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Abandonment - The voluntary
relinquishment of rights of ownership or another
interest (such as rights to an easement) by
failure to use the property, coupled with an
intent to abandon (give up the interest).
Abatement - A reduction or
decrease. Usually applies to a decrease of
assessed valuation of property for ad valorem
taxes.
Abstract of Judgment - A summary of the
essential provisions of a court judgment. (When
this summary or abstract is recorded in the
county recorder's office, in some states the
judgment becomes a lien on the debtor's
property, both presently owned or
after-acquired.)
Abstract of Title - A summary of the
public records relating to the title to a
particular piece of land. An attorney or title
insurance company reviews an abstract of title
to determine whether there are any title defects
which must be cleared before a buyer can
purchase clear, marketable and insurable title.
Acceleration Clause - Condition in a
mortgage that may require the balance of the
loan to become due immediately, if regular
mortgage payments are not made or for breach of
other conditions of the mortgage.
Access - The right to enter and leave a
tract of land from a public way. Can include the
right to enter and leave over the lands of
another.
Accommodation Recording - Recording of
instruments with the county recorder by a title
company merely as a convenience to a customer
and without assumption of responsibility for
correctness or validity.
Accretion - The gradual addition to the
shore or bank of a waterway.
Acknowledgement - A formal declaration
before a duly authorized officer (such as a
notary public) by a person who has executed an
instrument that such execution is his own act
and deed. An acknowledgment is necessary to
entitle an instrument (with certain specific
exceptions) to be recorded, to impart
constructive notice of its contents and to
entitle the instrument to be used as evidence
without further proof. The certificate of
acknowledgment is attached to the instrument or
incorporated therein.
Acre - A measure, usually of land,
containing 43,560 square feet in any shape.
Ad Valorem - “According to value”. A
method of taxation using the value of the thing
taxed to determine the amount of the tax.
Adjustable-Rate Mortgage (ARM) - A loan
with an interest rate that changes periodically
in keeping with a current index, like one-year
treasury bills. Typically, however, ARMs can’t
jump more than two percentage points per year or
six points above the starting rate.
Administrator - A person appointed by the
probate court to carry out the administration of
a decedent's estate when the decedent has left
no will. If a woman is appointed, she is called
an administratrix.
Adverse Possession - A process of
acquiring title to real property by possession
for a certain (statutory) period of time, in
addition to fulfilling other conditions.
Affidavit - A written statement or
declaration, sworn to before an officer who has
authority to administer an oath.
Agent - One who has authorization, either
expressed or implied, to act for or represent
another party, usually in business matters.
Agreement of Sale - Known by various
names, such as contract of purchase, purchase
agreement, or sales agreement according to
location or jurisdiction. A contract in which a
seller agrees to sell and a buyer agrees to buy,
under certain specific terms and conditions
spelled out in writing and signed by both
parties.
Amortization - A payment plan which
enables the borrower to reduce his debt
gradually through monthly payments of principal
and interest.
Annual Percentage Rate (A.P.R.) - The
yearly interest percentage of a loan, as
expressed by the actual rate of interest paid.
The A.P.R. is disclosed as a requirement of
federal truth in lending statutes.
Appraisal - An expert judgment or
estimate of the quality or value of real estate
as of a given date.
Approved Attorney - In states where
attorneys examine the chain of title before
title insurance is issued, the title company
will approve certain attorneys as those whose
opinion it will accept for the issuance of a
title policy.
Appurtenance - 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.
Assessment - (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.
Assignment - (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.
Assumable Mortgage - A mortgage which, by
its terms, allows a new owner to take over its
obligations.
Attachment - Legal seizure of property to
force payment of a debt.
Attorney in Fact - One who holds a power
of attorney from another allowing him or her to
execute legal documents such as deeds,
mortgages, etc., on behalf of the grantor of the
power.
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. |
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Back Title Letter - Also called "back
title certificate" in some areas, and "starter"
in others. When titles previously have been
examined up to a certain date by reliable
examiners, title companies sometimes give
subsequent examiners of such titles a letter
that sets forth the condition of the title at
the time of the previous examination and
authorizes them to begin their subsequent
examination with the terminal date of the
previous examination.
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.
Bankruptcy - A special proceeding under
federal, or in some instances state, laws by
which the property of a debtor is protected by
the court and may be divided among the debtor's
creditors and the debtor.
Beneficiary - (1) One for whose benefit a
trust is created. (2) In states in which deeds
of trust are commonly used instead of mortgages,
the lender (mortgagee) is called the
beneficiary.
Binder - An early agreement to buy a home
from a seller, which is usually ensured with
earnest money.
Binder - (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.
Sometimes called "preliminary certificate" or
“prelim” "commitment." (2) A policy of title
insurance (used primarily by investors) calling
for a reduced rate for a future policy if the
property is sold within a specified period.
Blanket Mortgage - A mortgage or trust
deed that covers more than one lot or parcel of
real property, and often an entire subdivision.
As individual lots are sold, a partial
reconveyance or release from the blanket
mortgage is ordinarily obtained.
Bona Fide Purchaser - One who buys
property in good faith, for fair value, and
without notice of any adverse claim or right of
third parties.
Breach of Contract - Failure to perform a
contract, in whole or part, without legal
excuse.
Building Contract - An agreement between
an owner or lessee and a building contractor,
setting forth terms relative to the construction
of a proposed structure.
Buydown - A payment to the lender from
the seller, buyer, third party, or some
combination of these, causing the lender to
reduce the interest rate during the early years
of a loan. The buydown is usually for the first
one to five years of the loan. (See also:
Certificate Backed Mortgage). |
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Certificate of Title - In areas where
attorneys examine abstracts or chains of title,
a written opinion, executed by the examining
attorney, stating that title is vested as stated
in the abstract.
Chain - 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.
Claim - 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, especially voluntary liens such
as mortgages.
Closing - Also known as "escrow" or
"settlement." The process of executing legally
binding documents, such as deeds and mortgages
most commonly associated with the purchase of
real estate and the borrowing of money to assist
in the purchase .
Closing Costs - The numerous expenses
which buyers and sellers normally incur to
complete a transaction in the transfer of
ownership of real estate. These costs are in
addition to price of the property and are items
prepaid at the closing day. This is a typical
list:
Buyer’s Expenses:
Documentary Stamps on Notes
Recording Deed and Mortgage
Escrow Fees
Attorney's Fee
Title Insurance
Appraisal and Inspection
Survey Charge |
Seller’s Expenses:
Cost of Abstract
Documentary Stamps on Deed
Real Estate Commission
Recording Mortgage
Survey Charge
Escrow Fees
Attorney's Fees |
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Debt - Money owing from one person to
another.
Debtor - One who owes a debt.
Decree of Distribution - A probate court
decree which determines how the estate of a
decedent shall be distributed.
Dedication - The setting aside of certain
land by the owner and declaring it to be for
public use. Examples: streets, sidewalks and
parks.
Deed - A formal written instrument by
which title to real property is transferred from
one owner to another. The deed should contain an
accurate description of the property being
conveyed, should be signed and witnessed
according to the laws of the State where the
property is located, and should be delivered to
the purchaser at closing day. There are two
parties to a deed: the grantor and the grantee.
(See also deed of trust, general warranty deed
and quitclaim deed.)
Deed of Trust - Like a mortgage, a
security instrument whereby real property is
given as security for a debt. However, in a deed
of trust there are three parties to the
instrument: the borrower, the trustee and the
lender (or beneficiary). In such a transaction,
the borrower transfers the legal title for the
property to the trustee who holds the property
in trust as security for the payment of the debt
to the lender or beneficiary. If the borrower
pays the debt as agreed, the deed of trust
becomes void. If, however, he defaults in the
payment of the debt, the trustee may sell the
property at a public sale, under the terms of
the deed of trust. In most jurisdictions where
the deed of trust is in force, the borrower is
subject to having his property sold without
benefit of legal proceedings. A few States have
begun in recent years to treat the deed of trust
like a mortgage.
Deed Restrictions - Limitations in the
deed to a property that dictate certain uses
that may or not be made of the property.
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.
Delivery - In conveyancing, the placing
of the property in the actual or constructive
possession of the grantee. Usually accomplished
by delivery of a deed to the buyer or agent of
the buyer, or by recording the deed. The
transfer of a deed from seller to buyer in such
a manner that it cannot be recalled by the
seller. A necessary requisite to the transfer of
title.
Demand Note - A note having no date for
repayment, but due on demand of the lender.
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.
Depreciation - Loss in value occasioned
by ordinary wear and tear, destructive action of
the elements, or functional or economic
obsolescence.
Description - The exact location of a
piece of real property stated in terms of lot,
block, tract, part lot, metes and bounds,
recorded instruments, or U.S. Government survey
(sectionalized). This is also referred to as
legal description of property.
Devise - A disposition of property made
by a will.
Documentary Stamps - A State tax, in the
forms of stamps, required on deeds and mortgages
when real estate title passes from one owner to
another. The amount of stamps required varies
with each state.
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.
Dower - A right that a wife has in her
husband's property at the time of his death.
Does not exist in all states.
Due on Sale Clause - Provision in a
mortgage or deed of trust which requires loan to
be paid in full if property is sold or
transferred. |
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Earnest Money - The deposit money given
to the seller or his agent by the potential
buyer upon the signing of the agreement of sale
to show that he is serious about buying the
house. If the sale goes through, the earnest
money is applied as part of the down payment. If
the sale does not go through, the earnest money
will be forfeited or lost unless the binder or
offer to purchase expressly provides that it is
refundable.
Easement Rights -A right-of-way granted
to a person or company authorizing access to or
over the owner's land. An electric company
obtaining a right-of-way across private property
is a common example.
Effective Demand - A qualifying term
meaning the ability to pay as well as desire to
buy.
Egress - The right to leave a tract of
land. Usually used as part of the term “ingress
and egress” and interchangeably with "access."
Eminent Domain - The right of a
government to take privately owned property for
public purposes under condemnation proceedings
upon payment of its reasonable value. See
Condemnation.
Encroachment - An obstruction, building
or part of a building that intrudes beyond a
legal boundary onto neighboring private or
public land, or a building extending beyond the
building line or into an easement.
Encumbrance - A legal right or interest
in land that affects a good or clear title and
diminishes the land's value. It can take
numerous forms, such as zoning ordinances,
easement rights, claims, mortgages, liens,
charges, a pending legal action, unpaid taxes or
restrictive covenants. An encumbrance does not
legally prevent transfer of the property to
another. A title search is all that is usually
done to reveal the existence of such
encumbrances, and it is up to the buyer to
determine whether he wants to purchase with the
encumbrance or what can be done to remove it.
Endorsement - Addition to or modification
of a title insurance policy which expands or
changes coverage of the policy, fulfilling
specific requirements of the insured.
Equity - The market value of real
property , less the amount of existing liens..
Escheat - The reversion of property to
the state when an owner dies leaving no legal
heirs, devisees or claimants.
Escrow - Funds paid by one party to
another (the escrow agent) to hold until the
occurrence of a specified event, after which the
funds are released to a designated individual.
In FHA mortgage transactions, an escrow account
usually refers to the funds a mortgagor pays the
lender at the time of the periodic mortgage
payments. The money is held in a trust fund,
provided by the lender for the buyer. Such funds
should be adequate to cover yearly anticipated
expenditures for mortgage insurance premiums,
taxes, hazard insurance premiums and special
assessments.
Estate - (1) The interest or nature of
the interest which one has in property, such as
a life estate, the estate of a decreased, real
estate, etc. (2) A large house with substantial
grounds surrounding it, giving the connotation
of belonging to a wealthy person.
Estoppel - A legal restraint that stops
or prevents a person from contradicting or
reneging on his previous position or previous
assertions or commitments.
Examination (of Title) - The study of the
instruments 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.
Exception - A provision in a title
insurance binder or policy that excludes
liability for a specific title defect or an
outstanding lien or encumbrance.
Execute - To sign a legal instrument. A
deed is said to be executed when it is signed,
sealed, witnessed and delivered.
Execution Sale - Sale of real property
under a writ of execution by a court. A judicial
mortgage foreclosure sale is in this category.
Executor - A person appointed in a will
and affirmed by the probate court to cause a
distribution of the decedent's estate in
accordance with the will. (The one who makes the
will is called a "testator.") If a woman is
appointed, she is referred to as the
"executrix." |
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Fannie Mae - Federal National Mortgage
Association (also FNMA) is a private
corporation, federally chartered to provide
financial products and services that increase
the availability and affordability of housing by
purchasing mortgage loans.
Federal Housing Administration (FHA)
Guarantee - An insurance contract in which
HUD through FHA insures that the named lender
will recover a specific percentage of the loan
amount from the insurer (FHA) in the event that
the loan goes bad.
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.
File and Use - In most states, title
insurers file rate schedules, title insurance
policies and endorsement forms with the State
Insurance Department or other state agency and
then may use such items or rates starting within
a specified period of time after filing. Rates
so filed usually are mandatory.
Financing Statement - A document filed
with the Register of Deeds or Secretary of State
securing the title to personal property.
Fixed-Rate Mortgage - A loan that carries
an unchangeable interest rate over its entire
term - typically a period of 15-30 years.
Fixtures - 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.
Flood Certification - A common term for a
Federal Emergency Management Agency (FEMA)
Standard Flood Hazard Determination Form
(SFHDF). This determines whether land or a
building is located within a Special Flood
Hazard Area for purposes of flood insurance
requirements under the National Flood Insurance
Program .
Foreclosure - A proceeding in or out of
court, to extinguish all rights, title, and
interest, of the owner(s) of property in order
to sell the property to satisfy a lien against
it.
Forfeiture of Title - A common penalty
for the violation of conditions or restrictions
imposed by the seller upon the buyer in a deed
or other proper document. For example, a deed
may be granted upon the condition that if liquor
is sold on the land, the title to the land will
be forfeited (that is, lost) by the buyer (or
some later owner) and will revert to the seller.
Forgery - The fraudulent signing of
another's name to an instrument such as a deed,
mortgage or check.
Freddie Mac - Federal Home Loan Mortgage
Corporation (also FHLMC) is a stockholder owned
corporation chartered by Congress that purchases
mortgage loans.
Full Disclosure - In real estate,
revealing all the known facts which may affect
the decision of a buyer or tenant. A broker must
disclose known defects in the property for sale
or lease. |
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General Warranty Deed - A deed which
conveys not only all the grantor's interests in
and title to the property to the grantee, but
also warrants that if the title is defective or
has a "cloud" on it (such as mortgage claims,
tax liens, title claims, judgments, or
mechanic's liens against it) the grantee may
hold the grantor liable.
Ginnie Mae - Government National Mortgage
Association (also GNMA) is a wholly-owned United
States corporation that guarantees privately
issued securities backed by pools of mortgages
insured by FHA (Federal Housing Administration),
FMHA (Farmers Home Administration) or VA
(Veterans Administration).
Good Faith Purchaser or Mortgagee - A
person who buys or lends in good faith, that is,
without knowledge of fraudulent circumstances,
or reason to inquire further, where value is
paid or lent.
Graduated Payment Mortgage - A loan in
which monthly payments are relatively small in
the beginning and gradually increase in dollar
amount over the life of the mortgage.
Grant - To transfer an interest in real
property, either the fee simple or a lesser
interest, such as an easement. A transfer of
real estate from a sovereign is accomplished by
patent or royal decree.
Grantee - That party in the deed who is
the buyer or recipient.
Grantor - That party in the deed who is
the seller or giver.
Guardian - A person appointed by a court
to manage the person and/or property of one who
is legally incompetent to handle his/her own
affairs. |
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Harbor Line - An arbitrary line set by
authorities on navigable rivers, beyond which
wharves and other structures may not be built.
Also designated as line of navigation.
Hazard Insurance - Real estate insurance
that protects against damages caused to property
by fire, windstorms and other common hazards.
Heir - One who might inherit or succeed
to an interest in land of an individual who dies
without leaving a will (intestate).
Home Equity Conversion Mortgage - A
reverse or reverse annuity mortgage in which HUD
through FHA guarantees that the borrower will
receive monthly payments from the insurer (FHA)
in the event the lender is unable to make
payments to the borrower.
Home Repair Loan - A loan used for
repairs and additions to existing structures
without affecting existing mortgage. Typically
10 years or less in length. May also be called a
“Home Improvement Loan”.
Homeowner’s 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.
Homestead - The dwelling (house and
contiguous land) of the property owner. Some
states grant statutory protection for homestead
property against the rights of creditors.
Property tax exemptions are also available in
some states.
HUD - U.S. Department of Housing and
Urban Development. The federal department
responsible for the major housing programs in
the United States, such as FHA.
HUD 1 - A form settlement (closing)
statement required by the U.S. Department of
Housing and Urban Development (HUD) where
federally related mortgages are being made on
residential properties. It is a balance sheet
showing the source of funds and the distribution
of funds in connection with the purchase and/or
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Impounds - A trust type of account
established by lenders for the accumulation of
borrower's funds to meet periodic payments of
taxes, mortgage insurance premiums, and/or
future insurance policy premiums, required to
protect their security.
Inchoate Dower - The dower interest of a
wife during the life of her husband. It is an
interest which upon the death of the husband may
ripen into possession and use. Most states have
abolished dower rights.
Inchoate Curtesy - The curtesy interest
of a husband during the life of her wife. It is
an interest which upon the death of the wife may
ripen into possession and use. Most states have
abolished curtesy rights.
Indemnity - Insurance against possible
loss or damage. A title insurance policy is a
contract of indemnity.
Index - (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."
Ingress - The right to enter a tract of
land. Usually used as part of the term “ingress
and egress” and interchangeably with "access."
Instrument - Any writing having legal
form and significance, such as a deed, mortgage,
will or lease.
Insurance - A contract under which, for a
consideration, one party (the insurer) agrees to
indemnify another (the insured) for a possible
loss under specific conditions.
Interest - (1) A share or right in
property. (2) A charge paid for borrowing money.
Interim Financing - Temporary or short
term loans. Often used with new construction.
Intestate - Without leaving a will, or
leaving an invalid will so that the property of
the estate passes according to the laws of
succession rather than by direction of the
deceased. |
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Joint Tenancy - An undivided interest in
property, taken by two or more joint tenants.
The interests must be equal, accruing 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.
Judgment - The determination of a court
regarding the rights of parties in an action.
Money judgments, when recorded, become a lien on
the real property of the party whom the judgment
is against.
Judgment Lien - A lien against the
property of a judgment debtor. An involuntary
lien.
Junior Mortgage - A mortgage lower in
lien priority than another. |
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Land Contract - An installment contract
for the sale of land whereby the seller (vendor)
holds legal title and the buyer (vendee) has
equitable title until the sales price is paid in
full.
Landmark - Any conspicuous object that
helps establish land boundaries.
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 specified
consideration (rent).
Leasehold - An estate in real property
held under a lease for a fixed term.
Legal Description - A description of land
recognized by law, based on government surveys,
spelling out the exact boundaries of the entire
piece of land. It should so thoroughly identify
a parcel of land that it cannot be confused with
any other.
Lender - Any person or entity advancing
funds which are to be repaid. A general term
encompassing all mortgagees, and beneficiaries
under deeds of trust.
Lender’s Policy - A title insurance
policy which insures the validity,
enforceability and priority of a lender’s lien.
This policy does not provide protection for the
owner.
Lessee - A party to whom a lease (the
right to possession) is given in return for a
consideration (rent).
Lessor - A landlord; one who gives a
leasehold to a lessee.
License - Permission to go upon or use
the land of another, the permission being a
personal privilege and not constituting an
interest in the land.
Lien - A claim by one person on the
property of another as security for money owed.
Such claims may include obligations not met or
satisfied, judgments, unpaid taxes, materials or
labor.
Lien Waver - Also called "waiver of
liens." A waiver of mechanic’s lien rights,
signed by contractors or subcontractors so that
the owner or general contractor can receive
funds from a construction loan.
Life Estate - A grant or reservation of
the right of use, occupancy and ownership for
the life of an individual.
Link - In surveying, a length of 7.92
inches.
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 tot eh date of the notice may be
bound by the outcome of the litigation.
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.
Lock-In - A guarantee, for which you are
usually charged a fee, that you will receive a
specific rate when you close your mortgage.
Loss Payable Clause - A provision added
to a Fire and Casualty Policy which says any
loss will be paid to two or more parties as
their interest may appear. Usually the owner and
the mortgage lender.
Lot - Generally, any portion or parcel of
real property. Usually refers to a portion of a
subdivision. |
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Majority - The age at which a person no
longer considered a minor and is entitled to
contract and enjoy civic rights, such as voting.
Market Value - The price that a home will
likely fetch on the market, based on comparisons
to similar homes that have sold recently.
Marketable Title - A title which enables
an owner to sell his property freely to others
and which others will accept without objection.
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 - A land description in
which boundaries are described by courses,
directions, distances and monuments.
Minor - One who because of insufficient
age or status is legally incapable of making
contracts.
Monument of Survey - Visible marks or
indications left on natural or other objects
indicating the lines and boundaries of a survey.
May be posts, pillars, stones, cairns, and other
such objects. May also be fixed natural objects,
blazed trees, roads and even a water course.
Mortgage - A lien or claim against real
property given by the buyer to the lender as
security for money borrowed. Under
government-insured or loan-guarantee provisions,
the payments may include escrow amounts covering
taxes, hazard insurance, water charges and
special assessments. Mortgages generally run
from 10 to 30 years, during which the loan is to
be paid off.
Mortgage-Backed Securities - Securities
similar to bonds, but having their value based
on a pool of mortgages. The rate of return is
based on the interest rate of the mortgages,
plus early payoffs, which increases the value of
any discounts. The price of the securities will
vary as interest rates rise and fall.
Mortgage Banker - A specialized lending
institution that lends money solely with respect
to real estate and secures its loans with
mortgages on the real estate.
Mortgage Broker - A person or company
that buys and sells mortgages for another on
commission or who arranges for and negotiates
mortgage contracts.
Mortgage Commitment - A written notice
from the bank or other lending institution
saying it will advance mortgage funds in a
specified amount to enable a buyer to purchase a
house.
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 - A written agreement to
repay a loan. The agreement is secured by a
mortgage, serves as proof of an indebtedness,
and states the manner in which it shall be paid.
The note states the actual amount of the debt
that the mortgage secures and renders the
mortgagor personally responsible for repayment.
Mortgage (Open-End) - A mortgage with a
provision that permits borrowing additional
money in the future without refinancing the loan
or paying additional financing charges. Open-end
provisions often limit such borrowing to no more
than would raise the balance to the original
loan figure.
Mortgagee - The lender in a mortgage
agreement.
Mortgagee Policy - See Lender’s Policy.
Mortgagor - The borrower in a mortgage
agreement.
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. |
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Negative Amortization - A condition
created when a loan payment is less than the
interest payment due. Even though payments are
made on time, the amount of principal owed
increases.
Notary Public - One who is authorized by
the state or federal government, to administer
oaths, and to attest to the authenticity of
signatures.
Note - A unilateral agreement containing
an express and absolute promise of the signer to
pay to a named person, or order, or bearer, a
definite sum of money at a specified date or on
demand. Usually provides for interest and,
concerning real property, is secured by a
mortgage or trust deed. |
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Obligee - One to whom an obligation
(promise) is owed.
Obligor - One who legally binds
(obligates) oneself, such as the maker of a
promissory note.
Original Cost - The purchase price of
property, paid by the present owner. The present
owner may or may not be the first owner.
Owner's Policy - A policy of title
insurance usually insuring an owner of real
estate against loss occasioned by defects in,
liens against or unmarketability of the owner's
title.
Ownership - The right to possess and use
property to the exclusion of others. |
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Parcel - Any area of land contained
within a single description.
Partnership - An association of two or
more persons who have contracted to join in
business and share the profits.
Party Wall - A wall erected on a property
boundary or between two lots for the common
benefit and use of the property owners on either
side.
Patent - A conveyance of title to land by
the Federal or State Government.
Personal Property - Any property that is
not designated by law as real property (i.e.,
money, goods, evidences of debt, rights of
action, furniture, automobiles).
Personal Representative - A person
appointed by the probate court to administer a
decedent’s estate. See also "Executor."
"P.I.Q." - A title term referring to
Property In Question.
PITI - Abbreviation for principal,
interest, taxes and insurance, all of which are
lumped together in your monthly mortgage
payment.
Plat - A map or chart of a lot,
subdivision or community drawn by a surveyor
showing boundary lines, buildings, improvements
on the land and easements.
P.M.I. - Private Mortgage Insurance. An
insurance contract which insures that the named
lender will re cover a specific percentage of
the loan amount from the insurer in the event
the loan goes bad. Many lenders require this on
higher percentage loans.
Points - A one-time-only fee you pay up
front to your lender, sometimes in exchange for
a slightly lower mortgage rate. One point equals
one percent of the total amount you plan to
borrow.
Policy - A general term used to describe
all contracts of insurance.
Power of Attorney - A document by which
one person (called the "principal") authorizes
another person (called the "attorney-in-fact")
to act for him/her in a specific manner in
designated transactions.
Power of Sale - A clause in a will,
mortgage, deed of trust or trust agreement
authorizing the sale or transfer of land in
accordance with the terms of the clause.
"PRE," "PRELIM" or Preliminary Title Report
- A written report issued by a title company,
prior to issuing title insurance, which shows
the recorded condition of title of the property
in question. See Commitment.
Premium - The amount paid for an
insurance policy.
Prepayment - Payment of mortgage loan, or
part of it, before due date. Mortgage agreements
often restrict the right of prepayment either by
limiting the amount that can be prepaid in any
one year or charging a penalty for prepayment.
The Federal Housing Administration does not
permit such restrictions in FHA insured
mortgages.
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.
Principal - The basic element of the loan
as distinguished from interest and mortgage
insurance premium. In other words, principal is
the amount upon which interest is paid.
Priority - The order of preference, rank
or position of the various liens and
encumbrances affecting the title to a particular
parcel of land. Usually, the date and time of
recording determine the relative priority
between documents.
Priority Inspection - A title term
referring to the type of inspection made in
connection with insuring a new construction
loan. In making the inspection of the property,
the title company must be assured that the work
of improvement had not yet begun when the
lender's deed of trust was recorded.
Pro rate - To allocate between seller and
buyer their proportionate share of an obligation
paid or due.
Public Domain - Land owned by the
government and belonging to the community at
large.
Public Records - The records of all
documents which are necessary to give notice and
are available to the public.
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. |
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Quiet Title - To free the title to a
piece of land from the claims of other persons
by means of a court action called a "quiet
title" action. The court decree obtained is a
"quiet title" decree.
Quitclaim Deed - A deed which transfers
whatever interest the maker of the deed may have
in the particular parcel of land. A quitclaim
deed is often given to clear the title when the
grantor's interest in a property is
questionable. By accepting such a deed the buyer
assumes all the risks. Such a deed makes no
warranties as to the title, but simply transfers
to the buyer whatever interest the grantor has.
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Range - A part of the government survey,
being a strip of land six miles in width, and
numbered east or west of the principal meridian.
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 Estate Broker - A middle man or
agent who buys and sells real estate for a
company, firm or individual on a commission
basis. The broker does not have title to the
property, but generally represents the owner.
Realtor® - A federally registered
collective membership mark which identifies a
real estate professional who is a member of the
National Association of Realtors® and subscribes
to its strict Code of Ethics.
Realty - A brief term for real estate.
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.
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 statute and usually requires the
witnessing and notarizing of an instrument to be
recorded.
Redeem - Literally "to buy back." The act
of buying back lands after a mortgage
foreclosure, tax foreclosure, or other execution
sale.
Refinancing - The process of the same
mortgagor paying off one loan with the proceeds
from another loan.
Reinsurance - A contract which one
insurer makes with another to protect the first
insurer, wholly or partially, against loss or
liability by reason of a risk under a separate
and distinct contract as insurer of a third
party. Reinsurance differs from coinsurance in
that, in the case of reinsurance, only one
insurer has a direct contractual relationship
with the insured, and that insurer (commonly
referred to as the "lead insurer") purchases
reinsurance in order to lessen or spread the
risk. The "lead insurer" will assume a risk up
to a limit (the amount of which is referred to
as the "retention") and any loss which exceeds
this limit would be borne by the reinsurers. In
the case of coinsurance, each coinsurer has a
direct contractual relationship with the
insured, and the risk is shared in agreed-upon
proportions from the first dollar of loss.
REIT - Real Estate Investment Trust. A
business trust or corporation formed under
federal and state statues for the purpose of
investing in real estate.
Release - (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.
REMIC - Real Estate Mortgage Investment
Conduit. A product of 1986 federal tax
legislation in which a business entity such as a
corporation, partnership, or trust in which
substantially all of the assets consist of
qualified mortgages and permitted investments,
elects to be treated as a REMIC. Qualification
avoids treatment as a corporation for tax
purposes.
Restrictions - Often called restrictive
covenants. Provisions in a deed or other
instrument whereby an owner of land prohibits or
restricts certain use, occupation or improvement
of the land.
Reverse or Reverse Annuity Mortgage - A
mortgage for which the borrower pledges home
equity in return for regular (monthly) payments,
rather than a lump sum distribution of loan
proceeds. Repayment is usually not required
until the home is sold or the borrower’s estate
is settled, provided the borrower continues to
live in the home and keeps current all taxes and
insurance.
Right of Way - (1) The right to pass over
property owned by another, usually based upon an
easement. (2) A path or thoroughfare over which
passage is made. (3) A strip of land over which
facilities such as highways, railroads or power
lines are built.
Riparian Rights - The rights of owners of
lands bordering watercourses which relate to the
water and its use. |
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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 - A situation in which
the grantor in a deed to a parcel of property
sells it and retains possession by
simultaneously leasing it from the grantee.
Search - In title industry parlance, a
careful exploration and examination of the
public records in an effort to find all recorded
instruments relating to a particular chain of
title.
Second Mortgage - A mortgage ranking in
priority immediately below a first mortgage.
Section or Section of Land - A parcel of
land comprising one square mile or 640 acres.
Separate Property - Real property owned
by one spouse exclusive of any interest of the
other spouse.
Set Back Lines - Those lines which
delineate the required distances for the
location of structures in relation to the
perimeter of the property.
Special Assessments - A special tax
imposed on property, individual lots or all
property in the immediate area, for road
construction, sidewalks, sewers, street lights,
etc.
Squatter - One who lives on another’s
land without legal claim or authority. (See
Adverse Possession.)
Starter - A copy of the last policy or
report issued by a title insurer which described
the title to land upon which a new search is to
be made. In some states, this is called a back
title letter or back title certificate.
Street Improvement Bonds -
Interest-bearing bonds issued, usually by a city
or county, to secure the payment of assessments
levied against land to pay for street
improvements. The property owner may pay off the
particular assessment against the property, or
may allow the assessment to "go to bond" and pay
installments of principal and interest over a
period of years, usually at the city or county
treasurer's office. The holder of a bond
received payments from these offices.
Subdivision - An area of land laid out
and divided into lots, blocks, and building
sites, and in which public facilities are laid
out, such as streets, alleys, parks, and
easements for public utilities.
Subordination - 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.
Subordination Agreement - An agreement by
which one encumbrance (for example, a mortgage)
is made subject (junior) to another encumbrance.
To "subordinate" is to "make subject to," or to
make of lower priority.
Subrogation - The substitution of one
person for another, so that the former may
exercise certain rights or claims of the latter.
Used primarily when a surety relationship
exists, as in insurance.
Subsurface Rights - The rights of
ownership to things lying beneath the physical
surface of the property.
Surety - (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.
Surface Rights - Rights to enter upon and
use the surface of a parcel of land, usually in
connection with an oil and gas lease or other
mineral lease. They may be "implied" by the
language of the lease (no explicit reservation
or exception of the surface rights) or
"explicitly" set forth.
Survey - A map or plat made by a licensed
surveyor showing the results of measuring the
land with its elevations, improvements,
boundaries and its relationship to surrounding
tracts of land. A survey is often required by
the lender to assure him that a building is
actually sited on the land according to its
legal description. |
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Tax - As applied to real estate, an
enforced charge imposed on persons, property or
income, to be used to support the State.
Tax Deed - A deed executed by the tax
collector to the state, county or city after a
period of non-payment of taxes according to
statute.
Tax Sale - (1) Property on which current
county taxes have not been paid is "sold to the
state." No actual sale takes place - the title
is transferred to the state and the owner may
redeem it by paying taxes, penalties and costs.
If it has not been redeemed within five years,
the property (referred to as "tax sold
property") is actually deeded to the state.
(Similar "sales" to cities take place for unpaid
city taxes.) (2) A public sale of property at
auction by a governmental authority, after a
period of non-payment of property tax.
Tenancy by the Entirety - Ownership by
married persons where each owns the entire
estate, with the survivor taking the whole upon
the other’s death.
Tenancy in Common - An estate or interest
in land held by two or more persons, each having
equal rights of possession and enjoyment, but
without any right of succession by survivorship
between the owners.
Tenant - Any person occupying real
property with the owner’s permission.
Testate - Leaving a legally valid will at
death. See Intestate.
Title - As generally used, the rights of
ownership and possession of particular property.
In real estate usage, title may refer to the
instruments or documents by which a right of
ownership is established (title documents), or
it may refer to the ownership interest one has
in the real estate.
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.
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
resulting from defects of title to a
specifically described parcel of real property.
Insurance benefits will be paid only to the
"named insured" in the title policy, so it is
important that an owner purchase an "owner's
title policy," if he desires the protection of
title insurance.
Title Plant - Also called "abstract
plant" in some areas. 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 or Examination - A review of
all recorded documents affecting a specific
piece of property to determine the present
condition of title.
Torrens Title - A system whereby, title
to land is registered with a registrar of land
titles, instead of being recorded.
Township - A territorial division of land
established by federal survey, being six miles
square, containing 36 sections or 36 square
miles.
Tract - A parcel of land.
Trust - A fiduciary relationship under
which one holds property for the benefit of
another.
Trustee - A party who is given legal
responsibility to hold property in the best
interest of or "for the benefit of" another. The
trustee is one placed in a position of
responsibility for another, a responsibility
enforceable in a court of law. |
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Underwritten Company: - A title firm
which conducts title searches but is not
qualified to insure, and therefore issues
policies of a qualified title insurer
(underwriter) in return for a portion of the
premium.
Underwriter - An insurance company that
issues insurance policies to the public or to
another insurer. |
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VA Guarantee - An insurance contract in
which the Veterans Administration (VA) insures
that the named lender will recover a specific
percentage of the loan amount from the insurer
in the event the loan goes bad.
Variable Interest Rate - An interest rate
that fluctuates with the current cost of money;
subject to adjustment if the prevailing rate
moves up or down.
Vendee - Purchaser or buyer, especially
on a land contract.
Vendor - The person who transfers
property by sale. Another word for “seller”.
Vendor's Lien - A lien either express or
implied given to a vendor for the remaining
unpaid and unsecured part of a purchase price.
Venue - Used to refer to the county or
place in which an acknowledgment is made before
a notary; also refers to the county in which a
lawsuit may be filed or tried.
Vested - Present ownership rights,
absolute and fixed. |
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Waiver - The voluntary and intentional
relinquishment of a known right, claim or
privilege.
Warranty - A legal, binding, promise,
given at the time of a sale, whereby the seller
gives the buyer certain assurances as to the
condition of the property being sold.
Warranty Deed - A deed used in many
states to convey fee title to real property. A
warranty deed contains provisions under which
the seller becomes liable to the purchaser for
defects in or encumbrances on the title.
Will - A written expression of the desire
of a person as to the disposition of that
person’s property after death. Must follow
certain procedures to be valid. |
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Zoning - Laws passed by local governments
regulating the size, type, structure, nature and
use of land or buildings. |
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