What is the difference between a Grant Deed and Deed of Trust?

A grant deed transfers ownership title from an existing owner of real property (for example, a house) to a new owner. Words in a grant deed are to the effect: I (existing owner or seller) transfer to you (prospective owner or buyer) all of the right, title, and interest that I have in the subject property. The grant deed, properly signed by the transferor (seller) before a notary public becomes the ownership document for the transferee (buyer), which proves the transferee is the new owner. The notarized grant deed can be recorded with the county recorder in the county where the property is located to effectively give notice to the entire world that the transferee (buyer) is the owner of the property as of the date of the grant deed. In California, a deed of trust transfers a lien interest in real property, usually to secure repayment of a debt owing from the owner of the property to the lienholder or also referred to as the holder of the deed of trust or also referred to as the beneficiary under the deed of trust. For example, a bank that loans a buyer money to purchase a home is given a deed of trust. That is, the bank/lender is given a lien on the house, and under the terms of the deed of trust, in California, has the right or "may make an election to" foreclose or repossess [so-to-speak] the house, without getting a court order, if the loan becomes delinquent. A lienholder under a deed of trust must follow very strict statutory procedure to conduct a non-judicial foreclosure and forced sale of a house whose owner defaulted on his or her loan.

A grant deed is the instrument used to transfer title to an interest in real property from one owner to someone else. The use of the word "grant" means the deed comes with certain warranties. A deed of trust is the security instrument given to a lender to secure a loan or other obligation. Bare naked title is deeded to the trustee, who holds the power of sale or the power to re-convey. If you fulfill the obligation, the power to reconvey is given back to the owner. If you default, the property is sold pursuant to the power of sale.

A grant deed transfers ownership. A deed of trust secures the loan against the property