When Should You Sign a Trust Deed When Selling Your House?

A seller doesn't sign as much paperwork as the buyer.

A seller doesn't sign as much paperwork as the buyer.

When you bought your home, you had to sign many documents at the closing. If you decide to sell the house, you won't need to sign the same amount of paperwork as your buyer does. The buyer is responsible for signing the mortgage lender's documents, including the trust deed, while the seller needs to sign the property deed. Sometimes these two documents can be confused with one another because they are both deeds, but a property deed concerns property ownership, and the trust deed is a loan document.

Selling Your Home

Once you accept an offer from an interested buyer for your home, the real estate agents prepare the sales contract, which includes the selling price and any contingencies either party might want to include. While the buyer is going through the mortgage loan approval process, you can prepare to move and cooperate with any requested surveys or appraisals. The real estate agent acts as a middleman between you and the buyer and provides feedback and documents to sign, or you might utilize an escrow account, depending on the common practice in your state.

Closing Process

The closing date is the day the buyer meets with the escrow agent to sign the required loan documents and get the keys to his new home. By the closing date, all of the preliminary inspections, appraisals and other contingencies must be completed and satisfactory to the terms stated in the sales contract. Sellers don't typically attend the closing appointment. The listing agent provides the necessary documents for the seller to sign prior to the closing. Both parties have a chance to review the HUD-1 settlement statement, which lists all of the fees involved and who is paying them. Otherwise, the buyer has a great deal of paperwork to sign vs. the seller.

Property Deed

The most important document you'll sign when selling your house is the property deed. These deeds are often called warranty deeds or grant deeds. They function to convey ownership from you to the buyer. By signing the deed, you transfer all of your ownership rights away. Deeds include a legal description of the property and any restrictions or other encumbrances. When the closing process is complete, property deeds are recorded with the county land records office. This updates the property's title on public record.

Trust Deed

The trust deed, also called the deed of trust, is a loan document the buyer must sign. Trust deeds act as the lender's security instrument in some states, while the mortgage document is used in others. A deed of trust secures the property in the lender's favor by placing it in control of a trust. If the buyer defaults on mortgage loan payments, the trustee acts on behalf of the lender to initiate and carry out the foreclosure process according to the specific state laws. The buyers and any co-signers must sign the trust deed in the presence of a notary public. This document is also filed on public record. Only when the loan is completely paid in full will the lender release the property from the trust.

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