Glossary

What is Title Insurance, anyway and why do I need it? Click here to find out

Abstract - A summary of all of the recorded instruments and proceedings that affect the title to property.

Affidavit - a written statement or declaration sworn to or affirmed before an officer authorized to administer an oath or affirmation.

Appraisal - An opinion or estimate of a property’s value.

Assumption of Mortgage - The purchase of mortgaged property whereby the buyer accepts liability for any debt. The seller remains liable to the lender unless the lender agrees to release the seller.

Balloon Payment - The final payment on a loan, when that payment is greater than the preceding installment payments and pays the note in full.

Bargain and Sale Deed - A deed that conveys real estate, generally lacking a warranty. The grantor will thus claim to have ownership but will not defend against all claims.

Bill of Sale - A written instrument that passes title of personal property from a seller to a buyer.

Chattel - Personal property, including autos and household goods and fixtures.

Closing statement - An accounting of funds from a real estate sale, made to both the seller and the buyer separately. Also known as a HUD-1 or settlement statement.

Cloud on Title - An outstanding claim or encumbrance that, if valid, would affect or impair the owner’s title.

Commission - an amount earned by a real estate broker for services rendered.

Condominium – a system of ownership of individual units in a multi-unit structure, combine with joint ownership of commonly used property such as sidewalks, hallways and stairs.

Consideration - Anything of value given to induce entering into a contract, including money, personal services, love and affection (a contract must have some consideration to be legally binding).

Contract for Deed - A type of installment sale whereby the buyer makes monthly payments on property and receives the deed upon the final payment.

Deed - a written document, properly signed and delivered, that conveys title to real property (see Bargain and sale deed, general warranty deed, quitclaim deed and special warranty deed).

Deed Restrictions - Any limitation within the face of a deed that inhibits the use of real estate.

Devise - a gift of real estate by will or last testament.

Devisee - One who inherits real estate through a will.

Discount Points - Amounts paid to the lender at the time of a loan origination, to account for the difference between the market interest rate and the lower face rate of the note. Each point is 1 percent of the loan amount.

Documentary Stamps - A tax paid to the local or state government based on the mortgage amount or purchase price.

Earnest Money - a deposit made by a purchaser of real estate to evidence good faith.

Easement - The right, privilege or interest that one party has in the land of another, such as the right of public utility companies to lay their lines across another’s property.

Egress - The ability to reach a road from a parcel of land.

Eminent Domain - The right of the government or a public utility to acquire property for necessary public use by condemnation; the owner must be fairly compensated.

Encroachment - The building, a part of a building, or any improvement that physically intrudes upon, overlaps or trespasses upon the property of another.

Encumbrance - Any right to or interest in land that diminishes its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions, mechanic’s liens and leases.

Escrow - An agreement between two or more parties providing that certain instruments, money or property be placed with a third party for safekeeping, pending the fulfillment or performance of some act or condition.

Estoppel - A written letter stating any money owed that affects real estate such as the balance of a mortgage or homeowner’s association fees.

Federal Housing Administration (FHA) - U. S. government agency that insures the repayment of real estate loans to lenders.

FHA Loan - A mortgage loan insured by the Federal Housing Administration.

General Warranty Deed - A deed in which the grantor agrees to protect the grantee against any other claim to title of the property and provides other promises.

Grantee - The party to whom the title to real property is conveyed; the buyer.

Grantor – The party who conveys real estate by deed; the seller.

Homestead - Status provided to a homeowner’s principal residence by some state statutes; protects home against some judgments up to specified amounts.

HUD-1 – Another term for a Closing Statement

Intangible Tax – A governmental tax on the mortgage to real property.

Investment Property - Property that is owned for its income generating capacity or expected resale value, such as apartments, office buildings or undeveloped land.

Joint Tenancy - Ownership of realty by two or more persons, each of whom has an undivided interest with the right of survivorship.

Judgment - A court decree stating that one individual is indebted to another and fixing the amount of the indebtedness.

Judgment Lien – The claim upon the property of a debtor resulting from a judgment.

Lien - a charge against property, making it security for the payment of a debt, judgment, mortgage or taxes, a type of encumbrance.

Life Estate - A freehold interest in land that expires upon the death of the owner or another specified person.

Lis Pendens - Latin for “suit pending”. Recorded notice that a suit bas been filed, the outcome of which may affect title to certain land.

Mechanic’s Lien - A lien given by law upon a building or other improvement upon land, and upon the land itself, as security for the payment for labor done upon, and materials furnished for, the improvement.

Mortgage - a written instrument that creates a lien upon real estate as security for the payment of a specified debt.

Note - a written instrument that acknowledges a debt and premises payment.

Personalty – Personal property; all property that is not realty.

PITI - Acronym for principal, interest, taxes and insurance. The monthly mortgage payment, by most homeowners, consisting of calculated principal and interest plus one twelfth of the estimated annual taxes and insurance.

Power of Attorney - An instrument authorizing a person to act as the agent of the person granting it.

Purchase Money Mortgage - A mortgage given by a grantee (buyer) to a grantor (seller) in partial payment of the purchase price of real estate.

Quitclaim Deed - A deed that conveys only the grantor’s rights or interest in real estate, without stating their nature and with no warranties of ownership.

Real Estate Settlement Procedures Act (RESPA) - Federal law enacted in 1974 that requires buyer and seller to have knowledge of closing costs. Applies to first mortgage loans on one-to-four family homes.

Riparian Rights - Rights pertaining to the use of water on, under or adjacent to one’s land.

Sales Contract - A contract by which the buyer and seller agree to the terms of sale.

Settlement Statement - Another term for a Closing Statement

Special Warranty Deed - A deed in which the grantor limits the title warranty given to the grantee to anyone claiming by, from, through or under him or her, the grantor. The grantor does not warranty against title defects arising from conditions that existed before he or she owned the property.

Survey - The process by which a parcel of land is measured and its boundaries ascertained. It will also show any encroachments or easements.

Tenancy by the Entireties - An estate that exists only between husband and wife with equal right of possession ;and enjoyment during their joint lives and with the right of survivorship.

Tenancy in Common - An ownership of realty by two or more persons, each of whom has an undivided interest, without the right of survivorship. Upon the death of one of the owners, his or her ownership share is inherited by the party or parties designated in his or her will.

Title – Evidence that the owner of land is in lawful possession thereof; evidence of ownership.

Title Insurance - An insurance policy that protects the holder from any loss resulting from defects in the title.

Title Search – An examination of the public records to determine the ownership and encumbrances affecting real property. (See abstract).

Warranty Deed - One that contains a covenant that the grantor will protect the grantee against any and all claims. Usually contains covenants assuring good title, freedom from encumbrances and quiet enjoyment.

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