Abstract of Title: A summary prepared by
a licensed abstractor of all documents
recorded in the public records of the
political subdivision where the land is
located. An abstract in some states or
areas is reviewed by an attorney or
other experienced title examiner to
determine the status of title. Virtually
every abstractor today provides actual
copies of the records rather than an
abstract of each document.
Abutting Owner: Owner whose land touches
another parcel, i.e., a road, highway,
or other parcel of land.
Abatement: A reduction or decrease.
Usually applies to a decrease of assessed valuation
of ad valorem taxes after the assessment, and levy.
Acceleration Clause: Clause in a
deed of trust or mortgage, which "accelerates," or
hastens, the time when the indebtedness becomes due.
For example, some deeds of trust contain a provision
(an acceleration clause) stating that the note shall
become due immediately upon the sale of the land or
upon failure to pay interest or an installment of
principal and interest.
Accomodation 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.
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.
Adjustable Mortgage Loans (AML'S):
Mortgage loans under which the interest rate is
periodically adjusted to more closely coincide with
current rates. The amounts and times of adjustment
are agreed to at the inception of the loan. Also
called: Adjustable Rate Loans, Adjustable Rate
Mortgages (ARM'S), Flexible Rate Loans, Variable
Rate Loans. (See also: Indexing, Rate Index).
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. One who has
authorization, either expressed or implied, to act
for or represent another party, usually in business
matters, such as issuing title insurance policies on
behalf of a title insurer for a portion of the
premium.
Agreement of Sale: A written
contract entered into between the seller (vendor)
and buyer (vendee) for sale of real property (land)
on an installment or deferred payment plan. It is
also known as an agreement to convey, a long form
Security Agreement or a real estate installment
contract.
All-Inclusive Rate: Rate which
includes charges for title insurance, searching or
abstract fees and examination fees.
ALTA: (American Land Title
Association) Organization composed of title
insurance firms which sets standards for the
industry, including title insurance policy forms
used on a national basis.
Amendment: A change either to
alter, add to, or correct part of an agreement
without changing the principal idea or essence.
Amortized Loan: A loan that is paid
off, both interest and principal, by regular
payments that are equal or nearly equal.
Annual Percentage Rate (A.P.R.):
The yearly interest percentage of a loan, as
expressed by the actual rate of interest paid. For
example: 6% add-on interest would be much more than
6% simple interest, even though both would say 6%.
The A.P.R. is disclosed as a requirement of federal
truth in lending statutes.
Appraisal: An estimate of value of
property resulting from analysis of facts about the
property; an opinion of value.
Approved Attorney: An attorney
whose opinion is acceptable to a title company as
the basis for issuance of a title insurance policy
by the insurer. The insurer, rather than the
attorney, executes the policy.
Assumption: The act of conveying
real property; taking title to a property with the
Buyer assuming liability for paying an existing note
secured by a deed of trust against the property.
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:
As used in the trust deed, the beneficiary is the
lender.
Bill of Sale: A written instrument
evidencing the transfer of title to personal
property.
Blanket Mortgage or Trust Deed: 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 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.
Branch: A subordinate or division
office of Pickford Escrow, as opposed to an
affiliate, agent, subsidiary or underwritten firm
associated with the Company.
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)
Capitalization Rate: The
percentage (acceptable to an average buyer) used
to determine the value of income property
through capitalization.
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.
Certificate of Sale: A
certificate issued to the purchaser at a
judicial sale.
Chain of Title: A chronological
list of recorded instruments affecting the title
to land
Chattel: Personal property
Chattel Real: Interest in real
estate less than recorded instruments affecting
the title to land.
Close of Escrow: The date the
documents are recorded and title passes from
Seller to Buyer. On this date, the Buyer becomes
the legal owner, and title insurance becomes
effective.
Closing: The final procedure in
the real estate sales process, where the sale
and pertinent loan are completed by the
execution of documents for recording. In some
areas, this procedure is known as the closing of
escrow.
Cloud on Title: An irregularity,
possible claim, or encumbrance which, if valid,
would adversely affect or impair the title.
Coinsurance: Ordinary
coinsurance is defined as a transaction under
which each of two or more insurers assumes a
designated portion of the liability for the
total risk and is liable for only such portion
of any loss beginning at the first dollar of
loss. (See Reinsurance.)
Collateral: By or at the side,
additional or auxiliary. Mistakenly used to mean
collateral security.
Collateral Security: Most
commonly used to mean some security in addition
to the personal obligation of the borrower.
Commitment: A binding contract
with a title company to issue a specific title
policy, showing only those exceptions contained
in the commitment and any intervening matters
after the date of the commitment and prior to
the effective date of the policy. The commitment
contains all information included in the
preliminary title report, plus a list of the
title company's requirements to insure the
transaction. It also includes the standard
exceptions from coverage that will appear in the
policy.
Community Driveway: A driveway
which is jointly owned, used and maintained by
two or more persons. Usually, a portion of each
owner's property is burdened by the driveway.
Community Property: Property
acquired by husband, wife or both during
marriage which gives each spouse an interest in
the property whether each appears in title or
not.
Competent: Legally qualified.
Comparable Sales: Sales that
have similar characteristics as the subject
property, used for analysis in the appraisal.
Commonly called "comps."
Condemnation: The taking of
private property by the government for public
use - as for a street or a storm drain - upon
making just compensation to the owner. This
right or power of government to take property
for a necessary public use is called "eminent
domain."
Confirmation of Sale: Court
approval of the sale of property by an executor,
administrator, guardian, or conservator.
Conservator: A person appointed
by the court to care for the person and/or
property of an incompetent adult or an adult
unable to care for their person or property
because of health.
Consideration: The inducement
for entering into a contract; it consists of
either a benefit to the promisor, or a loss or
detriment to the promisee.
Constructive Notice: Notice
imparted by the public records of the county
when documents entitled to recording are
recorded.
Contingent: Dependent upon an
uncertain event
Contract: An agreement between
two or more parties to do or not to do a certain
thing.
Conventional loan: A loan
secured by a mortgage or deed of trust which is
not insured or guaranteed by a government agency.
Conveyance: An instrument in
writing, such as a deed or trust deed, used to
transfer (convey) title to property from one
person to another
Corporation: An entity
authorized by law and established by a group of
people, the stockholders, which is endowed with
certain rights, privileges and duties similar to
an individual.
Covenant: (1) A formal
agreement or contract between two parties in
which one party gives the other certain promises
and assurances, such as the covenant of warranty
in a warranty deed. (2) Agreements or promises contained in deeds
and other instruments for performance or
nonperformance of certain acts, or use or nonuse
of property in a certain manner.
Covenants, Conditions and Restrictions:
Commonly called "CC & R's" the term usually
refers to a written recorded declaration which
sets forth certain covenants, conditions,
restrictions, rules or regulations established
by a subdivider or other landowner to create
uniformity of buildings and use within tracts of
land or groups of lots. The restrictions also
can be established by deed. CC & R's are
sometimes referred to as private zoning.
Decree of Distribution: A
probate court decree which determines how the
estate of a decedent shall be distributed.
Deed: Written document by which
an estate or interest in real property is
transferred from one person to another. The
person who transfers the interest is called the
"grantor." The one who acquires the interest is
called the "grantee." Examples of deeds are
grant deeds, administrators' deeds, executors'
deeds, quitclaim deeds, etc. The deed to use
depends on the language of the deed, the legal
capacity of the grantor and other circumstances.
Deed of Trust or Trust Deed: A
written document by which the title to land is
conveyed as security for the repayment of a loan
or other obligation. It is a form of mortgage.
The landowner or debtor is called the "trustor."
The party to whom the legal title is conveyed (and
who may be called on to conduct a sale thereof
if the loan is not paid) is the "trustee." The
lender is the "beneficiary." When the loan is
paid off, the trustee is asked by the
beneficiary to issue a "recon" or reconveyance.
This reconveyance corresponds to the release
that the holder of a mortgage executes when the
mortgage is paid off.
Deed Restrictions: Limitations
in the deed to a property that dictate certain
uses that may or not be made of the property.
Default: Failure to perform a
duty or to discharge an obligation
Defect: A blemish, imperfection
or deficiency. A defective title is one that is
irregular and faulty.
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.
Demand Note: A note having no
date for repayment, but due on demand of the
lender.
Deposit: Money given by the
buyer with an offer to purchase. Shows good
faith. Also called earnest money.
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.
Earnest Money Deposit: Down
payment made by a purchaser of real estate as
evidence of good faith; a deposit or partial
payment.
Easement: A right or interest
in the use of the land of another which entitles
the holder to some use, privilege or benefit,
such as to place pole lines, pipe lines or roads
thereon.
Effective Demand: A qualifying
term meaning the ability to pay as well as
desire to buy.
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: The presence of
an improvement such as a building, a wall, a
fence or other fixture which overlaps onto the
property of an adjoining owner.
Encumbrance: A Right or claim
upon real property (land) held by one other than
the property owner. Encumbrances are divided
into two classes, as follows: B Encumbrances other than liens which are
limitations on the ownership of the land (such
as conditions, restrictions, reservations,
easements, etc.).
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: (1) A legal doctrine
based on fairness, rather than strict
interpretation of the letter of the law. (2) The market value of real property, less the
amount of existing liens. (3) Any ownership investment (stocks, real
estate, etc.) as opposed to investing as a
lender (bonds, mortgages, etc.).
Escheat: The reversion of
property to the state when an owner dies leaving
no legal heirs, devisees or claimants.
Escrow: An independent third
party, such as Pickford Escrow who acts as the
agent for buyer and seller, or for borrower and
lender, carrying out instructions of both and
disbursing documents and funds. Escrow closes
and the transfer of property or document is
completed upon fulfillment of certain conditions
specified in the written instructions, whereupon
the necessary deeds and other instruments are
recorded.
Escrow Impounds, or Reserves:
See Impounds or Reserves.
Estate: (1) The interest or
nature of the interest which one has in
property, such as a life estate, the estate of a
deceased, real estate, etc. (2) A large house with substantial grounds
surrounding it, giving the connotation of
belonging to a wealthy person.
Execution: An order directing a
sheriff, constable, marshal or court-appointed
commissioner to enforce a money judgment against
the property of a debtor. This officer, if
necessary, may sell the property to satisfy the
judgment.
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."
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.
Fixed Rate Mortgage: A mortgage
having a rate of interest which remains the same
for the life of the mortgage.
Foreclosure: The sale of
property used as security for a debt after
default in payment.
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.
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.
"Good Faith" or "Mortgage Savings"
CLAUSE: A clause in CC & R's which
provides that " a violation thereof shall not
defeat or render invalid the lien of any
mortgage or deed of trust made in good faith and
for value."
Good Faith Purchaser or Mortgagee:
A person who buys or lends in good faith, that
is, without notice of any existing problem,
where value is paid or lent.
Grant: A transfer of real
estate, between individuals, by deed. A transfer
of real estate from a sovereign is accomplished
by patent or royal decree.
Grantee: See Deed.
Grantor: See Deed.
Grant Deed: One of the many
types of deeds used to transfer real property.
Contains warranties against prior conveyances or
encumbrances. When title insurance is purchased,
warranties in a deed are of little practical
significance.
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.
Hazard Insurance:
Real estate insurance protecting against fire,
some natural causes, vandalism, etc., depending
upon the policy. Buyer often adds liability
insurance and extended coverage for personal
property.
Homestead: A statutory
protection from execution or the establishment
of title by occupation of real property in
accordance with the laws of various states or
the Federal Government.
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.
Indemnity: Insurance against
possible loss or damage. A title insurance
policy is a contract of indemnity.
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.
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).
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.
Lien: An encumbrance against
property for money, either voluntary or
involuntary. All liens are encumbrances but all
encumbrances are not liens.
Mechanics 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.
Mortgage: (1) To hypothecate as
security, real property for the payment of a
debt. The borrower (mortgagor) retains
possession and use of the property. (2) The instrument by which real estate is
hypothecated as security for the repayment of a
loan.
Mortgagee: The party lending
the money and receiving the mortgage.
Mortgagor: The party who
borrows the money and gives the mortgage.
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.
Obligee:
One to whom an obligation (promise) is owned.
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.
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 generally
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 (movable):
Any property that is not designated by law as
real property (i.e., money, goods, evidences of
debt, rights of action, furniture, automobiles).
"P.I.Q.": A title term
referring to Property In Question.
PITI: A payment that combines
Principal, Interest, Taxes, and Insurance.
PLAT: A plan, map or chart of a
tract or town site dividing a parcel of land
into lots.
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.
"PRE," "PRELIM" OR Preliminary Report:
A written report issued by a title company,
preliminary to issuing title insurance, which
shows the recorded condition of title of the
property in question. See Commitment.
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.
Public Domain: Land owned by
the government and belonging to the community at
large.
Public Records: The
transcriptions in a recorder's office of
instruments which have been recorded, including
the indexes pertaining to them.
Quitclaim Deed:
A deed operating as a release; intended to pass
any title, interest, or claim which the grantor
may have in the property, but not containing any
warranty of a valid interest or title in the
grantor.
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
Real Property (immovable):
Land, from the center of the earth and extending
above the surface indefinitely, including all
inherent natural attributes and any man-made
improvements of a permanent nature place
thereon. For example: minerals, trees,
buildings, appurtenant rights.
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.
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.
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.
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.
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.
Separate Property: Real
property owned by one spouse exclusive of any
interest of the other spouse.
Squatter: One who settles upon
unoccupied 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 Agreement: An
agreement by which one encumbrance (for example,
a mortgage) is made subject to another
encumbrance (for example, a mortgage) is made
subject to another encumbrance (perhaps a
lease). To "subordinate" is to "make subject
to," or to make of lower priority.
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: The measurement by a
surveyor of real property which delineates the
boundaries of a parcel of land. An ALTA survey
additionally delineates the exact location of
all improvements, encroachments, easements and
other matters affecting the title to the
property in question. A survey may be required
by a title insurance company whenever the
company is requested to issue an ALTA Extended
Coverage Policy.
Tax Deed:
A deed executed by the tax collector to the
state, county or city when no redemption is made
from a tax sale.
Tax Sale: 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.)
Testate: Leaving a legally
valid will at death.
Title: (1) A combination of all
the elements that constitute a legal right to
own, possess, use, control, enjoy and dispose of
real estate or a right or interest therein. (2) The rights of ownership recognized and
protected by the law.
Title Insurance: Insured
statement of the condition of title or ownership
of real property. For a one-time-only premium,
the named insured and their heirs are protected
against title defects, liens and encumbrances
existing as of the date of the policy and not
specifically excluded from it. In the event of a
claim, the title company provides legal defense
from the policyholder and pays any covered
losses incurred as a result of such claim.
Title Report: See Preliminary
Report.
Title Search: A review of all
recorded documents affecting a specific parcel
of land to determine the present condition of
title. An experienced title officer or attorney
reviews and analyzes all material relating to
the search, then determines the sufficiency and
status of title for insurance of a title
insurance policy.
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.
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: See Agreement of Sale.
Vendor: See Agreement of Sale.
Vendor's Lien: An implied lien
given by law to a vendor for the remaining
unpaid and unsecured part of a purchase price.
Venue: Neighborhood; often 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.
Vesting: The names, status and
manner in which title of ownership is held with
a fixed or determinable interest in a particular
parcel of real property; also that portion of a
title report or policy setting forth the above.
