What is the role of a trustee in a deed of trust?

In a deed of trust, the role of the trustee is to hold the title to the property on behalf of the lender (the beneficiary). This arrangement involves three parties: the borrower, the lender, and the trustee. The trustee acts as an impartial third party and possesses the legal title to the property while the borrower retains equitable title. This means that the borrower can use the property, but the legal title is held by the trustee to ensure that the interests of the lender are protected.

The trustee also plays a crucial role in the event of a default. If the borrower fails to meet the loan obligations, the trustee can initiate the foreclosure process, allowing the lender to recover their investment. This function is significant because it provides an organized and legally binding method for the lender to secure their interests and facilitates a smooth resolution in cases where the borrower is unable to fulfill their loan commitment.

The other choices do not accurately reflect the responsibilities of the trustee within this context, as they pertain more to the functions of either the lender or the borrower, rather than the impartial role intended for the trustee.