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 Illinois, the primary instrument used for securing a loan for the purchase of real estate is a mortgage, not a deed of trust. Illinois is a mortgage state, which means that when a borrower takes out a loan to purchase real estate, they sign a mortgage agreement that pledges the property as security for the loan. The mortgage creates a lien on the property in favor of the lender. If the borrower defaults on the loan, the lender must go through the judicial foreclosure process to enforce its rights under the mortgage. This process involves filing a lawsuit and obtaining a court order to sell the property to satisfy the debt. Unlike states that use deeds of trust, which can allow for nonjudicial foreclosure, Illinois requires judicial proceedings for foreclosure, providing borrowers with certain protections and the opportunity to be heard in court before their property can be sold.