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 Vermont, the primary instrument used for securing a loan for the purchase of real estate is a mortgage, not a deed of trust. Vermont is known as a 'title theory' state where the property title remains in trust until the loan is fully paid off, but the common practice involves a mortgage rather than a deed of trust. In a mortgage transaction, the borrower conveys a mortgage to the lender which serves as a lien against the property as security for the repayment of the loan. If the borrower defaults on the loan, the lender must go through the judicial foreclosure process to sell the property. This means that the lender must file a lawsuit and obtain a court order to foreclose on the property. Vermont does not typically use nonjudicial foreclosure proceedings, which are associated with deeds of trust, and therefore, any foreclosure process must be carried out with court supervision.