Ace the Arizona Real Estate Exam 2025 – Unlock Your Property Dreams!

In a real estate transaction, a trust deed serves as a security instrument because it establishes a legal agreement that creates a lien on a property to secure a loan. This instrument is used in place of a mortgage in many states, including Arizona. When a borrower (the trustor) takes out a loan, they grant the lender (the beneficiary) a security interest in the property by placing a trust deed on it. This means that if the borrower defaults on the loan, the lender has the right to initiate foreclosure proceedings to recover the loan amount by selling the property.

A note, while crucial in the lending process, primarily outlines the terms of the loan, such as the amount borrowed, the interest rate, and the repayment schedule. It is not a security instrument because it does not create a lien or provide security for the loan. An easement, on the other hand, grants someone the right to use someone else's property for a specific purpose, such as access or utilities, but does not serve as a security for a loan. Lastly, an estoppel certificate is a document used to verify the terms of a lease or loan and confirm that there are no outstanding claims; it also does not serve as a security instrument in real estate transactions.