Massachusetts Real Estate License Practice Test 2025 – The All-in-One Guide to Master Your Exam!

The document that is commonly associated with financing industrial and commercial properties is a trust deed. In the context of commercial real estate, a trust deed serves as a security instrument for a loan. When a borrower obtains financing to purchase or refinance industrial or commercial property, the trust deed is executed to provide collateral for the lender. Unlike residential properties, which often utilize mortgages, commercial transactions frequently employ trust deeds because they can streamline the process of securing a loan.

Trust deeds involve three parties: the trustor (the borrower), the beneficiary (the lender), and the trustee (who holds the legal title of the property in trust for the benefit of the lender until the debt obligation is fulfilled). This arrangement can facilitate faster foreclosure processes if the borrower defaults, which is particularly important in the commercial real estate market where the stakes and complexities can be higher.

In contrast, promissory notes represent the borrower's promise to repay the loan and detail the terms of the financing, but they do not serve as security for the property itself. Purchase agreements outline the terms of the sale of the property rather than specifically addressing financing. Settlement statements detail the final closing costs and transaction specifics but do not independently enable financing.