Deed of Trust

Description

The Deed of Trust is the document that creates a lien on Arizona real property to secure payment of a debt or satisfaction of an obligation.  It must be signed by a person, people, entity and/or entities that own the real property to be encumbered.  The Deed of Trust is the preferred method of obtaining a lien on Arizona real property.  Mortgages can also be used to create a lien on Arizona real property, but the Mortgage is rarely used in Arizona.

Common Usage:  When a borrower gives a lender a Promissory Note to evidence a promise to pay money to the lender and the lender wants security for the loan, the Deed of Trust is used frequently to create a lien on Arizona real property to secure the obligations contained in the Promissory Note.  If the borrower / debtor defaults on the Promissory Note or other contractual obligation secured by a Deed of Trust, the lender / creditor can foreclose the Deed of Trust and cause the real property that is encumbered by the Deed of Trust to be sold at an auction to the highest bidder for cash.

Caution #1:  A lender does not have a lien on any of the borrower’s real property simply because the borrower signs a Promissory Note or other document that creates a legal obligation that the lender may enforce.  If the lender wants a lien on Arizona real property, the lender must get the owner(s) of the Arizona real property to sign a Deed of Trust (best type of lien) or a Mortgage (rarely used in Arizona).

Caution #2:  The lender must record the properly signed and notarized Deed of Trust with the County Recorder of the Arizona county in which the encumbered real property is located.  For information on each Arizona County Recorder, recording fees and where to mail or deliver the Deed of Trust for recording, see our Arizona County Recorder information area.

Caution #3:  The Deed of Trust will not be valid unless the owner(s) of the Arizona real property owe a debt or other obligation to the lender / secured party.  For example, if Bart Simpson borrows $10,000 to buy a car and Homer and Marge give the lender a Deed of Trust on their home, the Deed of Trust will not be valid because Homer and Marge do not owe money or any obligation to the lender.  If the lender wants to be able to foreclose on Homer and Marge’s home if Bart defaults on the loan, the lender must have Homer and Marge sign a Personal Guaranty by which they guaranty Bart’s debt and then the Deed of Trust would secure the satisfaction of Homer and Marge’s obligations under the Personal Guaranty, not under the Promissory Note because they did not sign it.

Disclaimer: If you purchase this form, you are buying a product from Richard Keyt and KEYTLaw, LLC. (collectively the “Firm”), and you are not hiring the Firm to provide any legal services or legal advice or represent you in any capacity. If you modify the form in any way, you are solely responsible for the legal affect of the changes you make. The form is drafted to comply only with Arizona law because Arizona is the only state where Richard Keyt is licensed to practice law. Do not use this document in any state other than Arizona without first having it reviewed and modified as necessary by an experienced attorney in the state where you intend to use the form. The Firm makes no representations or warranties of any kind with respect to this form. The Firm disclaims all warranties for fitness for a particular purpose.