Category: Glossary

Deficiency judgment | A judgment entered in a lawsuit when a property is sold for less than the amount of the loan.

Defendant | The person who defends against a claim asserted in a Court action.

Defeasance Clause | A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.

Default | The failure to make payments in full, on time or at all or to live up to any other obligations placed on the borrower by the loan agreement.

Deed of Trust (Trust Deed) | A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the “trustor”. The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the “trustee”. The lender is the “beneficiary”. When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien.

Deed of Reconveyance | A instrument that releases and discharges a deed of trust, when the mortgage has been paid out.

Deed in lieu of foreclosure | A process whereby the owner, with the approval of the lender, deeds the property to the lender to avoid foreclosure. Lenders are generally reluctant to accept a “deed in lieu” unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent.

Deed | A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Decree of Foreclosure | A court order to set out the outstanding amount on a delinquent mortgage in order to sell the property to pay the mortgagee.

Debtor | An entity that owes a debt; one who owes a debt.