Abstract- A history
of all transactions shown in the public
records affecting a particular tract
of land.
Abstract Plant- See
Title Plant.
Adjustable Rate
Mortgage (ARM)- Mortgage
loans under which the interest
rate is periodically adjusted,
in accordance with some
market indicator, to more
closely coincide with the
current rates. The extent
and number of these adjustments
are agreed to at the inception
of the loan.
Adverse Possession- The
possession, by one person,
of land belonging to another
in a manner deemed adverse
to the interest of the
owner. In most states,
by operation of law, title
to the land becomes vested
in such person after a
fixed number of years if
the owner fails to assert
his or her rights.
Affidavit- A
written statement made
under oath before a notary
public or other judicial
officer.
Agreement- A
legally binding contract
made between two or more
persons.
ALTA (American
Land Title Association)- The
trade association of the
title insurance industry,
which has adopted certain
insurance policy forms
to standardize coverage
on a national basis.
Amortization-
Payment to reduce the principal
of a debt in regular, periodic
installments.
Appraisal- A
report from an independent
third party detailing the
estimated value of real
estate.
Appurtenance- A
right or privilege that
is a part of the ownership
of property, such as a
right of way to a highway
across the land of another.
Water rights are also an
example.
Assessment- (1)
The valuation of real estate
for purpose of taxes or
special improvement charges.
(2) The amount of taxes
or special improvement
charges. Special improvement
charges are usually for
the costs of streets, sidewalks,
sewers, etc.
Assignment- (1)
The act of transferring
an interest, such as a
loan secured by a mortgage,
from one person to another.
(2) The instrument or paper
by which one person transfers
such ownership to another.
Attorney's Opinion- A
statement by an attorney
as to the validity of a
title, arrived at after
investigation of the history
of the title as recorded
in the public records.
Back Title Letter- Also
called "back title certificate" in
some areas, and "starter" in
others. When titles previously have
been examined up to a certain date
by reliable examiners, title companies
sometimes give subsequent examiners
of such titles a letter that sets
forth the condition of the title
at the time of the previous examination
and authorizes them to begin their
subsequent examination with the terminal
date of the previous examination.
Balloon Note- A
form of promissory
note that calls for
the minimum payment
of principal and the
payment of interest
at regular intervals.
This type of note requires
a substantial final
payment, which represents
all the principal.
Bankruptcy- A
proceeding in U.S.
District Court wherein
assets of an insolvent
debtor are protected
and distributed in
an equitable manner.
Binder- Sometimes
called "preliminary
certificate" or "commitment." (1)
A preliminary report
as to the condition
of a title and a
commitment to issue
a title insurance
policy in a certain
manner when certain
conditions are met.
(2) A deposit in
escrow of a small
part of the purchase
price of real estate
as evidence of good
faith and to bind
an agreement to purchase.
Certificate of Title- A
certificate issued by a title examiner
stating the condition of a title.
Chain- In
real estate measurements
(surveying), a chain is
66 feet long or 100 links,
each link being 7.92 inches.
The measurement may change
when used in fields other
than surveying.
Chain of Title- The
successive ownerships or
transfers in the history
of title to a tract of
land.
Claim- An
adverse right or interest
asserted by one party against
another or against an insurer
or indemnitor. Claims may
arise from unpaid debts
or taxes, as well as from
hidden title defects such
as fraud, forgery, missing
heirs, etc.
Clear Title- Real
property ownership free
of liens, defects, encumbrances
or claims.
Closing- Also
called "settlement." A
meeting of all parties
involved in a property
transaction during which
the transaction is consummated.
Clouded Title- An
irregularity, possible
claim or encumbrance that,
if valid, would adversely
affect or impair the title.
Coinsurance- Two
or more policies of title
insurance issued by different
insurers, each covering
a portion of the same risk,
which together provide
total coverage of the risk.
Commitment- Also
called "binder." A
document issued by a title
insurance company that
contains the conditions
under which a policy of
title insurance will be
issued.
Condemnation- (1)
The taking of private property
for a public purpose, with
compensation to the owner
under the right of eminent
domain. Governmental units,
railroads and utility companies
have the right to condemn
and take private property.
(2) The destruction by
government of private property
that imperils the life,
health or safety of the
public.
Conventional Loan- A
loan secured by a mortgage
or deed of trust for which
the loan-to-value ratio
is within an acceptable
range for a particular
lending institution.
Conveyance- The
transfer of title to property
from one person to another.
Covenant- A
formal agreement or contract
between two parties in
which one party gives the
other certain promises
and assurances, such as
covenants of warranty in
a warranty deed.
Courtesy- A
right that a husband has
in his wife's property
at her death. It does not
exist in all states.
Dedication- The
setting aside of certain land by the
owner and declaring it to be for public
use. Examples: streets, sidewalks and
parks.
Deed- A
document through which
a conveyance of property
is effected.
Deed Restriction-
A covenant contained in
a deed imposing limits
on the use or occupancy
of the real estate or the
type, size, purpose or
location of improvements
to be constructed on it.
Defect- A
blemish, imperfection or
deficiency. A defective
title is one that is irregular
and faulty.
Depreciation-
Loss in value occasioned
by ordinary wear and tear,
destructive action of the
elements, or functional
or economic obsolescence.
Devise-
A gift of real estate made
by a will.
Dominant Estate- The
property for the benefit
of which a right-of-way
easement exists across
another's adjoining piece
of land is said to be the
dominant estate. The land
across which the easement
runs is said to be the
servient estate.
Dower-
A right that a wife has
in her husband's property
at the time of his death.
Does not exist in all states.
Earnest Money- A
deposit of funds by the purchaser of
a piece of real estate as evidence
of good faith.
Easement-
A right to use all or part
of the land owned by another
for a specific purpose.
An easement may, for example,
entitle its holder to install
and maintain sewer or utility
lines.
Eminent Domain- The
right of a government to
take privately owned property
for public purposes under
condemnation proceedings
subject to payment of its
fair market value.
Encroachment-
Any building, improvement
or structure located on
one property (such as a
wall, fence or driveway)
that intrudes upon the
property of another.
Encumbrance-
Any interest, right, lien
or liability attached to
a parcel of land (such
as unpaid taxes or an unsatisfied
mortgage) that constitutes
or represents a burden
or charge upon the property.
Equity-
The market value of real
property, less the amount
of existing liens.
Escheat-
The reversion of property
to the state when an owner
dies leaving no legal heirs,
devisees or claimants.
Escrow-
A method of closing a real
estate transaction in which
all required documents
and funds are placed with
a third party for processing
and disbursement.
Estoppel-
A legal restraint that
stops or prevents a person
from contradicting or reneging
on his previous position
or previous assertions
or commitments.
Examination-
The study of the instruments
and muniments incident
to a chain of title to
determine their effect
and condition in order
to reach a conclusion as
to the status of the title.
Exception-
A provision in a title
insurance binder or policy
that excludes liability
for a specific title defect
or an outstanding lien
or encumbrance.
Execute-
To sign a legal instrument.
A deed is said to be executed
when it is signed, sealed,
witnessed and delivered.
Fannie Mae (FNMA)- Federal
National Mortgage Association. A private
corporation dealing in the purchase
of first mortgages.
Fee Simple Deed- The
absolute ownership of a
parcel of land. The highest
degree of ownership that
a person can have in real
estate, which gives the
owner unqualified ownership
and full power of disposition.
FHA (Federal Housing
Administration)-
A federal agency that insures
first mortgages, enabling
lenders to lend a very
high percentage of the
sale price.
Fixed Rate Mortgage- A
mortgage having a rate
of interest that remains
the same for the life of
the mortgage.
Fixtures-
Personal property that
is attached to real property
and is legally treated
as real property while
it is so attached. Examples:
medicine cabinets, window
blinds and chandeliers.
Foreclosure-
A legal proceeding in which
real estate secured by
a mortgage or deed of trust
is sold to satisfy the
underlying debt.
Forgery-
The fraudulent signing
of another's name to an
instrument such as a deed,
mortgage or check.
Freddie Mac (FHLMC)- Federal
Home Loan Mortgage Corporation.
A federal agency that purchases
both conventional and federally
insured first mortgages
from members of the Federal
Reserve System and the
Federal Home Loan Bank
System.
Ginnie Mae (GNMA)- Government
National Mortgage Association. A federal
association working with the FHA that
offers special assistance in obtaining
mortgages and purchases mortgages in
the secondary market.
Grant-
To bestow or confer, with
or without compensation,
a gift such as land or
money by one having control
or authority over the gift.
Hereditaments- Any
and all kinds of estates, interest
and rights in real estate that can
be inherited.
Homeowners Insurance- Real
estate insurance protecting
against loss caused by
fire, some natural causes,
vandalism, etc., depending
on the terms of the policy.
Also includes coverage
such as personal liability
and theft away from home.
HUD (Department
of Housing and Urban Development)- The
federal department responsible
for the major housing programs
in the United States.
Index- (1) An alphabetical
listing in the public records of the
names of parties to recorded real estate
instruments together with the book
and page number of the record. (2)
The listing in abstract and title plants
of recorded real estate instruments
in groups according to land descriptions,
known as a geographic index. (3) The
alphabetical listing in abstract and
title plants, by names of the parties,
of all recorded instruments that affect
but do not describe particular real
estate, such as judgments, powers of
attorney, wills and probate proceedings.
Such indexes are known by various names,
such as "general index," "judgment
index" and "name index."
Instrument-
Any written document having
a legal effect.
Judgment- The determination
of a court regarding the rights of
parties in an action. A judgment of
debt on a property owner can create
a lien on all of that owner's land
within a certain jurisdiction.
Junior Mortgage- A
mortgage lower in lien
priority than another.
Leasehold- The right
to possession and use of land for a
fixed period of time. The lease is
the agreement that creates the right.
Lessee-
A tenant holding a leasehold.
Lessor-
A landlord; one who gives
a leasehold to a lessee.
License-
Permission to go upon or
use the land of another,
the permission being a
personal privilege and
not constituting an interest
in the land.
Lien-
A monetary charge imposed
on a property, usually
arising from some debt
or obligation.
Lien Waver- Also
called "waiver of
liens." A waiver of
mechanics' lien rights,
signed by contractors or
subcontractors.
Link-
In surveying, a length
of 7.92 inches.
Loan Policy- Also
called "mortgage policy." A
title insurance policy
insuring a mortgagee, or
beneficiary under a deed
of trust, against loss
caused by invalidity or
unenforceability of a lien,
or loss of priority of
the mortgage or deed of
trust.
Lis Pendens- A
legal notice intending
to bind third parties of
litigation claiming an
interest in real estate.
Lot- Generally,
any portion or parcel of
real property. Usually
refers to a portion of
a subdivision.
Market Value- The
average of the highest price that a
buyer, willing but not compelled to
buy, would pay and the lowest price
a seller, willing but not compelled
to sell, would accept.
Mechanic's Lien- A
lien on real estate, created
by operation of law, that
secures the payment of
debts due to persons who
perform labor or services
or furnish materials incident
to the construction of
buildings and improvements
on the real estate.
Metes and Bounds- A
land description in which
boundaries are described
by courses, directions,
distances and monuments.
Mortgage- A
conditioned pledge of property
to a creditor as security
for the payment of a debt.
Mortgage Insurance- Insurance
written by an independent
mortgage insurance company
protecting the mortgage
lender against loss incurred
by a mortgage default,
thus enabling the lender
to lend a higher percentage
of the sale price.
Mortgagee-
The holder of a mortgage.
The party to whom a mortgage
is made, generally the
lender.
Mortgagee Policy- See
Loan Policy.
Mortgagor-
A person who mortgages
property. A person who
executes a mortgage, generally
the property owner.
Multiple Listing- The
pooling in a central bureau
of listings of properties
for sale. These listings
are held individually by
members of a group of real
estate brokers, with the
agreement that any member
of the group may sell the
properties and, in the
case of a sale, the commission
will be divided between
the broker making the sale
and the broker who filed
the listing.
Muniments of Title- Written
evidence (documents) that
an owner possesses to prove
his or her title to property.
Owner's Policy- A
policy of title insurance insuring
an owner of real estate against loss
occasioned by defects in, liens against
or unmarketability of the owner's title.
Plat- Also called "plat
map." A map dividing a parcel
of land into lots, as in a subdivision.
A plat book contains the plat maps
for a given area.
Point-
Also called "commission
points" or "discount
points." One percent
of the amount of the loan.
Premium-
The amount payable for
an insurance policy.
Prescriptive Easement- A
right to use another's
property that is not inconsistent
with the owner's rights
and that is acquired by
an open, notorious, adverse
and continuous use for
the statutory period, for
example 20 years.
Principal-
(1) A sum of money owed
as a debt on which interest
is payable. (2) A person
who empowers another to
act as his representative
or agent. (3) The person
having prime responsibility
for an obligation as distinguished
from one who acts as a
surety or endorser.
Purchase Money
Mortgage- A mortgage
given by a purchaser to
a seller on the subject
property to secure payment
of a part of the purchase
price.
Quit Claim Deed- A
deed that does not imply that the grantor
holds title, but that surrenders and
gives to the grantee any possible interest
or rights that the grantor may have
in the property.
Real Estate- Also
called "real property." (1)
Land and anything permanently affixed
to the land, such as building, fences
and those things attached to the buildings,
such as light fixtures, plumbing and
heating fixtures, or other such items
that would be personal property if
not attached. (2) May refer to rights
in real property as well as the property
itself.
Recording- The
noting in a public office
of the details of a legal
document - such as a deed
or mortgage - affecting
the title to real estate.
When such an instrument
is properly recorded, it
is considered to be a matter
of public record. Legally,
that means that all subsequent
purchasers are deemed to
have constructive knowledge
of that information.
Reinsurance-
A contractual relationship
between two insurance companies
under which one insurer
assumes a portion of the
risk of the insurance policy
written by the other.
Release-
(1) To relieve from debt
or security or abandon
a right, such as the release
of a mortgage lien from
a part or all of the land
mortgaged. (2) The instrument
effecting a release.
Restrictions-
Limitations on the use
of property imposed or
created by deeds or other
documents in the chain
of title. A restriction,
for example, may prohibit
the placement of trailer
or the construction of
a commercial structure
on the property.
Riparian Rights- The
rights of owners of lands
bordering watercourses
which relate to the water
and its use.
Sale Agreement- A
contract entered into between a buyer
and seller, setting forth the terms,
provisions and conditions of a sale
of real estate.
Sale and Leaseback- The
sale of an asset to a buyer
who immediately leases
it back to the seller.
Search- A
careful exploration and
perusal of the public records
in an effort to find all
recorded instruments relating
to a particular chain of
title.
Second Mortgage- A
mortgage ranking in priority
immediately below a first
mortgage.
Subordination- The
act or process by which
a person's rights are ranked
below the rights of others.
For example, a second mortgagee's
rights are subordinate
to those of the first mortgagee.
Surety-
(1) A person who agrees
to be responsible for a
debt or obligation of another.
(2) The pledge or agreement
by which one undertakes
responsibility for the
debt or obligation of another.
Title- (1) A combination
of all the elements that constitute
the highest legal right to own, possess,
use, control, enjoy and dispose of
real estate or an inheritable right
or interest therein. (2) The rights
of ownership recognized and protected
by the law.
Title Covenants- Covenants
ordinarily inserted in
conveyances and in transfers
of title to real estate
for the purpose of giving
protection to the purchaser
against possible insufficiency
of the title received.
A group of such covenants
known as "common law
covenants" includes:
covenants against encumbrances;
covenants for further assurance
(in other words, to do
whatever is necessary to
rectify title deficiencies);
covenants of good right
and authority to convey;
covenants of quiet enjoyment;
covenants of seisin; covenants
of warranty. (See Warranty
or Covenant.)
Title Defect- (1)
Any possible or patent
claim or right outstanding
in a chain of title that
is adverse to the claim
of ownership. (2) Any material
irregularity in the execution
or effect of an instrument
in the chain of title.
Title Insurance
Policy- A contract
of title insurance under
which the insurer, in keeping
with the terms of the policy,
agrees to indemnify the
insured against loss arising
from claims against the
insured interest.
Title Plant- Also
called "abstract plant" in
some areas. A geographically
filed assemblage of title
information that helps
in expediting title examinations,
such as copies of previous
attorneys' opinions, abstracts,
tax searches and copies
or take-offs of the public
records.
Variable Interest Rate- Also
called "flexible interest rate." An
interest rate that fluctuates as the
prevailing rate moves up or down. In
mortgages, there are usually maximums
as to the frequency and amount of fluctuation.
Veterans Administration
(VA) Loans- Housing
loans to veterans by banks,
savings and loans, or other
lenders that are guaranteed
by the Veterans Administration,
enabling veterans to buy
a residence with little
or no down payment.
Waiver- The voluntary
and intentional relinquishment of a
known right, claim or privilege.
Warranty-
In a broad sense, an agreement
or undertaking by a seller
to be responsible for present
or future losses of the
purchaser occasioned by
deficiency or defect in
the quality, condition
or quantity of the thing
sold. In a stricter sense,
the provision or provisions
in a deed, lease or other
instrument conveying or
transferring an estate
or interest in real estate
under which the seller
becomes liable to the purchaser
for defects in or encumbrances
on the title. (See Title
Covenants.)
Will-
A testamentary disposition
of property, usually in
a form prescribed by law,
that takes effect upon
death.
