When choosing a trustee’s deed in the State of Idaho, it is important to understand the difference between the two very different types of conveyances the term can refer to: the trustee’s deed as used in estate planning, and the trustee’s deed upon sale, used in cases of foreclosure of a deed of trust.
Both deeds are a little different from other instruments of conveyance of real property in Idaho because they are named for the person executing them rather than the type of warranties they carry. In its simplest form, the trustee’s deed is a modified fee simple deed.
The trustee’s deed used in estate planning conveys title to real property out of a trust. In this case, the trustee is the person who administers the trust under the provisions of a trust agreement executed by the trust maker, or settlor. The settlor is the person funding the trust with the real property, and who gives the trustee the power to convey property under the trust. A trustee often furnishes a certificate of trust to verify the trust’s existence and his/her authority to act on behalf of the trust.
In this type of trustee’s deed, the settlor does not directly enter into the transaction. Rather, the trustee assumes the role of the grantor and transfers the settlor’s interest to a grantee. In many revocable living trusts, the settlor may also serve as trustee, and designate a successor trustee in the trust instrument.
A trustee’s deed upon sale, however, is only used when a deed of trust (also called a trust deed) has been executed. Idaho is one of a handful of states that use deeds of trust as the primary form of financing purchases of real property.
A deed of trust, similar to a mortgage, is a security instrument that, along with a promissory note, sets out the terms for repaying the loan used to purchase the property. The deed of trust is acknowledged by the grantor and recorded in the county in which the real property is located.
The deed of trust conveys “real property to a trustee in trust to secure the performance of an obligation of the grantor…named in the deed to a beneficiary” (I.C. § 45-1502(3)). In a deed of trust, the grantor is the borrower of the secured real estate loan. The trustee is named in the deed of trust, and, as codified at I.C. § 45-1504, “can be a bank, lawyer, title insurance agent, or a licensed trust organization,” though it is generally a title insurance agent . In Idaho, the lender is the beneficiary of the trust deed and the trustee holds the lien on the property.
There are two outcomes of a deed of trust. Upon fulfillment of the obligation (the repayment of the loan), the trustee executes a deed of reconveyance, discharging the lien. In the event that the grantor defaults, however, on the terms of the deed of trust (for instance, not making payments toward the loan), then the trustee is able to begin a non-judicial foreclosure (a foreclosure not dependent on court) under a power of sale clause within the deed of trust (I.C. § 45-1503(1)). The terms for curing default are stated in I.C. § 45-1506(12).
The trustee’s deed under I.C. § 45-1509, then, is used to convey the foreclosed property to the purchaser (highest bidder) after the trustee’s sale, the procedure for which is governed by I.C. § 45-1506.
The trustee’s deed requires, “in addition to a description of the property conveyed, a recital of the facts concerning the default, the mailing and the publication of the notice of sale, the conduct of the sale and the receipt of the purchase money from the purchaser” (I.C. § 45-1509). From I.C. § 45-1510(1), “the recitals contained in the deed…shall be prima facie evidence” of their accuracy, and may be relied on by a purchaser in good faith.
The trustee’s deed should be recorded in the county in which the property is located within fifteen (15) days of the sale date pursuant to I.C. § 45-1510.
The information provided summarizes very complicated processes, and should not be taken as legal advice. As always, consult a lawyer with any questions regarding the above material.