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 North Carolina, a deed of trust is the customary instrument used to secure a loan for the purchase of real property. It involves three parties: the borrower (trustor), the lender (beneficiary), and the trustee, who is typically a neutral third party such as a title company. The borrower transfers the legal title of the property to the trustee, who holds it as security for the debt owed to the lender. Upon full repayment of the loan, the trustee reconveys the legal title to the borrower. If the borrower defaults on the loan, North Carolina allows for nonjudicial foreclosure under the power of sale clause in the deed of trust, enabling the trustee to sell the property without court intervention to pay off the debt. This process is generally faster and less costly than judicial foreclosure. It's important to note that while deeds of trust serve a similar purpose to mortgages, they are distinct legal instruments and are governed by different statutes within the state.