What describes a deed to real property that involves three parties: the lender, borrower, and a third party holding title?

A deed to real property involving three parties—the lender, borrower, and a third party holding title—is known as a Deed of Trust. In this arrangement, the borrower conveys the legal title of the property to a trustee, who holds it on behalf of the lender as security for the loan. This structure effectively allows the lender to have a claim against the property in case of default while not having to engage directly with the title. The borrower retains the equitable title, maintaining rights to use and occupy the property as long as the loan terms are met.

Understanding the roles within a Deed of Trust is crucial. The lender provides the funds, the borrower agrees to repay the loan, and the trustee acts as an impartial holder of the title, facilitating the transaction and ensuring the lender's interests are protected. This differentiation in roles is what sets the Deed of Trust apart from other options, such as a mortgage, which typically involves only the lender and borrower without the addition of a third party to hold the title.