A new Maryland real estate salesperson is reviewing a residential purchase contract. The financing contingency refers to the buyer obtaining a loan secured by a 'deed of trust.' The salesperson's client asks who the 'beneficiary' is in a Maryland deed of trust. Which answer is correct?
Correct Answer
A) The lender, who holds the beneficial interest and receives loan repayments
In a Maryland deed of trust, the 'beneficiary' is the lender. The lender is called the beneficiary because it holds the beneficial interest in the deed of trust — it benefits from the borrower's loan repayments and has the right to direct the trustee to foreclose if the borrower defaults. The three parties are: trustor (borrower), trustee (neutral title holder), and beneficiary (lender). Understanding this terminology is essential for Maryland real estate practice.
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