Abstract:
An abbreviation of all of the recorded deeds, mortgages, leases and the instruments affecting the title to a particular piece of land.
Abut:
To touch or border upon. A piece of land bordering on a street or an adjoining property is said to abut such street or property.
Appraise:
To estimate the value of real estate.
Assessed Valuation:
The estimated value of property for tax purposes usually determined by the tax assessor and /or local appraisal district for the particular municipality or county..
Closing:
Often referred to as "settlement". The process of completing a real estate transaction during which deeds, mortgages, leases or other required instruments are signed or delivered. Additionally, the accounting between parties is made, monies disbursed and recording of all pertinent documents prepared.
Conveyance:
The transfer of title to property from one person to another.
Deed:
An instrument by which title to real estate is conveyed from one party to another.
Easement:
A right held by a person to enjoy or make limited use of another's real property.
Eminent Domain:
The right of a government to take privately owned property for public purposes under condemnation proceeding upon payment of its reasonable value.
Encroachment:
The extension of a structure from the real estate to which it belongs across a boundary line and onto adjoining property.
Encumbrance:
A claim, right, or lien upon the title to real estate held by someone other than the real estate owner.
Escrow:
The depositing of money or documents from a real estate transaction with an impartial third party (escrow agent), to be disbursed to the rightful party when all conditions of the transaction have been met.
Fiduciary:
A person who bears a special relationship of trust, confidence and responsibility to others, such as a trustee or agent.
Filing:
The delivery of real estate documents to a county clerk for recording.
First Lien/Mortgage:
A mortgage having a priority first lien position over any other mortgage or lien on the same property.
Grant:
A transfer of real estate between individuals by deed.
Homestead:
Property occupied by an individual as his or her home and primary residence. The amount of land that is subject to the homestead exemption is dependant upon whether it is located inside a city or is in a rural area.
HUD:
A summary of the financial portion of the real estate transaction required by the Department of Housing and Urban Development.
Indemnity:
Insurance or agreement against possible loss or damage. A title insurance policy is a contract of indemnity.
Indenture:
A deed or other real estate contract executed between two or more parties.
Mortgagee's Title Insurance:
An insurance policy, which protects the lender against claims, and losses that may arise if the title is unmarketable or defective.
Lien:
The liability of real estate as security for payment of a debt. Such liability may be created by contract, such as a mortgage, deed of trust or by operation of law, such as a mechanic's lien.
Marketable Title:
A title, which a court of equity considers to be so free of material defects and liens that it will force acceptance by a purchaser. Also known as a merchantable title.
Market Value:
The average between the highest price which a buyer is willing to pay and the lowest price a seller is willing to accept.
Mechanic's Lien:
A lien on real estate, created by operation of law which 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.
Owner's Title Insurance:
A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against or other conditions rendering the owner's title to the property unmarketable.
Quit Claim Deed:
A deed which does not imply that the grantor hold title, but which surrenders and gives to the grantee any possible interest or rights which the grantor may have in the property.
Real Estate:
Land, including all inherent natural attributes and man-made improvements of a permanent nature placed thereon.
Record Title:
The aspects of title, which appear in the public records, as distinguished from unrecorded title aspects and interests.
Restrictions:
Often called restrictive covenants. Provisions in a deed or other instrument whereby an owner of land prohibits or restricts certain use, occupation and improvement of the land.
Search:
Exploration of public records in an effort to find all recorded instruments related to a particular chain of title.
Second Mortgage: A mortgage ranking in priority immediately below a first mortgage.
Survey:
The map or plot drawing of a property.
Title:
A legal right to own, posses, use, control, enjoy and dispose of real estate or an inheritable right or interest therein.
Questions of Particular Interest
What is a title?
A title is the foundation of property ownership. It is the owner's right to possess and use and transfer the property.
Why is transferring title to real estate differ from transferring to title to personal property, such as a car?
Real estate is permanent and can have many owners over the years, as well as rights to use the property. In order to transfer clear title to real property, it is first necessary to determine the rights outstanding on the property.
What is a title search?
A title search is a detailed examination of the historical records concerning a property. These records include deeds, mortgages, deeds of trust, court records, property and name indexes, taxes and many other documents. The purpose of the search is to verify the property owner's right to sell or finance the property and to discover any claims or defects to the property.
What kind of problems can a title search reveal?
A title search can reveal several types of defects in title, liens, encumbrances and restrictions. Among these are unpaid taxes, easements, unsatisfied mortgages, judgments against the property owner and restrictions of use or transfer.
What is title insurance?
Title insurance is a policy of protection against loss if any of the problems listed above result in a claim against your ownership.
How does title insurance protect my investment if a claim should arise?
If a claim is made against your property, title insurance, in accordance with the policy, will assure your legal defense, including paying court costs and related fees. If the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
What are the different types of title policies?
There are two types of title policies- a mortgagee's policy and an owner's policy. The mortgagee's policy protect the lender's interest in the property as security for the outstanding balance under the buyer's mortgage. The owner's policy protects the buyer's investment in the property up to the face amount of the policy.
What is a HUD Settlement Statement (HUD-1)?
This is a summary of the financial portion of the real estate transaction. The HUD will list the purchase price, loan amount, closing costs for both buyer and seller and show all pro-rations and sums to be disbursed by the title company to all parties.
What is pro-ration of property taxes?
This is the process of charging either the buyer or seller for their share of real estate taxes owed on the property for their respective time of ownership. Taxes are said to be "pro-rated" back or forward to the due date of the property taxes.
What is pre-paid interest?
This is interest due from the date of a loan closing to the first day of the following month. Most loans require payments to be due on the first day of the month. Each monthly payment reflects the principle and interest due on the loan for the previous month. For example, a loan closing on the 20th day of the month will require interest adjustment through the 1st day of the following month. The first payment will then be due on the 1st day of the month following. Interest adjustment is considered a settlement charge and will be disclosed on the HUD.