Concepts Definitions

Trust Deed (Deed of Trust): A security instrument used in California that creates a voluntary lien on real property to secure the repayment of a debt. It involves three parties: the trustor (borrower), beneficiary (lender), and trustee (neutral third party).

Lien: A charge or claim against a property that provides security for a debt or obligation.

Loan Priority: The order in which liens against a property are paid if the property is sold, especially in a foreclosure. Generally, “first in time” is “first in right,” meaning the lien recorded first has higher priority.

Recordation/Recording: The act of filing legal documents, such as deeds of trust, with the county recorder’s office. This provides public, constructive notice of the interest and establishes legal priority.

First Trust Deed: A trust deed that holds the highest lien priority against a property.

Second Trust Deed (Junior Lien): A trust deed that is subordinate to a first trust deed, meaning it has a lower priority for repayment in the event of a foreclosure.

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