Form – Substitution of Trustee

Substitution of Trustee, a legal document used exclusively in states that use a deed of trust for real estate loans (like California, Texas, and others). It is a critical document in the foreclosure process.

Here is a clear breakdown of its purpose and function:

Primary Purpose

The sole purpose of a Substitution of Trustee is to fire the current trustee and appoint a new one under a deed of trust.

The Key Players in a Deed of Trust

To understand this form, you need to know the three parties in a deed of trust:

1. Trustor: The borrower/homeowner.
2. Beneficiary: The lender.
3. Trustee: A neutral third party (often a title company) who holds “naked” legal title to the property. Their main power is to initiate and carry out a non-judicial foreclosure on the lender’s behalf if the borrower defaults.

When and Why Is This Form Used?

This form is almost always used when the Beneficiary (the lender) has decided to begin the foreclosure process.

The most common reasons for substituting a trustee are:

1. To Initiate Foreclosure: The original trustee named in the deed of trust may be unwilling, unresponsive, or too slow to act. The lender appoints a new, specialized trustee (often called a “foreclosure trustee”) who is experienced and efficient at handling the legal steps of a non-judicial foreclosure.
2. Routine Change: The original trustee company may have gone out of business, merged with another company, or the lender may simply have a new preferred trustee for all their foreclosures.

How It Works

• The current Beneficiary (lender) executes this form, stating they are removing the old trustee and appointing a new one.
• The form must be notarized to be valid.
• The form is then recorded in the county where the property is located. This makes the change official and provides public notice that a new trustee has been appointed with the power to act.

The Critical Implication for a Homeowner

For a homeowner (the Trustor), receiving a notice that a Substitution of Trustee has been recorded is a major red flag and a definitive step toward foreclosure. It signals that the lender is moving forward with the legal process to take back the property.

The newly appointed trustee is now authorized to issue the “Notice of Default,” which is the formal, public declaration that starts the foreclosure timeline.

Summary

In essence, the Substitution of Trustee is the document a lender uses to hire a “new sheriff” to manage the foreclosure process. Its recording is a clear indication that the lender is proceeding with legal action to seize the property due to the borrower’s default.

Substitution of Trustee

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO

Name: _____________________________________________________
Street Address: _____________________________________________
City & State: _______________________________________________

SPACE ABOVE THIS LINE FOR RECORDER’S USE

SUBSTITUTION OF TRUSTEE

DATE: ______, 20, at ______________________________________________________, California.

________________________________________________________________________, as the present Beneficiary under a Trust Deed dated ______________________________, recorded on ____________________________, as Instrument No. __________________________, in ___________________________ County Records, California, executed by _______________________________________________________________________, as the Trustor,

HEREBY APPOINTS ______________________________________________ as the Trustee under the Trust Deed.

(Signature of Beneficiary)

STATE OF CALIFORNIA
COUNTY OF _______________________________________________

On ______________________________________________ before me,

(Name and title of officer)

personally appeared ________________________________________
_________________________________________________________,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _________________________________________________
(Signature of notary public)

(This area for official notarial seal)

Prepared by: Agent ____________________________ Broker ____________________________
Phone _______________________ Email _______________________

This form is based on standard California practice. Consult with a qualified California real estate attorney for specific legal advice.