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Question: The borrower does not want his or her spouse to sign the Deed of Trust because the borrower doesn’t want the spouse to vest in title. I know the difference, but can you give me an explanation of the difference between a vesting Deed and a Deed of Trust so I can educate myself before I address this with the borrower?

Answer: Yes, people often get “Deeds” and “Deeds of Trust” confused, especially because many in the mortgage industry refer to Deeds of Trust as “deeds.” However, these two legal documents are used for very different purposes. Let’s start with a couple of definitions that may contain a bit too much legalese for the average borrower:
DEED OF TRUST: The Texas Real Estate Forms Manual defines a Deed of Trust as:

• A deed of trust is a mortgage with a power of sale. Although a deed of trust by its literal terms conveys the described property in trust to the trustee, its actual effect under Texas law is to create a lien against the property to secure a debt of the grantor of the lien to the beneficiary of the lien. The deed of trust is often used to establish a lien on property for which the lender has advanced purchase money, but it may also secure a loan or other obligation unrelated to the property. The primary advantage of the deed of trust over the type of mortgage used in many other states is that it provides the default remedy of nonjudicial foreclosure by a trustee’s sale without the necessity of a lawsuit.

DEED: A Deed is defined in the forms manual as:

• A legal document that is signed and delivered, especially one regarding the ownership of property or legal rights.

That’s a lot of words. For the average borrower’s purpose, this is likely all you need:

• • Deed of Trust: Creates a lien against the property to secure a debt owed to the lender. It does not convey legal title to real property.
• • Deed: Conveys legal title to real property from a grantor to a grantee. In the most common transaction, a purchase, a deed transfers the real property from the seller to the buyer.

There are several different forms of deeds, which leads us to this next Q&A…

Question: I see a lot of different kinds of deeds. What is the difference between them?

Answer: Before we answer your question, I want to define a couple of terms I’ll use. A “grantor” is the person conveying an interest in the real property, and the “grantee” is the person receiving the interest in the real property. Here is a general definition of the most common deeds:

• • General Warranty Deed: In a general warranty deed a grantor conveys to a grantee a fee simple estate in real property with a covenant of general warranty in the real property, subject to reservations and exceptions in the deed. In other words, a warranty deed guarantees clear title to the buyer of real property.
• • Warranty Deed with Vendor’s Lien: This type of warranty deed includes a vendor’s lien to secure payment of the unpaid purchase price when a portion of the purchase price is financed.
• • Special Warranty Deed: With this type of warranty deed, the grantor warrants to defend title to the property conveyed only to the extent that claims are made by, through, or under the grantor. It only covers title defects caused by the grantor, not those caused by the grantor’s predecessors in title.
• • Partition Deed: Divides property held by joint owners so that each may have a distinct tract of land.
• • Owelty of Partition Deed: Allows one co-owner to buy the interest of the other co-owner(s) while using the entire property as collateral for the loan to acquire the property.
• • Assumption Deeds: An assumption deed can be general or special warranty deed to convey real property, but it additionally provides that the grantee will assume liability for a debt.
• • Quitclaim Deed: Conveys only the right, title, and interest that the grantor has in the property at the time the instrument is executed and delivered.
• • Lady Bird Deed: Also known as an Enhanced Life Estate Deed, a Lady Bird Deed is a special type of life estate deed where the life estate holder retains exclusive control over the property (including the right to sell or encumber the property) until the life estate holder’s death, at which time the property is transferred to the grantee.
• • Gift Deed: Used for the purpose of the grantor making a gift of real property to the grantee. Typically, the deed will provide that the grantee has paid consideration to the grantor in the form of “love and affection” for the gift.

These are general definitions and, as they say, the devil can be in the details. At least with these definitions, you will know what these deeds are doing when you are dealing with them.