Deed of Trust

Under a deed of trust, the borrower hands legal title to a trustee who holds it for the lender until the debt is repaid. Many states use it instead of a mortgage, and it is the document behind many hard money and refinance loans in a BRRRR deal.

Three parties sign: the borrower, the lender and the trustee. After a default, the trustee generally has power to sell without going to court, which tends to move much faster than a judicial case.

When the refinance pays off the short-term loan, the old lender issues a reconveyance or release and the new lender records its own deed of trust. Checking that the release is recorded keeps a paid-off loan from showing up as a lien when the investor sells or refinances again.

Further reading: Deed of Trust on Wikipedia.