Fundamentals of Surveying (FS) Practice Exam

What is a deed of trust?

1. A conditional conveyance of an estate as a pledge of security of a debt

2. A deed for excess acreage

3. A conveyance held in the hands of another for safekeeping

4. A conveyance made to a charitable organization

The correct answer is: A conditional conveyance of an estate as a pledge of security of a debt

A deed of trust is a legal instrument that secures a loan by transferring the title of property to a trustee, who holds it on behalf of the lender until the borrower pays off the debt. This arrangement effectively acts as a conditional conveyance, where the property is used as collateral for the loan. If the borrower defaults on the repayment, the trustee has the authority to sell the property to satisfy the outstanding debt. This mechanism is commonly used in real estate finance, particularly for mortgages, providing security to lenders while allowing borrowers access to funds. The key aspect here is that the deed of trust ensures the lender has a secured interest in the property and can recover their investment by selling it if necessary. Other options address different aspects of property law but do not accurately define a deed of trust. A deed for excess acreage pertains to situations where the land exceeds the amount specified in a transaction. A conveyance held for safekeeping does not capture the financial transaction inherent in a deed of trust. Lastly, a conveyance made to a charitable organization refers to a transfer of ownership rather than a security interest related to debt. Each of these options misrepresents the fundamental purpose of a deed of trust.