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Abstract - A history
of all transactions shown in the public records affecting a
particular tract of land.
Adjustable Rate Mortgage (ARM) - 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.
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.
Affidavit - A written statement made under oath
before a notary public or other judicial officer.
Agreement - A legally binding contract made between
two or more persons.
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.
Amortization - Payment to reduce the principal of a
debt in regular, periodic installments.
Appraisal - A report from an independent third party
detailing the estimated value of real estate.
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
purposes 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.
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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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 proceeding in U.S. District Court
wherein assets of an insolvent debtor are protected and
distributed in an equitable manner. |
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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,
defects, encumbrances or claims.
Closing - 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.
Coinsurance - 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.
Commitment - A document issued by a title insurance
company that contains the conditions under which a policy of
title insurance will be issued.
Condemnation - (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 institution.
Conveyance - The transfer of title to property from
one person to another.
Covenant - 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. |
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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 document through which a conveyance of
property is effected.
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.
Defect - A blemish, imperfection or deficiency. A
defective title is one that is irregular and faulty.
Depreciation - Loss in value occasioned by ordinary
wear and tear, destructive action of the elements, or
functional or economic obsolescence.
Devise - 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. |
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Earnest Money - A
deposit of funds by the purchaser of a piece of real estate
as evidence of good faith.
Easement - 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.
Encroachment - Any building, improvement or structure
located on one property (such as a wall, fence or driveway)
that intrudes upon the property of another.
Encumbrance - 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.
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 - 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.
Estoppel - A legal restraint that stops or prevents a
person from contradicting or reneging on his previous
position or previous assertions or commitments.
Examination - 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.
Exception - A provision in a title insurance
commitment or policy that excludes liability for a specific
title defect or an outstanding lien or encumbrance.
Excise Tax - A state
and county imposed tax upon each sale or transfer of
ownership of real property.
Execute - To sign a legal instrument. A deed is said
to be executed when it is signed, sealed, witnessed and
delivered. |
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Fannie Mae (FNMA) -
Federal National Mortgage Association. A private
corporation dealing in the purchase of first 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) - A federal
agency that insures first mortgages, enabling lenders to
lend a very high percentage of the sale price.
Fixed Rate Mortgage - A mortgage having a rate of
interest that remains the same for the life of the mortgage.
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.
Foreclosure - A legal proceeding in which real estate
secured by a mortgage or deed of trust is sold to satisfy
the underlying debt.
Forgery - The fraudulent signing of another's name to
an instrument such as a deed, mortgage or check.
Freddie Mac (FHLMC) - Federal Home Loan Mortgage
Corporation. 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. |
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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.
Grant - To bestow or confer, with or without
compensation, a gift such as land or money by one having
control or authority over the gift.
Grantee - One to whom a grant is made.
Grantor - One who makes a grant. |
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Hereditaments - 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.
DHUD (Department of Housing and Urban Development) -
The federal department responsible for the major housing
programs in the United States. |
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| Instrument - Any
written document having a legal effect. |
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Judgment - 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.
Junior Mortgage - A mortgage lower in lien priority
than another. |
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Leasehold - The
right to possession and use of land for a fixed period of
time. The lease is the agreement that creates the right.
Lessee - A tenant holding a leasehold.
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 monetary charge imposed on a property,
usually arising from some debt or obligation.
Link - In surveying, a length of 7.92 inches.
Loan Policy - Also called "mortgagee 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.
Lot - Generally, any portion or parcel of real
property. Usually refers to a portion of a subdivision. |
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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 - A conditional 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.
Mortgagee - The holder of a mortgage. The party to
whom a mortgage is made, generally the lender.
Mortgagee Policy - See Loan Policy.
Mortgagor - A person who mortgages property. A
person who executes a mortgage, generally the property
owner.
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. |
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| Note - 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. |
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| 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. |
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Plat - 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.
Point - Also called "commission points" or "discount
points." One percent of the amount of the loan.
Premium - The amount payable for 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.
Principal - (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.
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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| 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. |
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Real Estate - Also
called "real property." (1) Land and anything permanently
affixed to the land, such as buildings, 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.
Recording - 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.
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.
Restrictions - 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 a 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. |
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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 - The sale of an asset to a buyer
who immediately leases it back to the seller.
Search - 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 - A mortgage ranking in priority
immediately below a first mortgage.
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.
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. |
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Title - (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.
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 seisen; 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 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. |
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| Underwriter - An
insurance company that issues insurance policies to the
public or to another insurer. |
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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. |
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Waiver - The
voluntary and intentional relinquishment of a known right,
claim or privilege.
Warranty - 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.)
Will - A testamentary disposition of property,
usually in a form prescribed by law, that takes effect upon
death. |
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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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