The trust deed is

• A. seldom used by lenders in California.
• B. almost exclusively used by lenders in California.
• C. used to convey title but without representations of encumbrances on title.
• D. used to convey title from one spouse to another

Answer: (B)

In California, lenders almost exclusively use a deed of trust to secure real estate loans. This instrument involves three parties—the trustor (borrower), the trustee (a neutral third party), and the beneficiary (the lender). The trustor conveys legal title to the trustee to hold as security for the loan, while the borrower keeps possession and equitable title. The key feature is the power of sale given to the trustee, which allows nonjudicial foreclosure if the loan falls into default. This faster, court-light foreclosure process is why lenders in California favor deeds of trust. It isn’t about transferring title to a spouse or making guarantees about encumbrances; it’s a security instrument that encumbers the property to secure repayment and provides a path to reconveyance once paid or to sell the property to satisfy the debt.