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Real Estate Glossary
Real Estate Glossary
Real Estate Glossary
The voluntary relinquishment of rights of ownership or another interest(such as easement) by faliure to use the property, coupled with an intent to abandon (give up the interest).
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.
A written statement or declaration, sworn to before an officer who has authority to administer an oath.
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).
A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.
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.
A subordinate or division office of First American Title Insurance Company, as opposed to an affiliate, agent, subsidiary or underwritten firm associated with the Company.
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.
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).
Blanket 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.
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.
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.
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.
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.)
Most commonly used to mean some security in addition to the personal obligation of the borrower.
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.
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.”
An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.
One who owes a debt.
Decree of Distribution
A probate court decree which determines how the estate of a decedent shall be distributed.
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.
A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
A note having no date for repayment, but due on demand of the lender.
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.
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.
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.
The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value. See Condemnation.
A right or claim upon real property (land) held by one other than the property owner. Encumbrances are divided into two classes, as follows:
a) Liens (mortgages, deeds of trust, mechanics’ liens, local taxes, assessments, judgments, attachments, etc.).
b) Encumbrances other than liens which are limitations on the ownership of the land (such as conditions, restrictions, reservations, easements, etc.).
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.).
The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
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.”
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.
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.
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.
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.”
A transfer of real estate, between individuals, by deed. A transfer of real estate from a sovereign is accomplished by patent or royal decree.
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.
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.
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.
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.
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.
Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.
A lien against the property of a judgment debtor. An involuntary lien.
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.
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.
An encumbrance against property for money, either voluntary or involuntary. All liens are encumbrances but all encumbrances are not liens.
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).
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.
The party lending the money and receiving the 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.
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.
One to whom an obligation (promise) is owned.
One who legally binds (obligates) oneself, such as the maker of a promissory note.
The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.
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.
Any area of land contained within a single description.
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.
A payment that combines Principal, Interest, Taxes, and 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.
Land owned by the government and belonging to the community at large.
A conveyance of title to land by the Federal or State Government.
A title term referring to Property In Question.
A plan, map or chart of a tract or town site dividing a parcel of land into lots.
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.
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.
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.
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.
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.
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.
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.
Real property owned by one spouse exclusive of any interest of the other spouse.
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.
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.
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.
One who settles upon unoccupied land without legal claim or authority. (See Adverse Possession.)
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.
A deed executed by the tax collector to the state, county or city when no redemption is made from a tax sale.
Leaving a legally valid will at death. See Intestate.
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.
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.
See Deed of Trust.
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.)
See Preliminary Report.
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.
See Agreement of Sale.
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.
An implied lien given by law to a vendor for the remaining unpaid and unsecured part of a purchase price.
To voluntarily and intentionally relinquish a known right, claim or privilege.
A deed used in many states to convey fee title to real property.