Glossary
Title & Settlement Jargon Made Simple
A
Abstract of Title
a summary of the conveyances, transfers, and other facts appearing of record and relied upon as evidence of title to real property
Adverse Possession
claim of ownership of property based upon the unauthorized occupation of land belonging to another
Affidavit
a written declaration under oath (the person making the affidavit is known as the “affiant”)
ALTA
American Land Title Association, the national trade association for the title insurance industry
Assessed Value
value of property for taxation purposes
B
Broker
one who acts as an agent for another in negotiating sales or purchases in return for a fee or commission
C
Chain of Title
a chronological list of documents comprising the record history of title to a specific parcel or real property
Closing
the process of completing a real estate transaction in accordance with written instructions during which deeds, mortgages, leases and other required instruments are executed, payment is made, the papers are recorded in the public record, the money is disbursed, and any other details are attended to (also referred to as “settlement”)
Closing Disclosure
details all of the costs associated with a mortgage-related residential transaction (also referred to as the “settlement statement”)
Consideration
the value inducing another person to enter into a contract (in a purchase transaction, this is the purchase price)
Contract of Sale
an agreement entered into for the sale and purchase of property
Convey
to transfer title to property from one person to another
Covenant
an agreement or promise
D
Deed
a written document transferring title to land from one person to another
Deed of Trust
a three party security instrument conveying title to land as security for the performance of an obligation
Default
omission or failure to fulfill a duty, observe a promise, discharge an obligation, or perform an agreement
E
Earnest Money
part of the purchase price made by a purchaser as evidence of good faith to bind the agreement
Easement
a limited right or interest in the land of another entitling the holder to some use, privilege, or benefit
Encroachment
the extension of an improvement onto land of another
Encumbrance
a right or interest in land decreasing its value but not hindering its sale or transfer
Endorsement
a written document attached to an insurance policy expanding or limiting coverage
Escrow
the depositing with an impartial third party (the “escrow agent”) of anything pertaining to the transaction, including money and documents, that are then disbursed and delivered to the rightful parties by the escrow agent when all conditions of the transaction have been met
F
Foreclosure
a legal proceeding for the collection of liens on real estate, which results in cutting off the rights to the property and usually involves a judicial sale of the property to pay the deb
G
Grantee
the person acquiring title to real property by a deed
Grantor
the person transferring title to real property by a deed
H
Hazard Insurance
real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy (in residential cases, also known as “homeowner’s insurance”)
I
Indemnity Agreement
an agreement relieving a person of an obligation to compensate for a potential loss (also known as a “hold harmless agreement”
Instrument
a formal, legal, written document
J
Judgment
a conclusion or determination by a court of law usually awarding the payment of money or relief of some kind to one of the parties to a lawsuit
L
Legal Description
a description of real property sufficient to locate it on the ground by reference to government surveys or approved recorded maps
Lien
the liability of real estate as security for payment of a debt; may be created by contract (ex: mortgage) or by operation of law (ex: mechanics lien or judgment)
Loan Policy
a policy of title insurance insuring the interest of a lender against loss by defects in, liens against, or unmarketability of title.
M
Marketable Title
title that a court of equity considers to be so free of material defects and liens that it will force the title’s acceptance by questioning purchaser
Mechanic's Lien
a statutory lien which secures the payment of debts due to persons contributing labor, material, supplies, etc. to a work of improvement upon real property
Mortgage
a temporary conditional pledge of property to a creditor as security for the payment of a debt that may be cancelled by payment
N
Notarize
to prove execution of a document by means of a notary public’s certificate of acknowledgment
O
Owner's Policy
a policy of title insurance insuring the title of an owner against possible hidden title problems such as errors or omissions in deeds, mistakes in examining records, forgery, undisclosed heirs, etc.
P
Power of Attorney
a legal instrument authorizing one to act as another’s agent or attorney
Premium
the amount payable for an insurance policy
Promissory Note
a written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person
Public Records
the transcriptions in a recorder’s office of instruments that have been recorded, including the indexes pertaining to them
R
Record
to incorporate a legal document into the public records of the Clerk’s office
Reissue Rate
the reduced rate for an Owner’s Policy of title insurance issued on a property that was previously insured within a certain period of years
S
Survey (n.)
the map or plat drawn by a surveyor that represents the property surveyed and shows the results of the survey
Survey (v.)
a process of measuring a parcel of land and ascertaining its area and boundaries
T
Title
a person’s right or the extent if his/her interest in real property, recognized and protected by law
Title Agency
any person, company, or entity which is authorized by a Title Insurer to issue title insurance policies
Title Commitment
an offer to issue a title insurance policy, describing the various conditions, exclusions, and exceptions that will apply to that particular policy
Title Defect
any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership
Title Insurance
assurance of indemnification for loss occasioned by defects in the title to real property or to an interest therein which is insured
Title Insurer
any person, company, or entity that is licensed to issue and insure title insurance policies
Title Policy
a contract indemnifying against loss resulting from a defect in the title to the interest or lien in real property insured
Title Search
a careful exploration and inspection of the public records in an effort to find all recorded instruments to complete a chain of title to a particular parcel of real property (also referred to as the “title examination”)
U
Underwriter
an insurance company that issues insurance policies either to the public or to another insurer