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 North Dakota, the primary instrument used to secure a loan for the purchase of real estate is a mortgage rather than a deed of trust. When a borrower takes out a loan to buy property, they sign a mortgage agreement, which gives the lender a security interest in the property. This means that while the borrower holds the title to the property, the lender has a right to foreclose on the property if the borrower defaults on the loan. Foreclosure in North Dakota typically requires judicial proceedings, meaning the lender must go through the court system to enforce the foreclosure. Unlike states that use deeds of trust, which often allow for nonjudicial foreclosure, North Dakota's reliance on mortgages means that a court must oversee the foreclosure process, providing certain protections for the borrower and ensuring the process follows legal procedures.