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 South Dakota, the primary instrument used to secure a loan for the purchase of real estate is a mortgage rather than a deed of trust. South Dakota is a 'lien theory' state, which means that the borrower holds the actual title to the property, while 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 the lien, which involves the court system. This is in contrast to states that use deeds of trust, where a trustee holds the title and can conduct a nonjudicial foreclosure outside of the court system. In South Dakota, all foreclosures are judicial, which means the lender must file a lawsuit and obtain a court order to foreclose on the property. This process provides borrowers with certain protections, such as the right to be notified of the foreclosure and the opportunity to be heard in court.