What is a Deed of Trust and what does it do? (You may not find this in the book, but you want and need to know this - so read and answer this.) We often hear of a mortgage on a property, which means the property "secures" the repayment of a loan. If a party stops making mortgage, a lender will file a lawsuit to recover their property. In many western states, and especially in California, lenders use a "Deed of Trust", which acts like a mortgage, except it names a trustee who is entitled to take action if a person stops making payments. The trustee is allowed to follow state laws, and declare a loan in default, give the owner 90 days to make any payments, and if not, "notice" a sale of the property, meaning that the property will be auctioned off, perhaps in the Trustee's office, or on the courthouse steps. Once the steps are followed, a Trustee can then sign a deed and transfer the property to the person who bought the property at the Trustee's sale. No formal court action is necessary. Lenders love this process. So, answer this. What happens if I default on a note that is secured by a Deed of Trust? If I default, does the noteholder have to start a legal action in court to get my property?