Closing and Recording
- The first procedure relevant to a trust deed in California is the closing, or signing of the trust deed. You will sign a loan agreement under which you promise to repay a certain amount of money to the lender over a certain amount of time. You will also sign a trust deed securing that loan agreement. The trust deed is what gives the lender a lien on your home. For the trust deed to be effective, the lender will have to record a copy of the signed trust deed in the local county land records. Recording means paying a fee to file a copy of the trust deed in the public records.
- After closing you will enter into your repayment term under the loan and trust deed. As long as you remain current on your loan payments you will never have to worry about additional trust deed procedures. Your current lender may sell the mortgage to a different lender, which will involve a transfer and assignment of the trust deed, but that procedure will not affect your repayment terms or rights. You may have to send your monthly checks to a new address, but that is the only thing that will change as long as you make your payments on time. When you pay off your loan the lender will release the trust deed, meaning the lender will no longer have a lien on your home.
- If you fall behind on your payments under the loan agreement, this triggers a default under the trust deed. When you default, the lender is authorized to foreclose on the trust deed lien, if it wants to. The lender will send you a notice of your default and warn you that foreclosure may occur if you don't bring the loan current by curing your default within 60 days after the lender sends you a notice of default.
- If you don't cure your default then the lender can proceed to foreclose on your home. Foreclosure in California under a trust deed can be either judicial or nonjudicial. Judicial foreclosure requires the lender to file a lawsuit against you and potentially to hold a trial to prove that you are in default. Nonjudicial foreclosure, on the other hand, is a much simpler process. The lender can hire a third party, called a trustee, to provide public notice of a foreclosure sale and hold the foreclosure sale. Regardless of whether foreclosure occurs judicially or nonjudicially, ultimately your home will sell at a public auction to the highest bidder at that auction. At that point you will lose your home but you will generally have no further obligations under the trust deed or the mortgage loan agreement.