Pennsylvania uses which security instrument for most real estate loans?
Question & Answer
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Deed of trust
A deed of trust is used in approximately 30 states, including California, Texas, Virginia, and North Carolina, where a neutral trustee holds legal title to the property on behalf of the lender until the loan is repaid — Pennsylvania does not use deeds of trust as its primary security instrument.
Mortgage
Land contract
A land contract (also called a contract for deed or installment sales contract) is a seller-financing arrangement where the seller retains legal title until the buyer completes all payments — while occasionally used in Pennsylvania, it is not the primary security instrument for institutional real estate loans.
Security deed
A security deed (also called a deed to secure debt) is used primarily in Georgia and is a unique instrument where the borrower actually conveys title to the lender as security for the loan, with the lender reconveying title upon repayment — this instrument is not used in Pennsylvania.
Why is this correct?
Pennsylvania law recognizes the mortgage as the standard security instrument for real estate loans, creating a two-party lien relationship between the borrower (mortgagor) and the lender (mortgagee) under which the borrower retains title while granting the lender a security interest in the property. This is confirmed by the structure of Pennsylvania's foreclosure statutes (Pennsylvania Rules of Civil Procedure 1141–1150), which are written entirely around mortgage enforcement rather than deed of trust or power of sale procedures. The use of mortgages also explains why Pennsylvania requires judicial foreclosure — without a trustee holding title (as in a deed of trust arrangement), there is no non-judicial mechanism for the lender to sell the property.
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