What happens to the legal title when a deed of trust is executed?

When a deed of trust is executed, the legal title is indeed held in trust by the trustee. This means that the trustee has a fiduciary responsibility to hold the title for the benefit of the lender (beneficiary) until the borrower (trustor) has fulfilled their obligations under the loan agreement, typically through the repayment of the loan.

In this arrangement, the borrower retains equitable title, which gives them the right to use and occupy the property, while the legal title is temporarily transferred to the trustee to ensure that the lender's interest is protected. If the borrower defaults on the loan, the trustee can take necessary actions, such as initiating foreclosure proceedings, to satisfy the lender's claim on the property. This mechanism provides a level of security for the lender, while still allowing the borrower to enjoy the property during the term of the loan.