A deed of trust is a legal document that transfers ownership of real property (real estate) to a trustee until the person or entity buying the real property repays a loan for the purchase of the real property. A deed of trust is similar to a mortgage—some states use a mortgage and other states use a deed of trust.

In a deed of trust transaction a lender (the bank) gives a borrower (who is purchasing the real property) money to pay the seller, and the borrower gives the lender one or more promissory notes for repayment of the loan. As security for the promissory notes, the borrower transfers the ownership interest (title) in the real property to a trustee—often a title company—to hold until the borrower repays the lender.

If the borrower fails to timely make payments and defaults on the loan, the property generally may be sold without the lender using or going through the court system. This is known as nonjudicial foreclosure and is usually less time-consuming and less expensive for the lender.

A deed of trust is also known as a trust deed, a trust indenture, an indemnity mortgage, or a common-law mortgage.

In Arkansas, a deed of trust is not commonly used; instead, the state typically operates under a mortgage system. However, when a deed of trust is utilized, it serves as a document that transfers the legal title of a property to a trustee, which holds it as security for a loan between a borrower and lender. The trustee is usually a title company, and this arrangement allows the lender to have a security interest in the property while the borrower repays the loan. If the borrower defaults on the loan, Arkansas allows for nonjudicial foreclosure, meaning the trustee can sell the property without court intervention, which is generally faster and less costly than judicial foreclosure. It's important to note that while deeds of trust may be less common in Arkansas, the principles of their operation are similar to those in states where they are more widely used. Borrowers and lenders should consult with an attorney to understand the specific implications and processes related to deeds of trust or mortgages in Arkansas.