Glossary

Real Estate Glossary

The Home Closing 101 Real Estate Glossary from the American Land Title Association provides simple definitions for some of the most common terms you can expect to hear during the closing process.

These general definitions should not be used for legal purposes. However, if you have any specific questions about the terms listed below, please reach out to the Good Deed Closing team, and we would be glad to assist.

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There are currently 57 terms in this directory
A

Abstract
An abbreviation of the cardinal aspects of all recorded deeds, mortgages, leases and other instruments affecting the title to a particular piece of land.

All-Inclusive Rate
This is a rate that includes the insurance premium, and at least some part of the cost of the title search, examination and the cost of conducting the closing/settlement.

ALTA
American Land Title Association, the national trade association for the title insurance industry. ALTA member companies include businesses that conduct your closing and issue you an Owner’s Policy of Title Insurance.

Appraisal
An estimate of value of property from analysis of facts about the property; an opinion of value.

C

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.

Chain of Title
Beginning with a conveyance out of an original source of title such as a government, each succeeding deed, will or other medium which conveys and transfers the title to succeeding owners constitutes a link in the chain of title. The chain of title is the composite of all such links.

Claim
A right to assert, or the assertion of, a demand for payment of money due; or the surrender or delivery of possession of property or the recognition or some right. A demand for something as one’s rightful due.

Closing
Also known as “settlement.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.

Closing Disclosure
The five-page Closing Disclosure must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all of the costs associated with their mortgage transaction.

Closing Statement
A summation, in the form of a balance sheet, made at a closing, showing the amounts of debits and credits to which each party to a real estate transaction is entitled.

Cloud on Title
An irregularity, possible claim, or encumbrance which, if valid, would affect or impair the title.

Comission
The amount due a real estate broker, mortgage loan broker or real estate professional for services performed in such capacity.

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.

D

Deed
A written document by which title to real estate is conveyed from one party to another.

Default
Failure to perform a promised task or to pay an obligation when due.

E

Earnest Money
Down payment or a small part of the purchase price made by a purchaser as evidence of good faith.

Easement
A right held by a person to enjoy or make limited use of another’s real property.

Egress
The right to a path or right-of-way over that a person may leave or go away from his own real estate.

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.

Endorsement
Addition to or modification of a title insurance policy that expands or changes coverage of the policy, fulfilling specific requirements of the insured.

Escrow
Technically, this term strictly refers to a deed delivered to a third person to be held by him until the fulfillment or performance of some act or condition by the grantee. In the title industry, it means the depositing with an impartial third party (typically an escrow agent or title company) of anything pertaining to a real estate transaction including money and documents of all kinds. The money and documents are to be disbursed and delivered to the rightful parties by the escrow agent or title company when all conditions of the transaction have been met.

Escrow Agreement
A written agreement usually made between buyer, seller and escrow agent, but sometimes only between one person and the escrow agent. It sets forth the conditions to be performed incident to the object deposited in escrow, and gives the escrow agent instructions with respect to the disposition of the object so deposited.

Exceptions
Insurance policies include a list of items excluded from coverage. Items excluded from coverage can be found in section two of Schedule B of the policy.

F

Foreclosure
A legal proceeding for the collection of real estate mortgages and other types of liens on real estate, which results in cutting off the right to redeem the mortgaged property and usually involves a judicial sale of the property to pay the mortgage debt.

H

Heir
A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.

J

Joint Tenants
Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants.

Judgement
A conclusion or determination by a court of law usually awarding the payment of money or relief of some kind to one of the parties to a lawsuit.

L

Lien
The liability of real estate as security for payment of a debt. Such liability may be created by contract, such as a mortgage, or by operation of law, such as a mechanics lien.

List Pendens
A pending lawsuit. A lis pendens notice is legal notice to the world that a lawsuit is pending.

Loan Estimate
A three-page Loan Estimate must be provided to the consumers no later than three business days after they submit a loan application for most mortgages. The Loan Estimate provides information about key features, costs and risks of the mortgage loan for which the consumer is applying.

Loan Policy
A policy of title insurance issued to the mortgage lender insuring against loss by defects in, liens against, or unmarketability of title.

M

Marketable Title
A title that a court of equity considers to be so free of material defects and liens that it will force the title’s acceptance by questioning purchaser. Also known as a merchantable title.

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.

Mortgage
A temporary conditional pledge of property to a creditor as security for the payment of a debt that may be cancelled by payment.

O

Owner's Policy
This policy is purchased for a one-time fee and protects a homeowner’s investment in a property for as long as they or their heirs have an interest in the property. Only an owner’s policy protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include errors or omissions in deeds, mistakes in examining records, forgery and undisclosed heirs.

P

Power of Attorney
A legal instrument authorizing one to act as another’s agent or attorney.

Preliminary Title Report
A report prepared prior to issuing a title insurance policy that shows the ownership of a specific parcel of land. It includes information about liens and encumbrances that will not be covered under a title insurance policy.

Premium
The amount payable for an insurance policy.

Q

Quiet Title Suit
A lawsuit brought by an owner of real estate for the purpose of cancelling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests that cloud the owner’s title.

R

Realtor
A copyrighted trade name that can be legally used only by those belonging to the National Association of Realtors.

Record Title
The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interests.

Refinance Rate
When referring to title insurance, the refinance rate is the reduced rate for a loan policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.

Reissue Rate
When referring to title insurance, the reissue rate is the reduced rate for an Owner’s Policy of title insurance issued on a property that was previously insured within some period of years. In some states, the term is also used for a refinance rate.

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.

S

Settlement
In some areas called a “closing.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.

Survey
(1) To determine the location, boundaries, area, or the elevations of land and structures upon the earth’s surface by means of courses in relation to the North Star, and the measuring of angles and distances by using the techniques of geometry and trigonometry. (2) The map or plat drawn by a surveyor that represents the property surveyed and shows the results of a survey.

T

Tax Lien
The lien that is imposed upon real estate by operation of law that secures the payment of real estate taxes.

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 Commitment
An offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions and exceptions that will apply to that particular policy.

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: (a) covenants against encumbrances; (b) covenant for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); (c) covenant of good right and authority to convey; (d) covenant of quiet enjoyment; (e) covenant of seisin; (f) covenant of warranty.

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 Examination
To peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.

Title Insurance
Is insurance that protects purchasers of real estate and mortgages against loss from defective titles, liens and encumbrances.

Title Search
A search and perusal of the public records for recorded instruments that affect the title to a particular piece of land. (See also Abstract and Examination.)

U

Underwriter
An insurance company that issues insurance policies either to the public or to another insurer.

V

Vesting
How ownership of title is taken. Common methods of holding title include sole ownership (such as a single man or woman) or co-ownership (such as community property, community property with right of survivorship, joint tenancy or tenancy in common). How title is vested has important legal consequences and tax consequences. The tax consequences may be different for same sex legally related couples. You may wish to consult an attorney or tax advisor to determine the most advantageous form of ownership for your particular situation.