Final answer:
The primary function of a deed of trust is to grant a security interest in real property, where it acts as a means to secure a loan with the real estate acting as collateral between three parties: the borrower, the lender, and the trustee.
Step-by-step explanation:
The primary function of a deed of trust, which is also known as deed in trust in some states, is B) Granting a security interest in real property. This legal document is used in certain states as an alternative to a mortgage, where a borrower uses it to pledge real property to secure a loan.
Essentially, the deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a third-party trustee. The borrower transfers the title of the real property to the trustee who holds it as security for the lender. If the borrower defaults on the loan, the trustee has the authority to sell the property to repay the lender.
A trust, in the broader sense, is an estate planning tool used to manage assets, and upon the death of the trust creator, the assets are disbursed according to the terms of the trust, often avoiding the public and lengthy process of probate court. However, a deed of trust specifically pertains to real estate transactions and is designed to secure a loan with the property acting as collateral.