What is reconveyance in the context of a deed of trust?

Reconveyance refers specifically to the process by which a lender or trustee returns title of the property back to the trustor (the borrower) after the debt secured by the deed of trust has been fully repaid. This process signifies the completion of the loan obligation, and it is an important step that confirms to the trustor that they have cleared the debt and regained full ownership.

In this context, the reconveyance is formally documented and recorded, ensuring that public records reflect the trustor as the sole owner of the property without any encumbrances or claims related to the loan. This is crucial not only for the trustor's peace of mind but also for future transactions involving the property.

The other options describe scenarios that do not accurately represent reconveyance. For instance, the sale of the property by the trustee relates to a foreclosure situation, and transferring property to a third party does not pertain directly to the repayment of a loan. Modifying loan terms involves renegotiation rather than returning property rights, which is a different legal process.