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 Alabama, the primary instrument used to secure a real estate loan is a mortgage rather than a deed of trust. Alabama is a 'title theory' state where the property title remains in trust until the loan is fully paid off. However, unlike states that use deeds of trust, Alabama does not typically use a trustee to hold the title. Instead, the legal title is directly transferred to the lender through the mortgage, and the borrower retains equitable title. Upon full repayment of the loan, the borrower obtains full legal title. In the event of default, Alabama allows for both judicial and nonjudicial foreclosure processes. Nonjudicial foreclosure can be faster and less costly than going through the courts, but it requires the mortgage to contain a 'power of sale' clause. If the mortgage does not contain this clause, the lender must pursue foreclosure through the court system, known as judicial foreclosure.