Glossary of Title Terms
AFFIDAVIT - A written statement or declaration, sworn to before an officer who has authority to administer an oath.
AMORTIZATION SCHEDULE - A schedule showing each payment of a loan to be amortized and breaking down the payment into the amount of principal and the amount applied to interest.
APR - Annual percentage rate. A measure of the cost of credit expressed as a yearly rate. It includes interest as well as other charges paid in advance by the borrower. (typically higher than the actual note rate)
ASSUMPTION - A mortgage that allows a new owner to take over payments. In many cases, the original borrower remains liable on the mortgage note.
ASSESSED VALUE - Value placed upon property for property tax purposes by the tax assessor.
ATTORNEY-IN-FACT - One who is appointed to act (as agent) for another (principal) under a power of attorney. The scope of the agent's authority is limited to that given by the power of attorney, which may be limited to one specific act or may be broader.
BUILDING RESTRICTION LINE - A line beyond which there can be no construction. Set by law, or the restrictive covenants that run with the land, the purpose of such a line is to keep buildings from being built too close to the street, both for safety and aesthetic reasons.
CLOSING COSTS - Expenses incidental to a sale of real estate, such as lender fees, title fees, appraisals and recording costs.
COMMISSION - An amount, usually as a percentage, paid to an agent (real estate broker) as compensation for his services, and is generally based on the sales price.
CONVEYANCE - Transfer of title to land. Includes most instruments by which in interest is real estate is created, mortgaged or assigned.
DEED - Generally, a conveyancing instrument, given to pass fee title to property upon sale.
DEED OF TRUST - Instrument used to secure a loan on real estate. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full.
DEPOSIT OR EARNEST MONEY - Money given by the buyer with an offer to purchase. Shows good faith. (applied to the purchase price at closing as a credit towards the amount due)
DUE-ON-SALE CLAUSE - A type of acceleration clause, calling for a debt under a deed of trust to be due in its entirety upon transfer of ownership of the secured property.
EASEMENT - A right created by grant, reservation, agreement, prescription, or necessary implication, which one has in the land of another.
EQUITY - The current market value of real property, less the amount of existing liens.
ESCROWS - Money that is kept by the mortgage company to ensure that taxes, homeowner's insurance and mortgage insurance can be paid in full when due. This is collected up front on settlement sheet lines 1001 - 1008 and is added to the mortgage payment monthly over the principal and interest figure.
FIXED RATE MORTGAGES - Mortgages with a fixed interest rate. Your payment for principal and interest will not change for the life of the loan. Your monthly payment may change if taxes, or homeowner insurance rates change.
FORECLOSURE - Legal process by which a mortgagor of real property is deprived of his interest in that property due to failure to comply with terms and conditions of the mortgage.
GRANTEE - A person who acquires an interest in land by deed, grant or other written instrument.
GRANTOR - A person who, by a written instrument, grants property or property rights.
HAZARD INSURANCE - Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending upon the terms of the policy. (aka homeowner's insurance)
HEIR - One who might inherit or succeed to an interest in lands under applicable law where an individual dies without leaving a will.
HOME OWNER'S ASSOCIATION - An association of people who own homes in a given area, formed for the purpose of improving or maintaining the quality of the area.
HUD-1 (settlement statement) - A statement prepared by the settlement agent, giving a complete breakdown of costs and prorations involved in a real estate sale.
INGRESS AND EGRESS - A right to enter upon and pass through land, generally created by virtue of deed, agreement or reservation.
INSTRUMENT - Any writing having legal form and significance, such as a deed, mortgage, will, lease, etc.
INTEREST ONLY PAYMENTS - A mortgage where payments are made in the amount of interest only. This means that the borrower does not make any payments towards the principal.
JOINT TENANCY - An undivided interest in property, taken by two or more joint tenants. The interests must be equal, accuring under the same conveyance, and beginning at the same time. Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.
JUDGEMENT - The decision of a court of law. Money judgements, when recorded, become a lien on real property of the defendant.
LEGAL DESCRIPTION - A method of geographically identifying a parcel of land, which is acceptable in a court of law.
LIEN - An encumbrance against property for money, either voluntary or involuntary.
LIS PENDENS - A legal notice recorded to show pending litigation relating to real property, and giving notice that anyone acquiring interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation.
LOAN ORIGINATION FEES - Money required by the lender to be paid as part of the work of approving a mortgage.
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 deed of trust.
MECHANIC'S LIEN - A lien created by statute for the purpose of securing priority of payment for the price of 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.
NOTE - A written promise to pay a certain amount of money, at a certain time, or in a certain number of installments. It usually provides for payment of interest and is at times, secured by a deed of trust.
OCCUPANCY CERTIFICATE - A certificate issued by a local building department upon completion of improvements and inspections, stating that the dwelling is in proper condition to be occupied.
OWNERS POLICY - A title insurance policy protecting the owner against loss caused by invalid title in the borrower, or prior liens of record.
P.O.C. - Paid outside of closing. If you have paid any charges such as appraisal fees, home inspection fees, hazard insurance or loan application fees, they will appear on the proper line outside of your column, and will be marked P.O.C.
POINT - A fee charged by the lender based on the loan amount to secure the negiotiated rate.
POWER OF ATTORNEY - An instrument authorizing another to act on one's behalf as his agent.
PMI - Private mortgage insurance.
PRO-RATE - To allocate between seller and buyer their proportionate share of an obligation paid or due. Commonly used for HOA dues or real estate taxes.
RECORDING FEES - The amounts paid to the recorder's office for applicable state and county transfer taxes, clerk's fee and grantor's tax, to make a document a matter of public record.
REISSUE RATE - A reduced rate of title insurance premium applicable in cases where the land has been previously insured in an owner's policy within a certain time period.
RESTRICTIVE COVENANTS - Most commonly used to describe a use or uses prohibited to the owner of the land. Restrictions are set forth by former owners in deeds or in the case of subdivision, a declaration of restrictions is recorded by the developer. A limitation of use of the property by law (zoning ordinances) may also be termed a restriction.
RIGHT OF RESCISSION - The Right of Rescission (right to cancel) gives borrowers three business days to rescind or cancel the transaction, without cost, and is applicable on most refinance and home equity transactions.
SECOND MORTGAGE - A mortgage, the lien of which is subordinate to that of another mortgage.
SUBDIVISION - Commonly, a division of a single parcel of land into smaller parcels (lots) by filing a map describing the division, and obtaining approval by a governmental agency (city or county).
SURVEY - The process of measuring land to determine its size, location and physical description and the resulting drawing or map.
TENANTS BY THE ENTIRETY - A form of ownership by husband and wife whereby each owns the entire property. In the event of the death of one, the survivor owns the property without probate.
TENANTS IN COMMON - An undivided ownership in real estate by two or more persons. The interests need not be equal, and, in the event of death of one of the owners, no right of survivorship in the other owner exists.
TERMITE INSPECTION - An inspection required in certain types of sales of property, to determine if termites are present withing a building.
TITLE - The evidence or right a person has to the ownership and possession of land.
TITLE BINDER OR COMMITMENT - A report issued by a title insurance company binding or committing the title insurance company to issue the form of policy designated in the commitment or binder upon compliance with and satisfaction of requirements set forth in the commitment or binder.
TITLE INSURANCE - Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property.
TITLE SEARCH - An examination of public records and court decisions to disclose the current facts regarding ownership of real estate.
WILL - A written document properly witnessed, providing for the distribution of property owned by the deceased.