Escrow Terms and Phrases.
Terms and Phrases is Fidelity National Title & Title Glossary
of definitions, meanings, and descriptions of significance for some of
our industry's most often used terms and phrases. Look for terms and phrases in Alphabetical Order:
A
ABA Number --
Originated by the American Bankers Association, it is the number
(usually in the upper right-hand portion of the check) which identifies
the bank upon which the check is drawn.
Abstract of Judgment --
A summary of the essential provisions of a court judgment, which when
recorded in the county recorder's office, creates a lien upon the
property of the defendant in that county, both presently owned or after
acquired.
Abutting Owner -- One whose land is contiguous to (abuts) a public right of way.
Acceleration Clause --
Clause used in an installment note and mortgage (or deed of trust),
which gives the lender the right to demand payment in full upon the
happening of a certain event, such as failure to pay an installment by a
certain date, change of ownership without the lender's consent,
destruction of the property, or other event which endangers the security
of the loan.
Access Right -- A right to ingress and egress to and from one's property. May be express or implied.
Accommodation Recording --
The recording of documents with the county recorder by a title
insurance company, without liability (no insurance) on the part of the
company, but merely as a convenience to a customer.
Acknowledgement --
A written declaration by a person executing an instrument, given before
an officer authorized to give an oath (usually a notary public),
stating that the execution is of his own volition.
Action to Quiet Title --
A court action to establish ownership to real property. Although
technically not an action to remove a cloud on title, the two actions
are usually referred to as "Quiet Title" actions.
Adjudication -- A judgment or decision by a court.
Adjustable Mortgage Loans (AML\'92S) --
Mortgage loans under which the interest rate is periodically adjusted
to more closely coincide with current rates. The amounts and times of
adjustment are agreed to at the inception of the loan. Also called:
Adjustable Rate Loans, Adjustable Rate Mortgages (ARM\'92s), Flexible
Rate Loans, and Variable Rate Loans.
Administrator -- A person given authority by a proper court to manage and distribute the estate of a deceased person when there is no will.
Adverse Possession --
A method of acquiring title by possession under certain conditions.
Generally, possession must be actual, under claim of right, open,
continuous, notorious, exclusive and hostile (knowingly against the
rights of the owner). Exact time (years) of possession and specific
requirements (such as payment of property taxes) vary with the statutes
of each state.
Affidavit -- A written statement or declaration, sworn to before an officer who has authority to administer an oath.
Affirmative Easement --
An easement described from the benefited estate (dominant tenement).
Also called a parcel 2 easement. The same easement described from the
burdened estate (servient tenement) would be a negative easement.
After Acquired Title --
Legal doctrine by which property automatically vests in a grantee when
the grantor acquires title to the property after the deed has been
executed and delivered.
Agency --
One who is authorized to act for or represent another (principal),
usually in business matters. Authority may be expressed or implied.
Alias --
Latin for (otherwise) commonly meaning that a person is known by more
than one name. In some states, indicated by the letters AKA (Also Known
Aliases).
Alienation Clause --
A type of acceleration clause, calling for a debt under a mortgage or
deed of trust to be due in its entirety upon transfer of ownership of
the secured property. Also called a "due-on-transfer" clause.
A.L.T.A.(American Land Title Association) --
An organization, composed of title insurance companies, which has
adopted certain insurance policy forms to standardize coverage on a
national basis.
Amendment -- A change, either to correct an error or to alter a part of an agreement without changing the principal idea or essence.
American Institute of Real Estate Appraisers --
A trade organization designed to establish standards of competence in
the appraisal industry. The designation MAI (competent by the
institute's standards to appraise all types of real property) and RM
(one to four family residences) are prestigious and heavily relied upon
by the real estate industry, lenders, governments, and others who
utilize appraisers.
Amortization -- Payment of debt in regular, periodic installments of principal and interest, as opposed to interest only payments.
Amortization Schedule --
A schedule showing each payment of a loan to be amortized and breaking
down the payment applied to principal and the amount applied to
interest.
Amortize -- To reduce debt by regular payments of both principal and interest, as opposed to interest only payments.
Anchor Tenant --
The most reliable, and usually the largest, tenant in a shopping
center. The strength of the anchor tenant greatly affects the
availability of financing for the shopping center. The term may also be
used to describe a tenant in an office building, industrial park, etc.
Annexation -- Permanently affixing to real property, such as city adding additional land to increase its size.
Appel Loan (Accelerating Payoff Progressive Equity Loan) --
A residential property loan which calls for a payment increase over the
first six years. Level payments are made for the remaining years and
the loan paid off during the 15th year. There is no prepayment penalty
and P.M.I. is required.
Appraisal --
An opinion of value based upon a factual analysis. Legally, an
estimation of value by two disinterested persons of suitable
qualifications.
Appraiser --
One who is trained and educated in the methods of determining the value
of property through analysis of various factors which determine said
value.
Appropriation --
The private taking and use of public property, such as water from a
river or lake. Not to be confused with condemnation or expropriation.
Appurtenance --
Something belonging to something else, either attached or not, such as a
barn to a house or an easement to land. The appurtenance is part of the
property and passes with it upon sale or other transfer.
Arbitrary Map --
A map drawn by a title company to be used in locating property in areas
where legal descriptions are difficult and complex. Areas are
arbitrarily subdivided, usually by ownership at a given time, into lots
which are numbered. Recorded documents are then posted to these
arbitrary lots by the same "arb" number.
Arbitration Clause --
A clause in a lease calling for the decision of a third party (arbiter)
regarding disputes over future rents based on negotiation. Also used in
construction contracts, disputes between brokers, etc.
Articles of Incorporation --
Documentation filled with the state which sets forth-general
information about a corporation. More specific rules of the corporation
would be contained in the by-laws.
"As Is" Condition --
Premises accepted by a buyer or tenant in the condition existing at the
time of the sale or lease, including all physical defects.
Assessed Value -- Value placed upon property for property tax purposes by the tax assessor.
Assessment --
(1) The estimating of value of property for tax purposes. (2) A levy
against property in addition to general taxes. Usually for improvements
such as streets, sewers, etc.
Assessment District -- An area, the boundaries of which are set for tax assessment purposes only; these boundaries may cross city boundaries.
B
Backup Offer --
A secondary offer to buy property, used in case the first (primary)
offer fails. A backup offer is especially useful when the primary offer
contains difficult contingencies.
Balloon Note --
A note calling for periodic payments which are insufficient to fully
amortize the face amount of the note prior to maturity, so that a
principal sum known as the "balloon" is due at maturity.
Balloon Payment -- The final payment (balance due) of a balloon note.
Bankruptcy --
Proceedings under federal bankruptcy statutes to relieve a debtor
(bankrupt) from insurmountable debt. The bankrupt's property is
distributed by the court to the creditors as full satisfaction of the
debts, in accordance with certain priorities and exemptions. Voluntary
bankruptcy is petitioned by the debtor; involuntary by the creditors.
Base Map -- A map having background information, such as state, county, or city boundaries, upon which more detailed data is plotted.
Beneficial Estate --
An estate, the right of possession of which has been postponed, such as
a devise under a will. More commonly, an estate, the legal ownership of
which has not yet vested, as under a land contract. An equitable
estate.
Beneficial Interest -- The equitable, rather than legal ownership of property such as under a land contract.
Beneficiary --
(1) One for whose benefit trust is created. (2) In states in which
deeds of trust are commonly used instead of mortgages, the lender
(mortgagee) is called the beneficiary.
Beneficiary's Demand --
Written instructions by a beneficiary under a deed of trust stating and
demanding the amount necessary for issuance of a reconveyance, whether a
full or partial amount.
Beneficiary's Statement --
A statement by a lender under a deed of trust, setting forth the
pertinent information necessary to assume said deed of trust, such as
the unpaid balance, monthly payment, and interest rate.
Bequeath -- To give personal property by will.
Bequest -- Personal property left by will.
Bill of Sale -- An instrument by which one transfer personal property.
Binder --
A report issued by a title insurance company setting forth the
condition of title to certain property as of certain date, and also
setting forth conditions which, if satisfied, will cause a policy of
title insurance to be issued. Also called a commitment. A policy of
title insurance (used primarily by investors) calling for a reduced
rated for a future policy if the property is sold within a specified
period.
Blanket Mortgage --
(1) A mortgage covering more than one property of the mortgagor, such
as a mortgage all the lots of a builder in a subdivision. (2) A mortgage
covering all real property of the mortgagor, both present and future.
When used in this meaning, it is also called a general mortgage.
Board of Equalization -- State board charged with the duty to equitable uniformity to the various local property tax assessments.
Boot --
Something given in addition to. Generally used in exchange to refer to
something given other than the major properties to be exchanged, in
order to equalize value.
Broker, Real Estate --
One who is licensed by the state to carry on the business of dealing in
real estate. A broker may receive a commission for his or her part in
bringing together a buyer and a seller, landlord and tenant, or parties
to an exchange.
Bulk Sale --
A transfer in bulk, not in the ordinary course of business, of all or
substantially all of the inventory and fixtures of a business.
Business Opportunity --
The sale of a business (may or may not include the sale of real
estate). Some states require a real estate license for these sales even
when real estate is not involved. The Uniform Commercial Code, state
statutes, and special laws for alcoholic beverage licenses (when
applicable) should be studied by the business opportunities broker.
By-Laws - Rules and regulations, adopted by an association or corporation, which govern its activities.
C
Cal-Vet Loans -- Real estate loans available to armed forces from California, at low interest rates.
Cancellation Clause --
A clause in a lease or other contract, setting forth the conditions
under which each party may cancel or terminate the agreement. The
conditions may be as simple as giving notice or complex and require
payment by the party desiring to cancel.
Caravan --
An inspection of newly listed properties, either by the entire sales
staff of an office or by sales personnel from more than one office in
conjunction with a multiple listing group. Generally conducted on a
regular basis.
Cashier's Check --
A check drawn by a bank on itself rather than on an account of a
depositor. A cashier's check is generally acceptable to close a sale
without waiting for the check to clear.
Caveat Emptor --
"Let Him Beware" Legal maximum stating that the buyer takes the risk
regarding the quality or conditions of the item purchased, unless
protected by warranty or there is misrepresentation. Currently, consumer
protection laws have placed more responsibility for disclosure on the
seller and broker.
CC&R's (Covenants, Conditions, and Restrictions) --
A term used in some areas to describe the restrictive limitations which
may be placed on property. In other areas, simply called restrictions.
Certificate of Deposit (C.D.) --
A specific sum of money deposited into a savings institution for a
specified time period and bearing a higher rate of interest than a
passbook account if left to maturity. Does not have withdrawal
privileges, as does a passbook account. Also called a time certificate
deposit (T.C.D.).
Certificate of Eligibility --
A certificate obtained by a veteran from a Veteran's Administration
office which states that the veteran is eligible for a V.A. insured
loan. There is a list of requirements (when and how long the veteran
served, type of discharge, etc.) which also may be obtained from the
V.A. office.
Certificate of Occupancy --
A certificate issued by a local building department to a building
renovator, stating that the building is in proper condition to be
occupied.
Certificate of Sale --
Certificate issued to the buyer at a judicial sale (such as a tax
sale), which will entitle the buyer to a deed upon confirmation of the
sale by the court or if the land is not redeemed within a specified
time.
Certificate of Title --
In areas where attorneys examine abstracts or chains of title, a
written opinion, executed by the examining attorney, stating that the
title is vested as stated in the abstract.
Certified Check --
A personal check drawn by an individual, which is certified
(guaranteed) to be good. The bank holds the funds to pay the certified
check and will not pay any other checks drawn on the account if such
payments would impede payment of the certified check. The bank also will
not honor a stop payment on a certified check.
Chain of Title --
The chronological order of conveyance of a parcel of land, from the
original owner (usually the government to the present owner).
Chains and Links --
Measurements. In real estate measurements (surveying) a chain is 66"
long or 100 links, each link being 7.92". The measurement may change
when used in fields other than surveying.
Chattel -- Personal property.
Cistern -- A tank used for storing rainwater for use in areas where there is no water brought to the property by plumbing.
Closing --
(1) In real estate sales, the final procedure in which documents are
executed and/or recorded, and the sale (or loan) is completed. (2) A
selling term in which the client or customer is asked to agree to the
sale or purchase and sign the contract. (3) The final call in a metes
and bounds legal description which "closes" the boundaries of the
property.
Closing Costs -- Expenses incidental to the sale of real estate, such as loan fees, title fees, appraisal fees, etc.
Closing Statement --
The statement that lists the financial settlement between buyer and
seller, also the costs each must pay. A separate statement for buyer and
seller is sometimes prepared.
Cloud on Title --
An invalid encumbrance on real property, which, if valid, would affect
the rights of the owner. For example: A sells lot 1, tract 1, to B. The
deed is mistakenly drawn to read lot 2, tract 1. A cloud is created on
lot 2 by the recording of the erroneous deed. The cloud may be removed
by quitclaim deed, or, if necessary, by court action.
Cluster Housing --
Building houses close together with little yard space and a large
common area, rather than each house having a large yard. The density is
usually greater in the cluster project.
Codicil -- An addition to a will, which modifies the will by adding to it, subtracting from it, or clarifying it.
Color of Title --
That which gives the appearance of good title, but actually contains
some defect. For example: a conveyance given without the grantor having
good title.
Commercial Property --
Property, which is zoned "commercial" (for business use). Property such
as stores, restaurants, etc., falling between residential and
industrial.
Commission --
An amount, usually as a percentage, paid to an agent (real estate
broker) as compensation for his services. The amount to a real estate
broker is generally a percentage of the sale price or total rental.
Commitment --
(1) Title insurance term for the preliminary report issued before the
actual policy. Said report shows the condition of title and the steps
necessary to complete the transfer of title as contemplated by buyer and
seller. (2) A written promise to make or insure a loan for a specified
amount and on specified terms.
Commitment Fee -- A fee paid for a loan commitment.
Common Area -- The area owned in common by the owners of condominiums or planned unit development homes in subdivision.
Community Property --
Property owned in common by a husband and wife, which was not required
as a separate property. A classification of property peculiar to certain
states.
Comparable -- Properties used as comparisons to determine the value of a specified property.
Compensatory Damages -- Damages to cover a loss or injury or nothing more.
Conditional Commitment -- A loan commitment given before a borrower (buyer) is obtained and subject to approval of the buyer by the lender.
Conditional Sales Contract --
A sale in which the title to property or goods remains with the seller
until the purchaser has fulfilled the terms of the contract, usually
payment in full.
Condominium --
A structure of two or more units, the interior space of which are
individually owned; the balance of the property (both land and building)
is owned in common by the owners of the individual units. The size of
each unit is measured from the interior surfaces (exclusive of paint or
other finishes) of the exterior walls, floors, and ceiling. The balance
of property is called the common area.
Construction Loan --
Short term financing of real estate construction. Generally followed by
a long term financing called a "take out", issued upon completion of
improvements.
Constructive Notice --
Notice given by publishing in a newspaper, recording, or other method
which legally notifies the parties involved, but may not actually notify
them.
Contiguous -- Near or close to, whether actually touching or not. Generally refers to actual touching or bordering on.
Contingency --
Commonly, the dependence upon a stated event, which must occur before a
contract, is binding. For example: the sale of a house, contingent upon
the buyer obtaining financing.
Contact of Sale -- In some areas of the country, synonymous with land contract. In some areas, synonymous with purchase agreement.
Conventional Loan -- A mortgage or deed of trust not obtained under a government-insured program, (such as F.H.A. or V.A.).
Conveyance -- Transfer of title to land. Includes most instruments by which an interest in real estate is created, mortgaged, or assigned.
Corporation --
A general term encompassing any group of people "incorporating" by
following certain statutory procedures. Most common type of corporation
is a private one formed to carry on a business.
Co-Trustee -- One who shares the duty if trustee with one or more other trustees.
Counter Offer --
An offer (instead of acceptance) in response to an offer. For example: A
offers to buy B's house for X dollars. B, in response offers to sell to
A at a higher price. B's offer to A is a counter offer.
County Records -- Public recorded documents by which notice is given of changes to title, liens, and other matters reflecting real estate.
Courtesy to Brokers --
Willingness of a seller to pay a commission to any broker supplying a
suitable buyer; or the willingness of a listed broker to share the
commission with any broker supplying a suitable buyer.
Creditor's Position --
(1) The portion of the value of property, which is mortgaged, rather
than the equity. (2) The portion of the value of property upon which a
first mortgage could be obtained.
Credit Report --
A report on the past ability of a loan applicant to pay installment
payments. Several national and local companies make such reports.
Custodian - (1) One who is entrusted with the care and keeping of real or personal property. (2) A janitor.
Custody --
The care and keeping of property (real and personal). For example: An
escrow agent has custody of documents and funds until closing.
Custom Builder --
One who builds for a specific owner, designing the building to suit
said owner's need, rather than building and then looking for a buyer.
D
DBA (Doing Business As) -- An identification of the owner or owners of a business and the business name. Not a partnership or corporation.
Declaration of Restrictions - A set of restrictions filed by a subscriber to cover an entire tract or subdivision.
Declaratory Judgment --
A determination by a court as to the legal rights of the plaintiff,
with no order for relief. The judgment is binding on future litigation.
Deed --
Actually, any one of many conveyance or financing instruments, but
generally a conveyance instrument, given to pass fee title to property
upon sale.
Deed in Lieu --
A deed from the owner (debtor) to a lender to prevent foreclosure.
There are usually statutory provisions as to fairness of value and
absence of coercion, which must be recited on the deed.
Deed in Lieu of Foreclosure --
A deed given by an owner/borrower to a lender to prevent the lender
from beginning foreclosure proceedings. The validity of the deed depends
to some degree on "fairness" under the circumstances, and adequacy of
consideration, which will be considered.
Deed of Trust --
An instrument used in many states in place of a mortgage. Property is
transferred to a trustee by a borrower (trustor), in favor of the lender
(beneficiary), and reconveyed upon payment in full.
Deed Restrictions -- Limitations on the use of property placed in conveyance deed by the grantor, which bind all future owners.
Defective Title --
(1) Title to a negotiable instrument obtained by fraud. (2) Title to
real property, which lacks some of the elements necessary to transfer
good title.
Defendant -- The person against whom a civil or criminal action is brought.
Delayed Reconveyance --
A reconveyance of a deed of trust which is issued and recorded after
transfer of title and issuance of title insurance (not showing the deed
of trust). Usually occurs when the lender is in another state and will
not issue the reconveyance paid in full.
Demand --
(1) The quantity of goods that can be sold at a specified price, in a
given market, at a particular time. (2) A letter from a lender showing
the amount due in order to pay off a mortgage or trust deed.
Department of Real Estate --
That department of the state government responsible for the licensing
and regulation of persons engaged in the real estate business. The
person heading the department is usually called The Real Estate
Commissioner. Other names for the department are The Division of Real
Estate and the Real Estate Commission.
Deposit --
(1) Money given by the buyer with an offer to purchase. Shows good
faith. Also called earnest money. (2) A natural accumulation of
resources (oil, gold, etc.) which may be commercially recovered and
marketed.
Developer -- (1) A builder. (2) One who prepares the raw land for construction and then sells to a builder.
Development -- A planned construction project, rather than simply the building of unrelated buildings.
Development Loan --
A loan for the purchase of land or off-site improvements, rather than
building costs. The land involved is used to secure the loan.
Disclaimer --
(1) Statement on a publication attempting to limit liability in event
the information is inaccurate. (2) Renunciation of a claim or right of
another. (3) Refusal to accept an estate, either as trustee or as owner.
Distress Sale --
A sale of property when the seller is under extreme pressure to sell.
Generally the property is sold for less than market value.
Documentary Tax Stamps --
Stamps, similar to postage stamps, affixed to a deed, showing the
amount of transfer tax paid. Most states now "stamp" the deed rather
than affixing a stamp.
Documentary Transfer Tax -- A state tax on the sale of real property, based on the sale price or equity transferred.
Dominant Tenement --
A parcel of land which benefits from an easement. For example: An
easement exists over parcel A for access to parcel B. Parcel B is the
dominant tenement; parcel A is the servient tenement.
Down Payment -- Cash portion paid by a buyer from his own funds, as opposed to that portion of the purchase price that is financed.
Downzoning --
A change in the allowable use of land by the appropriate zoning
authority to a lesser (usually less available) use. Example: Eight units
per acre to four units per acre.
Dresser Drawer Title -- The failure to record evidence of title; instead, placing it in a "dresser drawer". Also called "Trunk Title".
Duplex --
(1) Any building containing exactly two dwelling units. Most commonly
refers to the units that are side by side, with a common wall and roof.
(2) An apartment on two floors or levels.
E
Easement --
A right created by grant, reservation, agreement, prescription, or
necessary implication, which one has in the land of another. It is
either for the benefit of land (appurtenant), such as the right to cross
parcel A to get to B, or "in gross", such as public utility easement.
Easement Appurtenant --
An easement for the benefit of another parcel of land, such as the
right to cross parcel A to reach B. The easement will pass with the
transfer of property to a new owner.
Easement in Gross --
An easement for the benefit of a person or company, rather than for the
benefit of another parcel of land. Commonly, such easements as for
public utilities.
Easement of Necessity --
An easement granted by a court when it is determined that said easement
is absolutely necessary for the use and enjoyment of the land. Commonly
given to landlocked parcels.
Egress --
A term concerning a right to come and go across the land (public or
private) of another. Usually part of the term ingress and egress.
Encroachment -- Generally, construction onto the property of another, as of a wall, fence, building, etc.
Encumbrance, Incumbrance --
A claim, lien, charge or liability attached to and binding real
property. Any right to, or interest in, land which may exist in one
other than the owner, but which will not prevent the transfer of fee
title.
Environmental Impact Report --
A report of the probable effect of a development on the surrounding
area (environment). The report is prepared by an independent company to
federal, state, or local guidelines.
Equitable Ownership --
Ownership by one whom does not have legal title, such as vendee under a
land contract or, technically, a trustor under a deed of trust (legal
title being in the trustee). Also called equitable title.
Equity --
(1) A legal doctrine based on fairness, rather than strict
interpretation of the letter of the law. (2) The market value of real
property, less the amount of existing liens. (3) Any ownership
investment (stocks, real estate, etc.) as opposed to investing as a
lender (bonds, mortgages, etc.)
Escheat --
A reversion of property to the state in the absence of an individual
owner. Usually occurs when a property owner dies interstate, and without
heirs.
Escrow --
Delivery of a deed by a grantor to a third party for delivery to the
grantee upon the happening of a contingent event. Contemporarily, in
some states, all instruments necessary to the sale (including funds) are
delivered to a third (neutral) party, with instructions as to their
use.
Escrow Instructions --
Instructions which are signed by both buyer and seller, and which
enable an escrow agent to carry out the procedures, necessary to
transfer real property, a business, or other assignable interest.
Escrow Officer --
An escrow agent. In some states, one who has, through experience and
education, gained a certain degree of expertise in escrow matters.
Estoppel -- The prevention of one from asserting a legal right because of prior actions inconsistent with the assertion.
Evidence of Title -- A document establishing ownership to property. Most commonly, a deed.
Exclusive Agency Listing --
A listing or agreement protecting the listing broker's commission
against the sale of property by another agent but not against the sale
of the principal. The term is not universal, as some areas use this
term, nonexclusive listing, to describe this agreement.
Exclusive Listing --
A written contract between a property owner and a real estate broker,
whereby the owner promises to pay a fee or commission to the broker if
certain real property of the owner is sold during a stated period,
regardless of whether the broker is or is not the cause of the sale. The
broker promises to put forth his or her best efforts to sell the
property, and may make specific promises as to advertising or other
promotion in certain instances.
Execute --
To complete; to fulfill a purposes, such as to execute an instrument,
meaning to sign, seal (contemporarily, to notarize), and deliver.
F
Farmer Home and Administration (FMHA) -- The federal agency which makes, participates, and ensures loans for rural housing and farms.
Federal Deposit Insurance Corporation (FDIC) -- The federal corporation which insures against loss of deposits in banks and, since 1989, in savings associations.
Federal Tax Lien --
A lien attaching to property for nonpayment of a federal tax (estate,
income, etc.). A federal tax lien differs from other liens in that it is
not automatically wiped out by foreclosing on a mortgage or trust deed
recorded before the tax lien (except by judicial foreclosure).
Fee Simple --
An estate under which the owner is entitled to unrestricted powers to
dispose of the property, and which can be left by will or inherited.
Commonly, a synonym for ownership.
Fee Simple Absolute -- A term now used synonymously with fee simple.
F.H.A.(Federal Housing Administration) -- A federal agency which insures first mortgages, enabling lenders to loan a very high percentage of the sale price.
FHA Escape Clause --
A clause stating that the buyer (borrower) shall not be obligated to
buy nor shall any deposit be lost if the appraisal is less than the
agreed upon amount.
Fictitious Instrument --
An instrument (usually a mortgage or deed of trust) which is recorded
not on specific property but to be incorporated by reference into future
mortgages or deeds of trust. This is done by reference to the recording
information of the fictitious instrument in the instrument recorded
against specific property. This shortens the latter instrument and
thereby cuts the cost of printing, paper, recording, etc. The fictitious
instrument contains general language applicable to any specific
property.
Financing Costs -- The cost and interest and other charges involved in borrowing money to build or purchase real estate.
First Refusal Right --
A right, usually given by an owner to a lessee, which gives the lessee a
first chance to buy the property if the owner decides to sell. The
owner must have a legitimate offer, which the lessee can match or
refuse. If the lessee refuses, the property can then be sold to the
offeror.
Flood Insurance --
Insurance indemnifying against loss by flood damage. Required by
lenders (usually banks) in areas designated (federally) as potential
flood areas. The insurance is private but federally subsidized.
Floor Time --
A period during the working day when a specific salesperson is
responsible for general inquiring (walk-in or telephone) regarding
property in a brokerage office. This is generally established as a set,
rotating number of hours per week for each salesperson. When a
salesperson is "on the floor" he or she must be in the office or make
arrangements with another salesperson to cover the floor during those
hours.
FNMA (Fannie Mae) -- A private corporation dealing in the purchase of first mortgages at a discount.
FNMA Buydown --
FNMA (Federal National Mortgage Association) accepts loans containing a
buy down provision on single family residential, owner occupied
properties. A prepayment (points) will buy a lower rate of interest
during the first one to five years of the loan. Restrictions apply to
the amount of the buydown and rise in payment amount as the loan
progresses.
Forced Sale --
A sale which is not the voluntary act of the owner, such as to satisfy a
debt, whether a mortgage, judgment, etc. The selling price of such a
sale would not be considered market value.
Foreclosure Sale -- a sale of property used as security for a debt, to satisfy said debt.
Fraud --
A deception, intended to wrongfully obtain money or property from the
reliance of another on the deceptive statements or acts, believing them
to be true.
Free and Clear -- Real property against which there are no liens, especially voluntary liens (mortgages).
Frontage --
The linear measurement along the front of a parcel, that is, the
portion facing a road, waterway, walkway, etc. that would be considered
the most valuable measurement of the property.
Fully Amortizing Loan -- A loan of equal, regular payments, which cause the principal and interest to be completely paid by the due date.
G
General Partner --
A member of the partnership who has authority to bind the partnership
and shares in the profits and losses. A partnership must have at lease
one general partner and may have more, as well as limited partners.
Gift Letter --
A letter to HUD from the owner (giver) stating that a gift of money has
been made to the buyer in order to purchase specific property. The
relationship of the donor and recipient is stated, as well as the amount
of gift.
GNMA (Ginnie Mae) --
Government National Mortgage Association. A federal association,
working with FHA, which offers special assistance in obtaining mortgages
and purchases mortgages in a secondary capacity.
Grant Deed --
One of the many types of deeds used to transfer real property. Contains
warranties against prior conveyances or encumbrances. When title
insurance is purchased, warranties in a deed are of little praFNTICal
significance.
Grantee -- One to whom a grant is made, generally the buyer.
Grantor -- One who grants property or property rights.
Grantor-Grantee Index --
The record of the passing of title to all the properties in a county as
kept by the county recorder's office. Property is checked, by tracing
the names of the sellers and buyers (chain and title). Title companies
usually have more efficient methods by keeping records according to
property description, rather than people's names.
Greenbelt --
A landscaped area surrounding a development to separate and protect it
from neighboring incompatible use, such as separating office buildings
from an industrial park.
Ground Lease -- A lease of vacant land, or land exclusive of any buildings on it. Usually a net lease.
H
Hard Money Mortgage --
A mortgage given in return for cash, rather than to secure a portion of
the purchase price, as with a purchase money mortgage.
Hardpan -- A compacted layer of soil, usually containing clay, through which it is difficult to drain or dig.
Hazard Insurance --
Real estate insurance protecting against loss caused by fir, some
natural causes, vandalism, etc., depending upon the terms of the policy.
Hereditaments -- (1) Anything which could be considered real property. (2) Anything which may be inherited.
Homeowner's Association --
(1) An association of people who own homes in a given area, formed for
the purpose of improving or maintaining the quality of the area. (2) An
association formed by the builder of condominiums or planned
developments, and required by statute in some states. The builder's
participation as well as the duties of the association is controlled by
statute.
Homestead --
The dwelling (house and contiguous land) of the head of a family. Some
states grant statutory exemptions, protecting homestead property
(usually to set a maximum amount) against the rights of creditors.
Property tax exemptions (usually to set a maximum amount) are also
available in some states. Statutory requirements to establish a
homestead may include a formal declaration to be recorded.
Home Warranty Insurance --
Private insurance insuring a buyer against defects (usually in
plumbing, heating and electrical) in the home he has purchased. The
period of insurance varies and both new and used homes may be insured.
Hypothecate -- To mortgage or pledge without delivery of the security to the lender.
I
Impound Account --
Account held by a lender for payment of taxes, insurance, or other
periodic debts against real property. The mortgagor or beneficiary pays a
portion of, for example, the yearly taxes, with each monthly payment.
The lender pays the tax bill from the accumulated funds.Indemnity Agreement -- An agreement by which one party agrees to repay another for any loss or damage the latter may suffer.
Ingress and Egress -- A right to enter upon and pass through land.
Installment Contract --
A method of purchasing by installment (usually monthly) payments. When
referring to real property, it is usually called a land contract.
Institutional Lenders --
Banks, savings and loan associations, and other businesses, which make
loans to the public in the ordinary course of business, rather than
individuals, or companies which may make loans to employees.
Insured Mortgage --
A mortgage insured against loss to the mortgagee in the event of
default and a failure of the mortgaged property to satisfy the balance
owning plus costs of foreclosure. May be insured by F.H.A, VA, or by
independent mortgage insurance companies.
Intestate --
Without leaving a will, or leaving an invalid will, so that the
property of the estate passes by the laws of succession rather than the
direction of the deceased.
Involuntary Lien --
A lien, such as a tax lien, judgment lien, etc., which attaches to
property without the consent of the owner, rather than a mortgage lien,
to which the owner agrees.
J
Joinder -- Joining together in some legal proceeding.
Joint Protection Policy -- A policy of title insurance which insures both the owners and the lender under the same policy.
Judgment Creditor --
A person, corporation, etc., that has been awarded a money judgment by a
court. Recording an abstract of said judgment would create a lien on
real property owned by the judgment debtor in the county where the
abstract is recorded.
Judgment Debtor -- A person, corporation, etc., against whom a money judgment has been awarded by the court.
Judgment -- The decision of a court of law. Money judgments, when recorded, become a lien on real property of the defendant.
L
Land Bank -- An accumulation of land held for future use.
Land Loan -- A loan with collateral security of unimproved land. Usually the loan to value ratio is less than on improved land.
Landlocked Parcel -- A parcel of land surrounded entirely by private owned land,
with no access to a public right of way (road). Condemnation for a
limited access highway is a major cause of such parcels.
Lease --
An agreement by which an owner of real property (lessor) gives the
right of possession to another (lessee), for a specified period of time
(term) and for a specific consideration (rent).
Legal Description -- A method of geographically identifying a parcel of land, which is acceptable in a court of law.
Legal
Owner -- The term has come to be used as a technical difference from
the equitable owner, and not as opposed to an illegal owner. The legal
owner has title to the property, although the title may actually carry
no rights to the property other than a lien.
Legal Title --
Usually title without ownership rights, such as the title placed in a
trustee under a deed of trust, or the title in a vendor under a land
contract.
Lender -- Any person or entity advancing funds which
are to be repaid. A general term encompassing all mortgagees, and
beneficiaries under deeds of trust.
Letter of Credit -- A letter,
usually from a bank, requesting a person or company to extend credit to
a certain person or company and guaranteeing payment. Most commonly
used in the purchase of good from another country. The letter may be
revocable or irrevocable, but most parties insist on the irrevocable.
Line
of Credit -- An amount of money a borrower may obtain from a bank
without special credit check. The money is generally for business
purposes and the amount would not include the borrower's own home loan
and other personal secured loans.
Liquidated Damages -- A
definite amount of damages, set forth in a contract, to be paid by the
party breaching the contract. A predetermined estimate of actual damages
from a breach.
Lis Pendens -- A legal notice recorded to show
pending litigation relating to real property, and giving notice that
anyone acquiring an interest in said property subsequent to the date of
the notice may be bound by the outcome of the litigation.
Listing
-- An agreement between an owner of real property and a real estate
agent, whereby the agent agrees to secure a buyer or tenant for specific
property at a certain price and terms in return for a fee or
commission.
Listing Agent -- A real estate agent obtaining a listing (see which), as opposed to the selling agent.
Loan Origination Fee -- A one time setup fee charged by the lender.
Loan
Package -- The file of all items necessary for the lender to decide to
give or not to give a loan. These items would include the information on
the prospective borrower (loan application, credit report, financial
statement, employment letters, etc.), and information on the property
(appraisal, survey, etc.,). There may be a charge for "packaging" the
loan.
Loan Policy -- A title insurance policy insuring a
mortgagee, or beneficiary under a deed of trust, against loss caused by
invalid title in the borrower, or loss of priority of the mortgage or
deed of trust.
Loan Servicing -- The bookkeeping and collection of a loan. It may be done by the lender or by another for the lender.
Loan
to Value Ratio -- The ratio, expressed as a percentage, of the amount
of a loan to the value or selling price of real property. Usually, the
higher the percentage, the greater the interest charged. Maximum
percentage for banks, savings and loans, or government insured loans, is
set by statute.
Loss Payable Clause -- A clause in a fire
insurance policy, listing the priority of claims in the event of
destruction of the property insured. Generally, a mortgagee, or
beneficiary under a deed of trust, is the party appearing in the clause,
being paid to the amount owing under the mortgage or deed of trust
before the owner is paid.
M
M.A.I.(Member Appraisal Institute) --
The designation given to a member of the American Institute of Real
Estate Appraisers. A designation earned through experience, education
and examination.
Maintenance Fee -- As
applied to condominiums and planned developments, the amount charged
each unit owner to maintain the common area. Usually a monthly fee paid
as part of the budget.
Management Fee --
The amount paid for property management or the estimated value of such
management if owner managed or the building is not yet built.
Marketable Title --
Title that can be readily marketed (sold) to a reasonably prudent
purchaser aware of the facts and their legal meaning concerning liens
and encumbrances.
Market Value --
The highest price a willing buyer would pay and a willing seller
accept, both being fully informed, and the property exposed for a
reasonable period of time. The market value may be different from the
price a property can actually be sold for at a given time.
Mechanic's Lien --
A lien created by statute for the purpose of securing priority of
payment for the price or value of work performed and materials furnished
in construction or repair of improvements to land, and which attaches
to the land as well as the improvements.
Metes and Bounds --
Description of land by boundary lines, with their terminal points and
angles. Originally metes referred to distance, bounds to direction;
contemporarily, the words have no individual meaning of praFNTICal
significance.
Mineral Rights --
The ownership of the minerals (coal, gold, iron, etc.) under the
ground, with or without ownership of the surface of the land.
Minerals --
In real estate terms, those minerals of value which may be taken by
mining, such as coal, iron, copper, gold, silver, etc. Mineral rights,
as well as oil rights, may be sold or leased separately from the land
itself.
Mobil Home --
Originally, a trailer pulled behind a car or truck cab. Now includes
large homes, which are not truly mobile but are constructed in the same
manner as trailers, as opposed to conventional on-site construction.
Monument --
A visible, permanent object, marked by a surveyor, to indicate the
boundaries of land. May be artificial, such as post, or natural, such as
a tree or large stone.
Mortgage --
(1) To hypothecate as security, real property for the payment of a
debt. The borrower (mortgagor) retains possession and use of the
property. (2) The instrument by which real estate is hypothecated as
security for repayment of a loan.
Mortgage Banker --
A company providing mortgage financing with its own funds rather than
simply bringing together lender and borrower, as does a mortgage broker.
Although the mortgage banker uses its own funds, these funds are
generally borrowed and the financing is either short term or, if long
term, the mortgages are sold to investors (many time's insurance
companies) within a short time, in general mortgage.
Mortgage Broker --
One who, for a fee, brings together a borrower and lender, and handles
the necessary applications for the borrower to obtain a loan against a
real property by giving a mortgage or deed of trust as a security. Also
called a loan broker.
Mortgage Company -- A company authorized to service real estate loans, charging a fee for this service.
Mutual Water Company -- A company in which the owners are the customers. Stock is issued to the users, who are the organizers of the company.
N
NAR (National Association of REALTORS®) --
An association of people engaged in the real estate business. Organized
in 1908, it currently lists over half a million members. With
headquarters in Chicago, it is dedicated to the betterment of the real
estate industry through education, legislation, and high ethical
standards for its members.
Negative Cash Flow --
When the income from an investment property does not equal the usual
expenses, the owner must come up with cash each month to meet these
expenses.
Non Exclusive Listing --
A listing under which the real estate broker has an exclusive listing
as opposed to other agents, but the owner may sell the property without
using an agent, and not be liable to pay a commission. Also called an
agency agreement.
Non Judicial Foreclosure Sale --
Sale by a trustee under a deed of trust, or mortgage under a power of
sale of a mortgage. There is no court (judicial) proceeding.
Notary Public --
One who is authorized by the state or federal government, to administer
oaths, and to attest to the authenticity of the signatures. A federal
authorization may extend the authority to attest to the authenticity of
certain documents, and to act as a notary in foreign countries.
Notice of Action --
A recorded notice that property may be subject to a lien, or even that
the title is defective, due to pending litigation. Notice of a pending
suit. Also called "Lis Pendens".
Notice of Completion --
A notice, recorded to show that construction job is finished. The
length of time in which a mechanic's liens may be filed depends upon
when and if a notice of completion is recorded.
Notice of Default -- A notice is filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).
O
Offer --
A presentation of proposal for acceptance, in order to form a contract.
To be legally binding, an offer must be definite as to price and terms.
Off-Site Improvements --
Development of land to make adjacent property suitable for
construction. Includes sidewalks, curbs, streets, sewers, streetlights,
etc.
Open House --
A house which is open without appointment to prospective buyers (or
tenants) for inspection, during certain hours and days of the week.
Open Listing --
A written authorization to a real estate agent by a property owner,
stating that a commission will be paid to the agent upon presentation of
an offer which meets a specified price and terms. However, the agent
has no exclusive right to sell and must bring in his offer before any
other offer is presented or accepted.
Origination Fee -- A fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one percent.
Owner's Policy -- Title insurance for the owner of the property, rather than a lien holder.
Owner will carry mortgage -- A term used to indicate that the seller is willing to take back a purchase money mortgage.
P
Parcel 2 Easement --
A colloquial term used to describe an appurtenant easement of the
dominant tenement, because the easement is described in the legal
description. Usually, the property is described as parcel 1 and the
easement as parcel 2.
Parcel Map --
A map allowed in some states as a substitute for a subdivision map for 1
to 4 parcels (lots) with no common area. The procedure is much simpler
and less costly than creating subdivision map.
Peroration --
To divide (prorate) property taxes, insurance premiums, rental income,
etc., between buyer and seller proportionally to time of use or the date
of closing.
PI (Principal and Interest) --
Used to indicate what is included in a monthly payment on real
property. If the payment includes only principal and interest, property
taxes and hazard insurance would make the total payment higher.
PITI (Principal, Interest, Taxes and Insurance) --
Used to indicate what is included in a monthly payment on real
property. Principal, interest, taxes and insurance are the four major
portions of a usual monthly payment.
Planned (Unit) Development --
A subdivision of five or more individually owned lots with one or more
other parcels owned in common or with reciprocal rights in one or more
other parcels. The lots are generally small, being the exact size of the
improvements, or slightly larger.
Point of Beginning (POB) --
A term used in metes and bounds descriptions. The description will
start with the words "Beginning at a point" and end with "to the point
of the beginning".
Power of Attorney --
An authority by which one person (principal) enables another (attorney
in fact) to act for him. (1) General power -- Authorizes sale,
mortgaging, etc. of all property of the principal. Invalid in some
jurisdictions. (2) Special Power -- Specifies property, buyers, price
and terms. How specific it must be varies in each state.
Preliminary Title Report --
A report showing the condition of title before a sale or loan
transaction. After completion of the transaction, a title insurance
policy is issued.
Prepayment Penalty -- A penalty under note, mortgage, or deed of trust, imposed when the loan is paid before it is due.
Prescriptive Easement --
The granting of an easement by a court, based on the presumption that a
written easement was given (though none existed), after a period of
open and continuous use of land.
Private Mortgage Insurance --
Insurance against a loss by a lender in the event of default by a
borrower (mortgagor). The insurance is similar to insurance by a
governmental agency such as FHA, except that a private insurance company
issues it. The premium is paid by the borrower and is included in the
mortgage payment.
Pro Rate --
To divide in proportionate shares, such as taxes, insurance, rent or
other items which buyer and seller share as of the time of closing, or
other agreed upon time.
Public Records --
Usually at a county level, the records of all documents, which are
necessary to give, notice. The records are available to the public. All
transactions for real estate sales should be recorded.
Public Report --
A report given to prospective purchasers in a new subdivision, stating
the conditions of the area (costs of common facilities, availability of
schools, noise factor if near an airport, etc.) issued by the real
estate commission.
Purchase Agreement -- An agreement between a buyer and seller of real property.
Q
Quitclaim Deed --
A deed operating as a release; intended to pass any title, interest, or
claim, which the grantor may have in the property, but not containing
any warranty of a valid interest or title in the grantor.
R
Range --
(1) A division of land in the government survey, being a six mile wide
row of townships, running North and South, and used in legal
descriptions.
(2) Land used for grazing livestock.
Real Estate --
(1) Land and anything permanently affixed to the land, such as
buildings, 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. The term is generally
synonymous with real property, although in some states a distinction may
be made.
(2) May refer to rights in real property as well as the
property itself.
Real Estate Board --
A state license granted to one as a broker or salesperson, after
passing an examination. Some states have educational requirements before
the brokers' examination may be taken.
Real Estate Owned (REO) --
Most commonly refers to property owned by a lender from foreclosure of
mortgages or trust deeds. The property is usually for sale.
REALTOR® --
A designation given to a real estate broker or sales-associate who is a
member of a board associated with the National Association of Realtors®
or with the National Association of Real Estate Boards.
Recital --
Setting forth in a deed or other writing some explanation for the
transaction. For example: A deed may state that the property is being
transferred in lieu of foreclosure.
Reconveyance --
An instrument used to transfer title from a trustee to the equitable
owner of real estate, when title is held as collateral security for a
debt. Most commonly used upon payment in full of a trust deed. Also
called a deed of reconveyance or release.
Recordation -- Filing instruments for public record (and notice) with a recorder (usually a county official).
Recorded Map --
A map recorded in a county recorder's office. May be a subdivision map
or describe a non-subdivided parcel. Reference to a recorded map is
commonly used in legal descriptions.
Recorded Plat -- Subdivision map filed as a matter of public record.
Recorder's Office -- The county office where instruments are recorded, giving public notice.
Recording --
Filing documents affecting real property as a matter of public record,
giving notice to future purchasers, creditors, or other interested
parties. Recording is controlled by statue and usually requires the
witnessing and notarizing of an instrument to be recorded.
Recording Fee -- The amount paid to the recorder's office in order to make a document a matter of public record.
Referral --
In real estate business, generally the act of a past client
recommending a real estate broker or agent to one currently a buyer or
seller. Also, any recommendation by one real estate agent of another for
a referral fee.
Refinance --
(1) The renewing of an existing loan with the same borrower and lender.
(2) A loan on the same property by either the same borrower or lender.
(3) The selling of loans by the original lender.
Regulation Z --
Federal Reserve regulation issued under the Truth-In-Lending Law, which
requires that a credit purchaser be advised in writing of all costs
connected with the credit portion of the purchase.
Reinstatement --
(1) Payment of a note, mortgage, deed of trust, etc., to bring it from
default to good standing. (2) Restoring the previously used entitlement
of a veteran to enable the veteran to purchase property under a VA
program. (Also called restoration of Eligibility).
R.E.I.T.(Real Estate Investment Trusts) -- A method of investing in real estate in a group, with certain tax advantages. Federal and state statutes dictate procedure.
Release --
An instrument releasing property from the lien of the mortgage,
judgment, etc. When a trust deed is used, the instrument is called a
reconveyance. In some areas, a "discharge" is used instead of a release.
Request for Reconveyance --
A request by a beneficiary under a deed of trust to the trustee,
requesting the trustee to reconvey the property (release the lien) to
the trustor, usually upon payment in full.
RESPA (Real Estate Settlement Procedures Act) --
A federal statute effective June 20, 1975, requiring disclosure of
certain costs in the sale of residential (one to four family) improved
property which is to be financed by a federally insured lender.
Restriction --
Most commonly used to describe a use or uses prohibited to the owner of
land. Restrictions are set forth by former owners in deeds or in the
case of a subdivision, a declaration of restrictions is recorded by the
developer. A limitation on use of the property by law (zoning
ordinances) may also be termed a restriction.
Revenue Stamps --
Formerly federal tax on sale of real property. Canceled and replaced by
state tax stamps. The stamps (similar to postage stamps) are affixed to
the conveyance instrument (deed), or a rubber stamp is used to show the
amount of tax.
Right of Survivorship --
The right of a survivor of a deceased person to the property of said
deceased. A distinguishing characteristic of a joint tenancy
relationship.
Right of Way --
A strip of land, which is used as a roadbed, either for a street or
railway. The land is set aside as an easement or in fee, either by
agreement or condemnation. May also be used to describe the right itself
to pass over the land of another.
Riparian -- Belonging or relating to the bank of a river or stream. Land within the natural watershed of a river or stream.
Riparian Owner -- One who owns land along the bank of a river or stream.
Riparian Rights -- Rights of an owner to riparian lands and water.
Rollover Loan --
A loan, which is periodically reviewed, adjusted (usually to reflect
current interest rates) and extended. Short term loans can be rolled
over into long term loans. The process is by initial agreement or
necessity.
Running with the Land -- Usually concerned with easements and covenants. Passing with the transfer of the land.
S
Sales-Associate -- One who is licensed to work in real estate under a licensed broker.
Sales Kit --
Material carried by a salesperson to aid in listings and sale. This is
the "tool kit" of real estate, containing forms, maps, tape measure,
amortization schedules, pens, paper, etc.
Satisfaction --
Discharge of an obligation by payment of the amount due, as on
mortgage, trust deed, or contract; or payment of a debt awarded, such as
satisfaction of a judgment. Also the recorded instrument stating said
payment has been made.
Secondary Financing -- A loan secured by a mortgage or trust deed, which lien is junior (secondary) to another mortgage or trust deed.
Secondary Mortgage Market --
The buying and selling of first mortgages or trust deeds by banks,
insurance companies, government agencies, and other mortgagees. This
enables lenders to keep an adequate supply of money for new loans. The
mortgages may be sold at full value (par) or above, but are usually sold
at a discount. The secondary mortgage market should not be confused
with second mortgage.
Second Mortgage --
A mortgage which ranks after a first mortgage in priority. Properties
may have two, three or more mortgages, deeds of trust, or land
contracts, as liens at the same time. Legal priority would determine
whether they are called a first, second, third, etc. lien.
Selling Agent --
The real estate agent obtaining the buyer rather than listing the
property. The listing and selling agent may be the same person or
company.
Settlement Statement --
A statement prepared by broker, escrow, or lender, giving a complete
breakdown of costs involved in a real estate sale. A separate statement
is prepared for the buyer and seller.
Sheathing -- The covering over the outside studs (or rafters) of a roof. May be wallboard, plywood, etc.
Short Form Document --
A document which refers either to another document not of record
containing the total agreement, or incorporates by reference a document
of record.
Simultaneous Issue --
A simultaneous issuance by a little insurance company of policies
insuring both an owner and a lender. The Lender's policy is issued at a
reduced rate.
Single Family House --
A general term originally used to distinguish a house designed for use
by one family from an apartment house. More recently, used to
distinguish a house with no common area from a planned development or
condominium.
Slant Drilling -- A method of drilling for oil or gas from adjoining property when surface rights have not yet been granted.
Special Assessment --
Lien assessed against real property by a public authority to pay costs
of public improvements (sidewalks, sewers, streetlights, etc.) which
directly benefits the assessed property.
Spite Fence --
A fence built for the purpose of causing a problem for one's neighbor.
May ruin the view, make access of a new vehicle, etc., or simply ugly.
Square Foot Method -- Determining the replacement cost of a building by finding the cost per square foot of comparable building.
Standard Coverage Policy --
A title insurance policy used in several states, not having as broad
coverage as the nationally recognized American Land Title Association
(A.L.T.A.) policies.
Start Card --
A file card used as a record of the opening of an escrow. It lists the
date the escrow opened, escrow number, name of escrow officer, names of
parties to the escrow, lender, title company, legal description of the
property, consideration, and type of transaction (sale, loan, etc.).
Starter --
A copy of the last policy issued by a title insurer, which describes
the condition of the title to land upon which a new policy is to be
written. In some states this is furnished to an attorney for his opinion
as to the condition of the title, and is called a back title letter or
back title certificate.
Statement of Information --
A confidential form filled out by buyer and seller to help a title
company determine if any liens are recorded against either. Very helpful
when people with common names are involved. Also called a statement of
identity.
Statute of Frauds --
State laws, requiring certain contracts to be in writing. All contracts
for the sale of real property must be in writing. Leases (personal
property) for more than one year must be in writing.
Statutory Lien -- An involuntary lien (created by law rather than contract). Includes tax liens, judgment liens, mechanic's liens, etc.
Street Improvement Bonds --
Interest bearing bonds, issued by a local government, to secure
assessments for street improvements. The owners of the property assessed
may pay in a lump sum or pay installments on the bonds, including
interest.
Strip Center --
Any shopping are, generally with common parking, comprised of a row of
stores. Usually does not contain major department stores or grocery
chain stores.
Studs (Studding) -- Vertical supports (wood or metal) in walls and partitions.
Subcontractor -- One who works under a general contractor (builder), such as an electrical contractor, cement contractor, etc.
"Subject To" Clause --
A clause in deed, stating that the grantee takes title "subject to" an
existing mortgage. The original mortgagor is alone responsible for any
deficiency, should there be foreclosure of the mortgage. Differs from an
"assumption" clause, whereby the grantee "assumes" and agrees to pay
the existing mortgage.
Subordination Agreement --
An agreement by which an encumbrance is made subject (junior) to a
junior encumbrance. For example: A loan on vacant land is made subject
to a subsequent construction loan.
Substitution Agreement --
A document which is recorded to change the trustee under a deed of
trust. A simple procedure in some states; more regulated in others.
Surface Rights --
The rights (easements) to use the surface of the land, including the
right to drill or mine through the surface when subsurface rights are
involved.
T
Take Out Loan -- The "permanent" (long term) financing of real estate after completion of construction.
Tax Deed --
(1) Deed from tax collector to government body after a period of
non-payment of taxes according to statute.
(2) Deed to a purchaser at a
public sale of land taken for delinquent taxes. The purchaser receives
only such title as the former owners had, and strict procedures must be
followed to prevent attachment of prior liens.
Tax Lien --
(1) A lien for nonpayment of property taxes. Attaches only to the
property upon which the taxes are unpaid. (2) A federal income tax lien.
May attach to all property of the one owing the taxes.
Tax Roll --
A list, usually published by a county, containing the descriptions of
all parcels in said county, the names of the owners (or those receiving
the tax bill), the assessed value and tax amount.
Tentative Map --
A map submitted by a subdivider to a planning commission for approval;
approval is usually conditioned upon charges. The final map, embodying
the changes, is recorded.
Testate -- Having written a last will and testament.
Title Company -- An agency issuing the policy of a title insurance company.
Title Insurance --
Insurance against loss resulting from defects of title to a
specifically described parcel of real property. Defects may run to the
fee (chain of title) or to encumbrance.
Title Insurance Company -- A company which issues insurance regarding the title of real property.
Title Order --
An order for a search of title to some parcel of property, eventually
leading to the issuance of a policy of title insurance.
Title Page -- The page in a subdivision map which is signed by all parties having an interest in the land, agreeing to the subdivision.
Title Plant --
A filing of all recorded information to real property, paralleling the
records of the county recorder's office, although the filing system may
be different.
Title Search -- A review of all recorded documents affecting a specific piece of property to determine the present condition of the title.
Tombstone Title -- Information to validate title taken from tombstones, such as the death of the owner, date of death, names of survivors, etc.
Torrens Title --
A system by which title to land is registered with a registrar of land
titles, instead of being recorded. Originally established by Sir Torrens
in Australia in 1858.
Transfer Tax --
State tax on the transfer of real property. Based on purchase price or
money changing hands. Check statues for each state. Also called the
documentary transfer tax.
U
Underwriter --
One who insures another. A small title insurance company may buy
insurance from a larger one (the underwriter) for all or part of the
liability of its policies. A larger title company may buy part of the
insurance from another company on high liability policies.
Unity of Title -- In joint tenancy, the holding by the joint tenants under the same title.
Unmarketable Title -- Not salable. A title which has serious defects.
Unrecorded Instrument --
A deed, mortgage, etc., which is not recorded in the county recorder's
office and, therefore, not protected under recording statutes. Valid
between the parties involved, but not against innocent third parties.
V
Variable Interest Rate --
An interest rate which fluctuates as the prevailing rate moves up or
down. In mortgages there are usually maximums as to the frequency and
amount of fluctuation. Also called "flexible interest rate".
Vested --
Present ownership rights, absolute and fixed. Modernly, ownership
rights, even though on a land contract or subject to a mortgage or deed
of trust.
Veteran's Administration (VA) Loans --
Housing loans to veterans by banks, savings and loans, or other lenders
which are insured by the Veteran's Administration, enabling veterans to
buy a residence with little or no down payment.
Voluntary Lien -- A lien placed against real property by the voluntary act of the owner. Most commonly, a mortgage or deed of trust.
W
Warranty Deed --
A deed used in many states to convey fee title to real property. Until
the widespread use of title insurance, the warranties by the grantor
were very important to the grantee. When title insurance is purchased,
the warranties become less important as praFNTICal means of recovery by
the grantee for defective title.
Wetlands -- Lands which, in their normal condition, have wet or spongy soil, such as a marsh or bog.
*The
statements made on this web page and any page that follows within this
website are not intended, and shall not be construed to expressly or
impliedly issue or deliver any form of written guaranty, affirmation,
indemnification, or certification of any fact, insurance coverage or
conclusion of law."