trust deed - an alternative to a mortgage, a financial instrument used in conjunction with a promissory note to establish the collateral in a loan secured by real property. In contrast to a two-party mortgage agreement, a trust deed requires a three-party agreement involving a trustor (borrower), trustee (neutral functionary), and beneficiary (len­der), in which the trustee holds legal title until the promissory note is paid in full (or defaulted). In the case of full performance (i.e,. satisfaction of the promissory note held by the beneficiary), the trustor will demand cancellation of the note by the beneficiary and a deed of reconveyance from the trustee to the trustor. In the case of a serious breach (i.e., nonpayment for a specified period), the beneficiary may order the trustee to begin foreclosure proceedings against the trustor as specified in the trust deed. See beneficiary, mortgage, promissory note, trustee, and trustor.

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