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Security Trust Deed – Complete Overview, Tips & FAQs

Security Trust Deed

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

A security trust deed is a traditional debt solution which was used a long time ago.

It is a good debt solution but the exact details of the agreement can be complicated.

I have compiled an article to explain how a trust deed works and the roles of the people involved.

Let’s dive right in!

What A Trust Deed Is

A trust deed is basically a document in the jurisdiction of law which stands as evidence of an event. The event is the legal transfer of property from a borrower to impartial trustees who act as the holders of the property for the lenders. 

The document has the details of the property and the terms and conditions under which the property is to be transferred to the lenders. This document gives certain powers to the security trustee

He can transfer the ownership of the property (with rights reserved) to the lenders in case the terms and conditions of the security trust deed aren’t met. There’s also a trust manager who coordinates the terms and conditions to the security trustee, the borrower and the lenders.

The security agent looks over the legal side of the security trust deed. For the security trustee, the security doesn’t mean anything. He just acts as a holder of the security and acts as a middleman between the borrower and the lender. 

In accordance with the provisions of the Facility Agreement, the security trustee is to be completely neutral. The trustee also has some additional responsibilities in excess of holding the property. These are given in the Facility Agreement.

In case the security in question is secured property, the deed is known as a security trust deed.

company party form trustee

Role Of The Trustee

The trustee is basically a third party person in the agency agreement. He gains no benefit from this deal. 

Under the jurisdiction of law, the security in question is to be held in the name of the trustee but the borrower will still be responsible for whatever happens within the premises until the debt is paid off.

The trustee will receive the benefit that he gains from the security in the duration of the agreement. This benefit will go to a trust fund which is held in between the borrower and the lender. 

If the loan is successfully paid off, the amount in the security trust fund will go to the borrower. And in case of defaulting, the third party security deed trustee is to transfer the funds to the lender. Basically, a security trust deed is only a little different from a traditional mortgage.

The manager of this whole agreement is the security agent. He oversees the security trust deed and will help in case any complications arise. 

In Case Of Defaulting

The details and information of every security trust deed is given within the document. In addition to that, there is also a note trustee. This note trustee gives directions to the trustee and makes him aware of his powers in this security trust deed.

The deal in practice here is that the lender will gain the ownership of the property in case the borrower defaults, and the trustee is to receive no benefit (with respect to law) in this security trust deed.

In case the debtor defaults, the trustee is to sell the security and give the lenders their due owed amount. Any money in addition to this is given back to the debtor. This transaction is overlooked by the security trust deed manager.

The security trust deed has all the information about this deal. It perfectly documents the security interests, and any relevant covenants. The security trust deed also has legal noteholders who hold all information about the security interests and the involved covenants.

The duties of the debtor and lenders are also given in the security trust deed. This document also has the legal rights and the duties of the security trustee

Make sure that the security trustee is a third party neutral person because any leverage given to the lender or the debtor will be dealt with legally by the security trust agent.

Role of the Debtor

A security trust deed is a good option for you to consider if you cannot afford other debt management plans. It is also better than a mortgage since it includes a neutral third party security trustee who has the possession of the property.

Also, the agent that is overlooking the security trust deed is also a qualified professional and will help you eliminate your debt. His job is to satisfy both the lender and the debtor so that all parties are dealt with fairly in the trust.

Frequently Asked Questions (FAQs)

Will A Security Trust Deed Affect My Credit Rating?
Yes, a security trust deed does affect your credit rating as you have breached the initial terms of the contractual agreement between you and your lenders.
Is a Security Trust Deed A Good Idea?
A security trust deed is a good debt solution but it is not for everyone. You should go for it if you have a regular income and can commit to regular monthly payments on your security trust deed.
How Long Does A Security Trust Deed Remain On Your Credit File?
The security trust deed is noted by the credit rating agency and remains on your credit file for 6 years from the day that your trust was secured.
Can I End My Trust Deed Early?
Yes, usually windfalls are enough to pay your security trust deed. You can definitely end the trust deed early by paying off all the debts you owe to your lenders. However, the trust deed will still remain on your credit file for 6 years.


Getting a trust deed is a good debt solution but remember; the property will be sold if you fail to clear your dues. 

Make an educated decision so that you don’t ever need to face that situation.

For any additional information, you can contact us on the email provided below and we will make sure to help you.

Good luck!


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