Chain of Title – The chronological order of conveyances of a parcel of land, from the original owner to the present owner.
Clear Title – Real property against which there are no liens, especially involuntary liens (mortgages). The chronological order of conveyances of a parcel of land, from the original owner to the present owner.
Closing – In real estate sales, the final procedure in which documents are executed an/or recorded, and the sale (or loan) is completed.
Closing Costs – Expenses incidental to a sale of real estate, such as loan fees, appraisal fees, etc.
Cloud on Title – An invalid encumbrance on real property, which if valid, would affect the rights of the owner. For example: (A) sells lot 1, tract 1 to (B). The deed is mistakenly drawn to real lot 2, tract 1. A cloud is created on lot 2 by the recording of the erroneous deed. The cloud may be removed by quitclaim deed, or if necessary, by court action.
Conveyance – Transfer of title to land. Includes most instruments by which an interest in real estate is created, mortgaged or assigned.
Covenants, Conditions, and Restrictions (CC&Rs) – A term used in some areas to describe the restrictive limitation which may be place on property.
Deed – Generally, an instrument given to pass fee title or easement to property that has to be recorded with the County Recorder.
Deed of Trust – an instrument used in may states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), and reconveyed upon payment in full.
Deposit – Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money.
Down Payment- Cash portion of the purchase price paid by a buyer from his/her own funds.
Encumbrance – A claim, lien, charge, or liability attached to and binding real property. Any right to, or interest in, land which may exist in one other thatn the owner, but which will not prevent the transfer of fee title.
Equity – The market value of real property, less the amount of existing liens.
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.
F.H.A. (Federal Housing Administration) – A federal Agency which insure first mortgages, enabling lenders to loan a very high percentages of the sale price.
FHLMC (Freddie Mac) – Federal Home Loan Mortgage Corporation. A Federal Agency purchasing first mortgages, both conventional and federal insured, from members of the Federal Reserve System and the Federal Home Loan bank System.
FNMA (Fannie Mae) – Federal National Mortgage Association. A private corporation dealing in the purchase of first mortgages, at a discount.
GNMA (Ginnie Mae) – Government National Mortgage Association. A Federal Association, working with F.H.A. , which offers special assistance in obtaining mortgages, and purchases mortgages in a secondary capacity.
Hazard Insurance – Real Estate insurance protection against loss caused by fire, natural causes, vandalism, etc., depending upon the terms of the policy.
Homeowner’s Association – (1) an association of people who own homes in a given area, formed for the purpose of improving or maintain the quality of the area. (2) An Association formed by the builder of condominiums of planned developments and required by the statue in some states. the builder’s participation as well as the duties of the association are controlled by statute.
Homeowner’s Insurance – Includes the coverage of Hazard Insurance plus added coverage such as personal liability, theft outside of the home (items stolen from the insured’s car). And other such coverage.
Impound Account – Account held by lender for payment of taxes, insurance, or other periodic debts against real property. The borrower pays a portion of, for example, the yearly taxes, with each monthly payment. the lender pays the tax bill from the accumulated funds.
Joint Tenancy – An undivided interest in property, taken by two or more joint tenants The interests must be equal occurring under the same conveyance, and beginning at the same time. Upon the death of a joint tenant, the interest passes to the surviving joint tenants, rather than to the heirs of the deceased.
Legal Description – A method of geographically identifying a parcel of land, which is acceptable in a curt of law. A description of a parcel of land sufficient to identify the property such as a lot and tract number.
Lien – An encumbrance against property for money, either voluntary or involuntary. All liens are encumbrances but all encumbrances are not liens.
Loan Origination Fee – A one time set up fee charge by a lender.
Marketable Title – Title which can be readily marketed (sold) to a reasonably prudent purchaser aware of the facts and their legal meaning concerning liens and encumbrances.
Mortgage – The party lending the money and receiving the mortgage. Some states treat the mortgagee as the “legal” owner, entitled to rents from the property. Other states treat the mortgage as a secured creditor, the mortgagor being the owner. the latter is the more modern and accepted view.
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. The Federal government writes this form of insurance through the FHA and VA.
Mortgagor – The party who borrows the money and gives the mortgage.
Note – A unilateral agreement containing a express and absolute promise of the signer to pay a named person, or order, or bearer, a definite sum of money at a specified date or on demand. It usually provides for interest and is generally secured by mortgage or trust deed.
Notice of Default – A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on the payments).
Origination Fee – A fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one percent.
Payoff – The payment in full of an existing loan or other lien.
Personal Property – Any property which is not designated by law as real property.
PITI (Principal, Interest, Taxes and Insurance) – Used to indicate what is included in a monthly payment on real property. Principal, Interest, taxes (property) and insurance (hazard are the four major portions of a used monthly payment.
Power of Attorney – An authority by which one person (principal) enables another (attorney-in-fact0 to act for him/her. (1) General power authorizes sale, mortgaging, etc., of all property of the principal. Invalid in some jurisdictions. (2) special power specifies property, buyers, price and terms. How specific it must be varies in each state.
Preliminary Title Report – a report showing the condition of title before a sale of loan transaction. After completion of the transaction, a title insurance policy is issued.
Prepaid Items – those expenses of property which are paid in advance and will usually be prorated upon sale, such as taxes, insurance, rent, etc.
Principal – (1) The person who gives authority to an agent or attorney. (2) Amount of debt, not including interest. The face value of a note, mortgage, etc.
Private Mortgage Insurance – Insurance against loss by a lender in the event of default by a borrower (mortgagor). The insurance is similar to insurance by a government agency such as FHA, except that it is issued by a private insurance company. the premium is paid by the borrower and is included in the mortgage payment.
Promisee – On to whom a promise has been made, such as the lender under a promissory note.
Promisor – One who makes a promise. the borrower under a promissory note.
Promissory Note – A promise in writing, and executed by the maker, to pay a specified amount during a limited time, or on demand, or at sight, to a named person, or on order, or to bearer.
Purchase Agreement – An agreement between a buyer and seller of real property, setting forth the price and terms of the the sale.
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 their interested parties. Recording is controlled by stature and usually requires the witnessing and notarizing of an instrument to be recorded.
Recording Fee – The amount paid to the recorder’s office in order to make a document a matter of public record.
Special Assignment – Lien assessed against real property by a public authority to pay costs of public improvements (sidewalks, sewers, street lights, etc.) which directly benefits the assessed property.
Special Performance – An action to compel the performance of a contract, when money damages for breach would not be satisfactory.