What does a deed of trust transfer from the trustor to the trustee?

The deed of trust is a legal document that involves three parties: the trustor (borrower), the trustee (third-party holder), and the beneficiary (lender). When a deed of trust is executed, it transfers naked legal title from the trustor to the trustee. Naked legal title means that the trustee holds the title to the property but does not have the full ownership rights associated with it. This arrangement allows the trustee to hold the property as security for the loan in case the trustor defaults on their obligations.

Along with the naked legal title, the trustee is granted a limited power of sale. This means that in the event of default by the trustor, the trustee has the authority to initiate a foreclosure process and sell the property to satisfy the debt without needing to go through the courts, which typically makes the process faster and less expensive.

Understanding that the transfer is limited to naked legal title distinguishes it from full legal title, which includes comprehensive ownership rights. It also clarifies that the ownership of the property remains with the trustor until there is a default, and thus it does not transfer ownership as implied by one of the other options. Additionally, while a financial interest certainly exists, what is specifically being transferred at the time of the deed