, damages, and payments, or loss which might arise or have arisen from any default of either the Guarantor or the Borrower to pay the amounts owed under this Trust;

  1. it has received a copy of this Trust and is aware of and fully agrees with its terms including the terms of this clause.

7.2 The Lender shall at its option take any action necessary under this Trust against the Guarantor in preference to the Borrower.


7.3 The Guarantor does not have any rights to object to any amendment of this Trust agreed between the Borrower and the Lender including but not limited to amendment of the Interest Rate, the Principal Amount. The Guarantor will remain bound by this Trust regardless of any amendments.



8.1 Should any of the following events occur the Borrower shall deemed to be in default of this Trust:

  1. the Borrower fails to pay any amounts due under this Trust;

  1. the Borrower fails to perform or comply with any of its obligations or responsibilities under this Trust.

  1. the Borrower or any persons or entities acting at the direction of Borrower gives or has given materially false, misleading, or inaccurate information or statements to Lender (or failed to provide Lender with material information) in connection with the Loan.

  1. If any action or proceeding, whether civil or criminal, including but not limited to any action for bankruptcy against the Borrower or Guarantor is begun that, in Lender's sole judgment, could result in forfeiture of the Property or other material impairment of Lender's interest in the Property or rights under this Trust.

  1. If a lien is registered against the Property, or if default occurs under any other lien or encumbrance existing against the Property; and

  1. if the Property or a material part of the Property is expropriated.


9.1 Acceleration. Where the Borrower is in default then at the option of the Lender all amounts due under this Trust and the Note will become due and payable immediately.

9.2 Acceleration Notice. Where the Lender wishes to proceed under clause 9.1 the Lender must provide a notice to the Borrower stating:

  1. the nature of the default;

  2. the action required to cure the default (if allowable);

  3. a date, not less than 30 days from the date of the notice, by which the default must be cured; and

  4. that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Trust and sale of the Property.

  5. informing the Borrower of their right to reinstate after acceleration and their right to bring a court action to assert the non-existence of a default or any other defense

9.3 Result of Acceleration. If the default is not remedied on the expiry of the notice, the Lender may proceed under clause 9.1 and if necessary may invoke the power of sale pursuant to clause 9.4 and begin foreclosure proceedings.

9.4 Power of Sale. Where the Borrower is in default under this Trust, the Lender shall have the right to foreclose and force sale of the Property.

9.5 Notice of Sale. Where the Lender wishes to proceed under clause 9.5 the Lender must provide notice of the terms of sale to include the date, time and place of the sale in line with Applicable Law. Copies of the notice must be provided to the Borrower, any Guarantor and to the public.

9.6 Sale. Subject to any postponement by the Trustee a sale under clause 9.5 must take place at public auction where the property must be sold to the highest bidder. There is no restriction on the Lender being a bidder at such public auction.

9.7 Applicable Remedies. Nothing in this Trust shall prevent the Lender from exercising their right to all applicable remedies for the collection of any amounts owing under this Trust or the Note, including but not limited to foreclosure proceedings.



10.1 Where the Borrower is in default or where any other circumstance including but not limited to any legal proceeding that the Lender in their sole judgment deems to have or have the potential to have a significant effect on the Lender’s interest under this Trust, then the Lender may at their option, take any action and make reasonable payments to third parties in order to protect the Lender's interest in the Property and/or rights under this Trust, to including, but is not limited to:


  1. settling any sums or making any payments due where such sums are secured by a lien which has priority over this Trust;

  1. engaging an attorney and paying that attorney’s reasonable fees;

  1. appearing at any legal proceeding’ and

  1. taking reasonable steps and paying reasonable fees to ensure the Property is kept in reasonable repair.


10.2 Notwithstanding the foregoing the Lender does not have any obligation to take such action or pay such sums pursuant to clause 10.1 and shall not incur any liability for any omission thereby.

10.3 Any amount disbursed by the Lender under clause 10 of this Trust will become additional fees payable by the Borrower. The additional fees will carry an interest rate of [Enter Percentage] % per annum, compounding annually until such time as paid by the Borrower. The total of any amounts outlaid by the Lender under this clause 10 including interest will become due upon written request by the Lender.  




11.1. GOVERNING LAW. The provisions of this Trust shall be governed by and interpreted in accordance with the laws of the county of [Enter County] and the State of California. Applicable Law will include all controlling applicable federal, state and local statutes. All rights and obligations under this Trust are subject to any requirements and limitations of Applicable Law.


11.2 SEVERABILITY.Should any part of this Trust be declared or held invalid for any reason, that invalidity shall not affect the validity of the remainder which shall continue in force and effect and be construed as if this Agreement had been executed without the invalid portion and it is hereby declared the intention of the parties hereto that this Agreement would have been executed without reference to any portion which may, for any reason, be hereafter declared or held invalid.

11.3 AMENDMENT & NO WAIVER. No provision of this Trust shall be amended, altered or waived except by a further written agreement, signed by each of the parties hereto.  No waiver of any provision hereof shall operate as a waiver of any other provision or as a waiver of the same provision on any other occasion. The failure of any party to enforce any right under this Trust shall not be deemed to be a waiver of such right in the future.


11.4 JOINT SIGNATURES. If the Borrower is more than one person or legal entity, each Borrower who signs this Trust will be jointly and severally bound to comply with all the obligations and liabilities of the other Borrower(s).


11.5 STATUTORY PROVISIONS. The provisions contained in this Trust are additional and supplemental, to the extent permitted by law, to the provisions set out in the Applicable Law as they relate to trusts.

11.6 SECURITY INTEREST AND FURTHER DOCUMENTATION. It is agreed that if any of the Property herein trusted is of a nature so that a security interest in the Property can be perfected under the Uniform Commercial Code, this instrument will constitute a Security Agreement and Borrower agrees to join with the Lender in the execution of any financing statements and to execute any and all other instruments that will be required for the perfection or renewal of such security interest under the Uniform Commercial Code.

11.7 SUBSTITUTE TRUSTEE. The Lender may, at its option, from time to time appoint a successor Trustee by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county in which the property is located. The instrument will contain the name of the original Lender, Trustee, and Borrower, the book and page where this Trust is recorded and the name and address if the successor Trustee. Without conveyance of the Property, the successor trustee will succeed to all the title, powers and duties of the Trustee.


11.8 HEADINGS AND INTERPRETATION. Headings are inserted for the convenience of the parties to the Trust and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender mean and include the feminine gender and vice versa. Words importing persons include firms and corporations and vice versa


11.9 NOTICE. All notice given by either party in connection with this Trust must be in writing. Notice will be considered sufficient when mailed by first class or certified mail to the address of the recipient. The recipient's address will be the property address as stated under this Trust unless another address has been designated. If there is a change of address by any party, that party must promptly notify all parties under this Trust of the change of address. Any notice will be considered effective on the same day that it was sent, unless the day falls on a national holiday, Saturday, or Sunday, in which case, the next business day will be considered as the day of receipt.




IN WITNESS WHEREOF the Borrower, Gurantor and Lender have executed this Trust on

_______________________ [Enter Date]




By: ___________________________________ Date: __________________




By: ___________________________________ Date: __________________



By: ___________________________________ Date: __________________




Borrower Acknowledgement


State of _________________  )

County of _________________  )


On ____________________ before me, ________________________________, personally appeared _________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.


____________________________________ (Notary Seal)

Notary Public


My commission expires



Guarantor Acknowledgement


State of _________________  )

County of _________________  )


On ____________________ before me, ________________________________, personally appeared _________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.


____________________________________ (Notary Seal)


Notary Public



My commission expires


Lender Acknowledgement


State of _________________  )

County of _________________  )


On ____________________ before me, ________________________________, personally appeared _________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.



WITNESS my hand and official seal.


____________________________________ (Notary Seal)

Notary Public


My commission expires

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