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• A • back
to glossary index
Abstract of Title - A summary of all public records relating to the
title to a particular parcel of land.
Acceleration
clause (in
a mortgage) - Specifies conditions under which the
lender may advance the time when the entire debt
which is secured by the mortgage becomes due. For
example, most mortgages contain provisions that the
note shall become due immediately upon the sale of
the securing land without the lender's consent or
upon failure of the landowner to pay an installment
when due.
Administrator - Person appointed by a court to take possession of
property of a person who died without leaving a
will, to pay debts and to distribute the property
to those entitled to it according to law.
Amortize - To reduce debt by means of regular periodic
payments which include amounts applicable to both
principal and interest.
Assessed
valuation -
The valuation placed upon land for purposes of
taxation. This valuation does not necessarily
correspond to the market valuation.
Attorney in
fact - A
person who holds a power of attorney from another
to execute specified documents on behalf of the
grantor of power.
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Balloon payment - A large lump sum payment of unamortized premium
and accrued interest at the end of the term of a
loan in which the consecutive monthly installment
payments are insufficient to amortize the entire
principal and interest over its terms.
Binder or
commitment - An enforceable agreement that upon the
satisfaction of the requirements which are sated in
the binder the insurer will issue the specified
title insurance policy subject only to the stated
exceptions in the binder. A binder sets forth
status of title as of a particular date.
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Certificate of
title - A
written opinion by an attorney that ownership of
the particular parcel of land is as stated in the
certificate.
Closing - Process by which all the parties to a real estate
transaction conclude the details of a sale or
mortgage. The process includes the signing and
transfer of documents and distribution of
funds.
Closing
costs -
Miscellaneous expenses involved in closing a real
estate transaction over and above the price of the
land.
Cloud on
title - An
outstanding claim or encumbrance that adversely
affects the marketability of title.
Condemnation - (1) The lawful taking of private land for public
use by a government under its right of eminent
domain. (2) A declaration by a governmental agency
that a building is unfit for use.
Condominium - A system of real estate ownership wherein there
is separate ownership of units in a multiunit
project with each separate unit ownership being
coupled with an undivided share in the entire
project less all of the units.
Construction
loan - A
loan that is made to finance the actual
construction or improvement on land. It is often
the practice to make disbursements in increments as
the construction progresses.
Contract of
sale -
Agreement by one person to buy and another person
to sell a specified parcel of land at a specified
price.
Conventional
loan - A
mortgage loan neither insured by FHA nor guaranteed
by VA.
Conveyance - (1) A document that transfers an interest in real
property from one person to another; e.g., a deed.
(2) The act of executing and delivering a deed or
mortgage.
Covenant - An agreement between the parties in a deed
whereby one party promises either (1) the
performance or non-performance of certain acts with
respect to the land or (2) that a given state of
things with respect to the land are so; e.g.,
covenant that the land will be used only for
residential purposes.
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Deed - A
written instrument duly executed and delivered by
which the title to land is transferred from one
person to another.
Discount
points -
The amount of money the borrower or seller must pay
the lender to get a mortgage at a stated interested
rate. A point equals one percent of the loan.
• E • back
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Easement -
A privilege or right of use or enjoyment which one
person may have in the lands of another; for
example, a right of way to install, operate and
maintain utility lines.
Eminent
domain -
The right of a government to appropriate private
property for public use by making reasonable
payment to the owner of such property.
Encroachment - The intrusion of any improvement partly or
entirely on the land of another.
Encumbrance - Any right or interest in land held by persons
other than the fee owner which right or interest
lessens the value of the fee title. Examples are
judgment liens, easements, mortgages and
restrictions.
Equity - The interest or value that an owner has in real
estate over and above the debts against it.
Exclusion - Those general matters affecting title to real
property excluded from coverage of a title
insurance policy.
Executor - A person named in a will to administer the
estate. Executrix is the female form.
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FNMA (Fannie Mae) - Federal National Mortgage Association, a
federally sponsored private corporation that
provides a secondary market for housing
mortgages.
Fee
simple - An
estate in which the owner is entitled to the entire
property, with unconditional power of disposition
during the owner's life, and which descends to the
heirs upon the owner's death if the owner dies
without a will.
FHA (Federal Housing
Agency) - An agency
of the federal government that insures private
loans for financing of new and existing housing and
for home repairs under government approved
programs.
FHLMC (Freddie
Mac) -
Federal Home Loan Mortgage Corporation, an
affiliate of the Federal Home Loan Bank, which
creates a secondary market in conventional
residential loans and in FHA and VA loans by
purchasing mortgages from members of the Federal
Reserve System and the Federal Home Loan Bank
System.
Foreclosure - Legal process by which a mortgagor of real
property is deprived of interest in that property
due to failure to comply with terms and conditions
of the mortgage.
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General Warranty
Deed - A
deed containing a covenant whereby the seller
agrees to protect the buyer against being
dispossessed because of any adverse claim against
the land.
GNMA (Ginnie
Mae) -
Government National Mortgage Association, a
government corporation that provides a secondary
market for housing mortgages and special assistance
to mortgage financing housing under special FHA
mortgage insurance programs.
Grantee - In a deed, the person to whom the land is
transferred.
Grantor - In a deed, the person who transfers the land.
Guardian - A person appointed by the court to administer the
affairs of an individual not capable of
administrating his own affairs.
• H • back
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Heir - The
person who, at the death of the owner of land, is
entitled to the land if the owner has died without
a will.
Homestead Tax
Credit -
Tax credit given for property that is owner
occupied.
HUD - The department of Housing and Urban Development.
It is responsible for the implementation and
administration of U.S. government housing and urban
development programs.
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Insurable title - A land title which a title insurance company is
willing to insure.
Insured closing
service -
An agreement by the insurer to indemnify the
insured for any loss in settlement funds caused by
(1) the failure of the company's policy issuing
agents or approved attorneys to conform to closing
instructions of the insured, or (2) fraud or
dishonesty of the issuing agent or approved
attorney. This service is offered by the insurer to
certain large lenders, developers, etc.
Intestate - Without having made a valid will or one who dies
without having made a will.
• J • back
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Joint tenants - Persons who are co-owners of interests in the
same land. At common law and in some states today,
upon the death of a joint tenant, interest
automatically passes to the surviving joint
tenant(s). This survivorship feature, when it
exists, is the principal distinction between a
joint tenancy and a tenancy in common.
Judgment - The formal expression and evidence of the
decision of a court in a specific lawsuit. Where
the judgment decrees that one party (the judgment
debtor) pay another party (the judgment creditor) a
certain sum of money, the recording of that
judgment creates a lien upon all land of the
judgment debtor in that jurisdiction.
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Lien - A
claim or charge on property of another for payment
of some debt, obligation, or duty.
Life
estate - An
individual's right to the use and occupancy of real
property for life.
Lis
Pendens - A
legal notice that there is litigation pending
relating to the land and a warning that anyone
obtaining an interest subsequent to the date of the
notice may be bound by the judgment.
• M • back
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Marketable title - A title which a reasonable purchaser, well
informed as to the facts and their legal meaning,
would be willing to accept.
Mechanics'
and materialmen's lien or mechanics' lien or M&M
lien -
The lien which by statute a laborer or materialman my
have against the land by reason of furnishing labor
or material for the improvement of the property.
The priority of such lien varies among the states;
in some states M&M liens take priority over
prerecorded mortgages.
Metes and
bounds - A
description of a parcel of land by describing the
boundary lines in length and direction.
Mortgage - An instrument whereby an owner conditionally
transfers title of property to another as security
for payment of a debt. The owner retains possession
and use of the land and, upon the payment of the
debt, the mortgage becomes void.
Mortgagee - The lender who provides the money for the
mortgage and to whom the mortgage is given.
Mortgagor - The person who borrows the money from the
mortgagee, and who signs the mortgage as
security.
• N • back
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Negative
amortization - Occurs where monthly installment payments are
insufficient to pay the interest accruing on the
principal balance, so the unpaid interest must be
added to the principal due.
Note - A written promise to pay a certain amount of
money, at a certain time, or in a certain number of
installments. It usually provides for payment of
interest and its payment is at times secured by a
mortgage.
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Open-end mortgage - A mortgage or deed of trust written so as to
secure and permit advancing of funds in addition to
the amount originally loaned.
Owner's
policy - A
title insurance policy insuring the owner against
loss due to any defect of title not excepted to or
excluded from the policy.
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Plat (of survey) - A map of land made by a surveyor showing boundary
lines, buildings and other improvements on the
land.
Points - See Discount points.
Power of
attorney -
An instrument in writing by which one person, the
principal, authorizes another, the attorney in
fact, to act in the specific actions described in
the instrument.
Purchase money
mortgage -
A mortgage given by the purchaser to the seller
simultaneously with the purchase of real estate to
secure the unpaid balance of the purchase
price.
• R • back
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Recording -
The noting in the designated public office of a
properly executed legal document, such as a deed or
mortgage, thereby making it a part of the public
record, and thus by law imparting constructive
notice of that document.
RESPA -
The Real Estate Settlement Procedures Act (12 U.S.C. 2601)
which, together with Regulation X promulgated pursuant to the
Act, regulate real estate transfers involving a "federally related
mortgage loan" by requiring, among other things,
certain disclosures to borrowers.
Reverse annuity
mortgage -
A Mortgage given by a homeowner who desires to
convert the equity in his or her house to an
income-producing asset. The proceeds of the loan
are paid out in periodic installments to the
homeowner, thus giving the homeowner income until
the proceeds paid out equal the face amount of the
mortgage.
Right of
way - See
Easement.
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Sale and leaseback - A financial device which an owner of land may
employ to raise money and still have the use of the
land by selling the land by selling the land to the
financier and immediately leasing it back for the
period the owner wishes to use iit.
Special warranty
deed - A
deed containing a covenant whereby the seller
agrees to protect the buyer against being
dispossessed because of any adverse claims to the
land by the seller, or anyone claiming through the
seller.
Subdivision - A tract of land surveyed and divided into lots
for purposes of sale.
Subordination - The act of a creditor acknowledging in writing
that the lien of the debt due from a debtor shall
be inferior to the lien of the debt due another
creditor from the same debtor.
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Tenant -
One who has right possession of land by any kind of
title. The word "tenant" used alone in modern times
is used almost exclusively in the limited meaning
of a tenant of a leasehold estate.
Tenants in
common -
Persons who are co-owners of residential interest
in the same land. At death of a co-tenant, interest
passes by will or by laws of intestate
succession.
Testate - Having made a will. One who makes a will is known
as the testator or testatrix.
Time share
ownership -
A technique for dividing the title to a commercial
property or a vacation home among many different
owners, with each owner acquiring the right to
occupy the premises during a specified portion of
each year.
Title - The sum of all the facts on which ownership is
founded or by which ownership is proved.
Torrens
System - A
governmental title registration system wherein
title to land is evidenced by a certificate of
title issued by a public official known as the
registrar of title.
• V • back
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VA loan - A
loan for purchase of land in which the Veteran's
Administration guarantees the lender payment of a
home mortgage by a qualified veteran.
Variable rate
mortgage -
A long-term loan having an interest rate that
fluctuates with a reference index and generally
reflects the current market rate of interest.
• W • back
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Warranty deed - A deed in which the grantor warrants or
guarantees that good title is being conveyed.
Wraparound
mortgage -
A mortgage that secures a debt which includes the
balance due on an existing senior mortgage and an
additional amount advanced by the wraparound
mortgagee. The wraparound mortgagee thereafter
makes the amortizing payments on the senior
mortgage. An example: A landowner has a mortgage
securing a debt with an outstanding balance of
$2,000,000. A lender now advances the same
mortgagor a new $1,000,000 and undertakes to make
the remaining payments due on the $2,000,000 debt.
A $3,000,000 wraparound mortgage on the land is
taken to secure this new $3,000,000 wraparound
note.
Source of
information: The Lawyers Title Glossary of Title
Insurance Terms
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