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 Minnesota, the primary instrument used for securing a real estate loan is a mortgage, not a deed of trust. Minnesota is known as a 'lien theory' state, where the borrower holds the actual title to the property, while the mortgage creates a lien on the property as security for the loan. When a borrower defaults on a mortgage in Minnesota, the lender typically must go through the judicial foreclosure process, which involves the court system, to enforce their rights and potentially sell the property to recoup the loan amount. Nonjudicial foreclosure, which is commonly associated with deeds of trust and does not require court intervention, is not used in Minnesota for the foreclosure of real property. Therefore, while deeds of trust are used in some states to secure repayment of a loan with real property, they are not the customary method in Minnesota, where mortgages serve this purpose and are subject to state-specific foreclosure laws and procedures.