Glossary

A

Abstract- an important document which includes the history of the title to a specific property.

Acknowledgement- a statement used to authenticate legal instruments, which prevents the recording of false instruments or fraudulent executions and has to involve a public official, usually a notary public.

Adjustable Mortgage Loans (AML)- a loan for real estate in which the interest rate and installment amount may change periodically.

After Acquired Title- title to property acquired by someone after that person has allegedly transferred the property to someone else. As soon as the seller actually acquires title, it passes to the person to whom it was sold.

Amortization- gradually making payments of monthly mortgage loan payments usually by periodic payments of principal and interest.

Appraisal- a licensed appraiser’s opinion of the market value of a property.

Assessment- the value of a property as determined by the city or town’s tax assessors, usually done in order to calculate real property taxes.

 

B

Backup Offer- when a seller has accepted an offer from a buyer, but still accepts offers from other buyers in case the current offer falls through.

Beneficiary- somebody who receives assets at your death.

Bequeath- to pass property by will to another person.

Binder- an agreement between the buyer and seller that protects both parties during the transitional phase of a real estate sale when their home insurance policies do not overlap over the same time frame.

Broker- a person who is licensed to negotiate and arrange transactions between sellers and buyers of real estate.

C

Certificate of Title- a document that provides evidence of the right of ownership.

Chain of Title- the succession of title ownership of a property, starting from the original owner to the present owner of the property.

Claim-adverse possessor is asserting title to the property as opposed to squatting or renting the property.

Closing- the last step in a real estate transaction in which the ownership of the property is transferred to the buyer.

Cloud on Title- a document, claim, unresolved lien, or encumbrance that might invalidate the title to real property.

Conveyancer- an individual who transfers the legal title of real property from the seller to the buyer.

D

Debt- something (typically money) that one party owes to another party.

Deed- the document which transfers the ownership of the property from the buyer to the seller.

Defective Title- a property being sold that has a publicly- recorded encumbrance, and therefore the title cannot be legally transferred to the buyer. See encumbrance below.

E

Easement- a legal right to use land owned by someone else for a specific purpose.

Encumbrances- any legal thing that burdens or restricts usage or transfer of the property.

Equity- the difference between the market value of a property and the amount the borrower owes the lender of the mortgage.

Escrow- a situation where money is held by a third party until certain conditions are met.

Equitable Title- refers to the benefits an individual receives when they become the legal owner of a piece of real property.

F

Foreclosure- a home that belongs to the bank, which once belonged to a homeowner. The homeowner either abandoned the home or voluntarily deeded the home to the bank.

Fraud- when a party uses false information during a real estate transaction in order to take advantage of the other party.

G

Grant- a transfer of property from a title holder (grantor) to another (grantee).

J

Judgement Lien- the legal right for the lender to take possession of the borrower’s real property if the borrower does not complete their contractual obligations.

L

Legal Title-clear ownership of a property that is enforceable in a court of law.

Lender- an individual, group, or financial institution that lends money to another person, with expectations that the money will be fully repaid.

Loan Policy- also known as lender’s title insurance; a policy that is almost always required when a lender gives someone a loan with the purpose of protecting the lender’s interest in the case that an issue with the title occurs.

Lien- a legal claim or a right against property. The lien provides security to somebody, who can take property or take other legal action to satisfy debts and other obligations.

M

Mechanic’s Lien- a legal claim of payment to builders, contractors, subcontractors, construction firms, suppliers, etc. who build, repair, or improve structures.

Mortgage- a type of loan where real estate is used as collateral, in which the borrower gets a loan from a lender and the borrower makes payments over a set amount of time until the loan is fully repaid.

N

Notary- an individual who is licensed by the government to witness the signing of important documents, in order to help stop fraud.

O

Owner’s Policy- a recommended but not required policy purchased as a one-time fee during closing that protects the purchaser if the title that is passed to them has an issue.

Q

Quiet Title- a type of lawsuit that establishes ownership of real property and intends to clear up any problems with the title of the property.

R

Refinance- reinstating an existing loan with a new loan that fully pays off the existing loan.

S

Settlement- another term for “Closing”, which is the last step in a real estate transaction where the ownership of a piece of real property is transferred to the new buyer.

Statutory Lien- a type of lien that begins due to statute (written law).

T

Tax Lien- a type of lien that is claimed by the government against a party’s property when the party does not pay a tax debt.

Title Insurance- a type of insurance that insures the holder’s ownership rights to a property, and protects the holder from any financial loss due to an invalid title to a property.

Title Search- the process of retrieving and examining documents that are relevant to a real property’s history in order to determine what claims are on the property.

U

Underwriter- A title insurance company which appoints agents to issue title insurance policies, commitments, endorsements, and other title assurances approved by the insurer for real estate transactions through an underwriting or policy-issuing agreement. For example, Investment Title’s underwriters are Chicago Title Insurance, First American Insurance and Stewart Title Insurance.

V

Voluntary Lien- a type of lien that is created by an action of the debtor.

W

Warranty Deed- a type of deed in which the seller guarantees a clear title to the buyer and that they may be held responsible for any issues with the title.