what sort of developer enters this arrangement banks are often reluctant to lend to certain types of developments such as mid size commercial projects too small for the big lenders too big for the small ones or developers with poor track records or too many loans cautious lenders may also move too slowly for developers up against a tight deadline for commencing or completing a project 
developers like these are often in a bit of a crunch for these reasons trust deed investors may often expect high interest rates on their money they can reap the benefits of diversifying into a different asset class without having to be experts in real estate construction or management this is a form of passive investment trust deed investing has certain risks and disadvantages unlike stocks real estate investments are not liquid meaning investors cannot retrieve their money on demand also investors can expect only the interest the loan generates any additional capital appreciation is unlikely invested parties may exploit any legal discrepancies in the trust deed causing costly legal entanglements that may endanger the investment the typical investor with little experience may have difficulty as it takes specific expertise to find credible and trustworthy developers projects and brokers real world example of a trust deeda short form deed of trust document used in austin county texas covers the requirements for most lenders the form begins with a definition of terms and spaces for the borrower lender and trustee to fill in their names the amount being borrowed and the address of the property are also required after this section the document goes on to specify the transfer of rights in the property and uniform covenants including the form also includes nonuniform covenants which specify default or breach of any of the agreement terms and it specifies that the loan the document deals with is not a home equity loan that is something the borrower will receive cash from but one for purchasing the property the deed of trust ends with a space for the borrower s signature which must be done in the presence of a notary and two witnesses who also sign 