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 Colorado, a deed of trust is commonly used to secure real estate transactions. It involves three parties: the borrower (trustor), the lender (beneficiary), and the trustee, who is typically a title company. The borrower transfers the property title to the trustee, who holds it as security for the loan provided by the lender. The deed of trust is recorded with the county recorder's office. If the borrower defaults on the loan, Colorado allows for nonjudicial foreclosure, meaning the trustee can sell the property without court intervention, following a process outlined in state statutes. This process includes sending a notice of election and demand (NED) to the public trustee, who then oversees the foreclosure process. Nonjudicial foreclosure is generally faster and less costly than judicial foreclosure, which involves the court system. It's important to note that while a deed of trust serves a similar purpose to a mortgage, the legal procedures and rights involved can differ, and Colorado primarily uses deeds of trust for this type of transaction.