Title West Title Company

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The real estate industry has its own unique language and, without some knowledge of this language, you may find yourself a bit confused if you become involved in a real estate transaction. With this in mind, the experts at Title West have compiled the following glossary of terms commonly used in the Real Estate industry.

NOTE: The following terms are defined only in their real estate or title insurance contexts and may have completely different meanings in other contexts. For more precise definitions, you are advised to seek legal counsel.

A history of all transactions shown in the public records affecting a particular tract of land.
Abstract of Title:
A condensed history or summary of all transactions affecting a particular tract of land.
Adjustable Rate Mortgage (ARM):
(1) 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. (2) Mortgages with an interest rate that may change up or down depending on an indicator. These are usually based something like the current Treasury bill rate.
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.
(1) A written statement made under oath before a notary public or other judicial officer. (2) A Sworn statement in writing.
A legally binding contract made between two or more persons.
All-Inclusive Title Insurance:
This means that most title insurance charges are included in one price.
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.
To reduce a debt by means of regular periodic payments which include amounts applicable to both principal and interest.
Payment to reduce the principal of a debt in regular, periodic installments.
A report from an independent third party detailing the estimated value of real estate.
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.
Annual percentage rate. On some mortgages the APR is higher than your actual mortgage rate.
(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.
(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.
A mortgage that allows a new owner to take over payments. The original borrower remains liable on the mortgage note.
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.
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.
A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.
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.
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.
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.
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.
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.
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.
(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.
The transfer of title to property from one person to another.
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.
The setting aside of certain land by the owner and declaring it to be for public use. Examples: streets, sidewalks and parks.
(1) A document through which a conveyance of property is effected. (2) A written document by which the ownership of land is transferred from one person to another.
Deed of Trust:
Instrument used to secure a loan on real estate. Like a mortgage, generally used in the South. The major difference is in how forclosures are handled. Forclosures are much faster with a Deed of Trust than with a Mortgage.
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.
A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
Advance payment of part of the purchase price to bind a contract for property.
Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
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.
Due-On-Sale Clause:
A provision in a mortgage or deed of trust which requires the loan to be paid in full if a property is sold or transfered.
Earnest Money:
(1) A deposit of funds by the purchaser of a piece of real estate as evidence of good faith. (2) Advance payment of part of the purchase price to bind a contract for property.
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.
Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.
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.
(1) The market value of real property, less the amount of existing liens. (2) The interest or value which an owner has in real estate over and above the debts against it.
The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
(1) 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. (2) A procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer. (3) Money that is kept by the mortgage company to ensure that taxes can be paid in full when due. This is paid up front on settlement sheet lines 1001 - 1006 and is added to the mortgage payment monthly over the prinicial and interest figure.
A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.
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.
A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.
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:
(1) A private corporation dealing in the purchase of first mortgages. (2) The Federal National Mortgage Association, a federally sponsored private corporation which provides a secondary market for housing 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):
(1) A federal agency that insures first mortgages, enabling lenders to lend a very high percentage of the sale price. (2) The Federal Housing Administration. An agency of the federal government which insures private loans for financing of new and existing housing and for home repairs under government approved programs.
Fixed Rate Mortgage:
(1) A mortgage having a rate of interest that remains the same for the life of the mortgage. (2) Mortgages with a fixed interest rate. You payment for principal and interest will not change for the life of the loan. Your monthly payment may change if taxes or insurance rates change.
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.
A legal proceeding in which real estate secured by a mortgage or deed of trust is sold to satisfy the underlying debt.
(1) The fraudulent signing of another's name to an instrument such as a deed, mortgage or check. (2) 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.
Freddie Mac (FHLMC)- Federal Home Loan Mortgage Corporation:
(1) 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. (2) Federal Home Loan Mortgage Corporation. An affiliate of the Federal Home Loan Bank, which creates a secondary market in conventional residential loan and FHA and VA loans by purchasing 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.
To bestow or confer, with or without compensation, a gift such as land or money by one having control or authority over the gift.
One to whom a grant is made. A person who acquires an interest in land by deed, grant or other written instrument.
One who makes a grant. A person who, by a written instrument, transfers to another interest in land.
Hazard Insurance:
The homeowner's insurance policy.
One who might inherit or succeed to an interest in lands under the rules of law applicable where an individual dies without leaving a will.
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.
(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."
In Personam:
Directed at specific persons rather than against property or generally for all people.
In Rem:
Pertaining to property or people in general.
Any written document having a legal effect.
Interest Only Payments:
A mortgage where only the interest is paid on a monthly basis. This means that the buyer gets no equity. This is only used on some purchase money mortgages where the buyer is responsible for paying the seller the entire amount of the second mortgage at some time in the future.
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. A decree of a court.
Junior Mortgage:
A mortgage lower in lien priority than another.
The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.
A tenant holding a leasehold.
A landlord; one who gives a leasehold to a lessee.
Permission to go upon or use the land of another, the permission being a personal privilege and not constituting an interest in the land.
A monetary charge imposed on a property, usually arising from some debt or obligation. A hold, a claim or charge allowed a creditor upon the lands of a debtor.
Lien Waver:
Also called "waiver of liens." A waiver of mechanics' lien rights, signed by contractors or subcontractors.
In surveying, a length of 7.92 inches.
Loan Origination Fees:
Money required by the lender to be paid to start the work of approving a mortgage.
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.
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 insurance protection.
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.
Mortgage Note:
An instrument used to encumber land as security for a debt. This document gives the mortgage company "in rem" jurisdiction over the mortgagor.
The holder of a mortgage. The party to whom a mortgage is made, generally the lender. A designation for the mortgage lender on lands.
Mortgagee Policy:
See Loan Policy.
A person who mortgages property. A person who executes a mortgage, generally the property owner. A designation for the mortgage borrower on lands.
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.
Also called "promissory note." A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee. 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 its payment is at times secured by a mortgage. The mortgage note document gives the mortgage company "in rem" jurisdiction over the mortgagor. The promisory note document gives the mortgage company "in personam" jurisdiction over the mortgagor. P.O.C. - Paid outside of closing. Sometimes the lender requests this money before settlement. If you pay any charges before settlement they should be written on the settlement sheet. They are written on the proper line outside of your column. They should also be marked P.O.C.
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
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.
Private mortgage insurance.
Purchase money mortgage. A mortgage given by the seller simultaneously with the purchase of real estate to secure the unpaid balance of the purchase price.
Also called "commission points" or "discount points." One percent of the amount of the loan. A percentage point.
Power of Attorney:
An instrument authorizing another to act on one's behalf as his agent or attorney.
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.
(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.
To allocate between seller and buyer their proportionate share of an obligation paid or due.
Promisory Note:
A promise to pay. The promisory note document gives the mortgage company "in personam" jurisdiction over the mortgagor.
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.
Real Property:
Land and that which is affixed to it.
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.
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.
Reissue Rate:
A reduced rate of title insurance premium applicable in cases where the owner of the land has been previously insured in an owner's policy by the insurer within a certain time.
(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.
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.
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:
(1) A mortgage ranking in priority immediately below a first mortgage. (2) A mortgage, the lien of which is subordinate to that of another mortgage.
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.
(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.
The process of measuring land to determine its size, location and physical description and the resulting drawing or map.
Tax Service Fee:
A fee paid to the mortgage company to verify that they actually pay the real estate taxes.
(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. (3) The evidence or right a person has to the ownership and possession of land.
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:
Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property.
Title Insurance Binder/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 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:
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.
Title Search:
An examination of public records and court decisions to disclose the current facts regarding ownership of real estate.
Transfer Taxes:
Money paid to the county and or state when property is sold.
An insurance company that issues insurance policies to the public or to another insurer.
The Veterans Administration. They insure mortgages.
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.
The voluntary and intentional relinquishment of a known right, claim or privilege.
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.)
(1) A testamentary disposition of property, usually in a form prescribed by law, that takes effect upon death. (2) A written document properly witnessed, providing for the distribution of property owned by the deceased.
Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.