I recently ( 6 months ago) signed a trust deed back to the lender(private party). The property was a rental and was occupied when the property went back to the lender. I took the security deposit and the tenants are
Moving out and want the deposit back from me. Am I legally responsible for the return of the deposit?
2 Answers from Attorneys
Your question is confusing. I'm going to explain why it is confusing, and then try to answer what I think you mean.
A deed of trust is also called a trust deed, but it has nothing to do with a trust that is used to avoid probate in estate planning. It is a security device that is used in California in place of a mortgage. The owner of the property is called the trustor, and grants a power of sale and a power to recovey to a trustee, who holds bare naked title to the property, on behalf of a beneficiary, who is the lender. The deed of trust/ trust deed acts as a lien as security for repayment of a loan or satisfaction of an underlying obligation.
When you state that you signed a trust deed, that just means you secured a loan. I think you mean that you had a deed of trust, that you were in default, and that you signed a deed in lieu of foreclosure. In that situation, you avoid foreclosure by simply deeding your interest to the lender.
If you have the security deposit, and have not transferred it, you are responsible for refunding the security deposit.
Mr Roach is correct, when you transferred the rental property, you should have transferred the rental deposits. Since you did not, you,owe them the money... It not your money to keep