.........GLOSSARY OF REAL ESTATE TERMS..........

Abstract of Title:  A condensed history of title to land and a listing of all liens and other charges against the land and owners.

Adverse Title:  A title set in opposition to another title; an exception to be excluded from title being run; a title claimed by another person by possession for a period of 21 years or more called Adverse Possession.

Bankruptcy:  The process in which an insolvent debtor's assets are gathered together and distributed fairly between the bankrupt's creditors enabling the debtor to "start fresh."It is governed under Federal law for benefit and relief of Creditors and relieves the debtor all personal liability but does not discharge recorded or filed liens.

Chain of Title:   A record of successive conveyances affecting a parcel of land from a particular point in time to the present.  It is what results from an Abstract of Title.

Condemnation:  Process of "taking" private property for public use by way of Eminent Domain.

Condominium:  A system of separate ownership of individual units in a multiple-unit project, each unit owner being a part-owner in the fee and the spaces and buildings used in common by all unit owners.

Consideration:  Inducement to a contract price paid for property: the basic and necessary element for the existence of a valid and legally binding contract.

Covenants:  Agreement between two or more parties by Deed or other writing; usually covenants running with land which cannot be separated from the land (these are normally shown in all Deeds made subsequent to the Deed creating the covenants); Sometimes synonymous with Restrictions

Deed:  Any writing sealed and delivered by parties; a conveyance of property

Deed-in-lieu: Conveyance of property to a Lender by a Mortgagor in the form of an absolute conveyance generally to avoid foreclosure.

Deposit or Earnest Money:  Advance payment of part of the purchase price to bind a contract for real estate

Easement:  A right of use over property of another for benefit of one or more parties affected.  The land having the right of use is the Dominant Tenement and the land subject to the easement is the Servient Tenement.

Eminent Domain:  The taking of private lands for public use by a state, municipality or authorized private person or corporation for a just compensation or consideration.

Encroachment:  An intrusion of one property into another altering the land upon which the intrusion occurs.

Encumbrance:  A right or interest in land that may diminish the value of the land, such as a mortgage, judgment, unpaid taxes, lease easement, etc.

Equitable interest:  Interest of a party in land to which that party has no legal ownership;  (Equitable Title) Interest of a beneficiary under a Trust; interest of a prospective purchaser under an Agreement of Sale or an Installment Sale.

Estate:  All assets and liabilities of decedent, both real and personal property: total property owned prior to distribution by terms of Will.

Estate Tax:  A tax imposed on the right to transfer property by death levied upon the descendant's estate and not the heir receiving the property.  

Examination:  Review and investigation of the abstract of title to ascertain status of title and any liens or encumbrances thereon for insurance purposes.

Exceptions:  Matters listed on Schedule B Section II of the Commitment which shall remain as Exclusions to the insurance. (Such items might be Restrictions, Rights of Way or Easements, Utility Company rights, Municipal rights for sewers, water or streets as well as public and private rights in streets, easements, etc).

Execution, Delivery and  Acceptance:  Completion of an instrument by signing, acknowledging by Notary and delivery.  When document is executed (signed) and acknowledging before a Notary, it must be delivered by the grantor and accepted by the grantee to accomplish its intended  purpose.

FHA, Federal Housing Administration:  An Agency of the federal government which insures loans for financing new and existing housing under government approved

FHLMC (Freddie Mac), Federal Home Loans Mortgage Corp:  An affiliate of the Federal Home Loan Bank, which creates a secondary market in conventional FHA and VA residential loans by purchasing mortgages from members of the Federal Reserve and the Federal Home Loan Bank System.

FNMA (Fannie-Mae), The Federal National Mortgage Association:  A federally sponsored private corporation which provides a secondary market for housing mortgages.

Financing Statement:  A document setting forth a Secured Party's interest in personal property, used mostly to gain additional security on a property (also called Secured Transaction and UCC).

Flood Plain:  Area adjoining body of water that may or may not have been covered by floodwaters; use or development of such area is restricted by State and Federal laws.

HUD-1:  A financial statement that provides an itemized listing of the funds to be paid, or that were paid at closing. Items that appear on the statement include real estate commissions, loan fees, points and initial escrow amounts. Each type of expense goes into a specific area on the sheet. The totals at the bottom of the HUD-1 statement define the seller's net proceeds and the buyer's net payment at closing. The HUD-1 statement is also known as the "closing statement" or "settlement sheet."

Homeowner's Insurance:  Insurance protecting real estate against loss caused by fire, some natural causes, vandalism, etc. depending on the terms of the policy.  Also includes coverage such as personal liability and theft away from home.

Indemnity or Indemnification:  Process by which a title insurer receives or gives to another what it deems to be sufficient security to remove, waive, or "insure over" an objection or gift.

Inheritance Tax:  Tax or assessment imposed by some states on the receipt of property from an Estate, not a tax on property itself but on the right to acquire the property by descent or gift.

Inspection:  An investigation and analysis of a real estate property by a qualified inspector or engineer. Such inspections are typically optional but highly recommended for home buyers.

Judgment: General lien affecting all property owned by party within a particular county.  Some may be in rem (against a particular property) such as Foreclosure.

Leasehold:  An estate in property held for a fixed number of years, very similar to Installment Sales.

Legal Description:  A written delineation of the property to be insured showing a preamble of what is to be described, where it is situated, and what plan it was drawn from (if any) followed by a paragraph showing metes and bounds or courses and distances around the perimeter of the lot and any noteworthy landmarks such as pins, stakes, stones, fence or bounding owners. The lot number and street address, if known and proven is also shown.

Lender:  The person or institution who provides money to a borrower for a fixed period of time in exchange for full repayment of the original  principal loan balance plus loan costs and interest. Mortgage documents often refer to the lender as the mortgagee and the borrower as the mortgagor.

Lien:  A monetary charge imposed on a property, usually arising from some debt or obligation.

Life Estate:  An interest or an estate in real property limited to the lifetime of the party holding the interest and upon the death of the life tenant the estate or interest passes to another.

Life tenancy:  The interest of a person holding a Life Estate created by omitting the words "heirs and assigns" from the deed and adding "for the term of his/her natural life only".

Lis Pendens:  A "pending suit" under court control until final judgment.  If a property has a Lis Pendens filed against it, the property cannot be sold until the action is resolved.

Mechanic's Lien: Claim filed by unpaid subcontractor or supplier of materials furnished for new construction for the purpose of securing payment.

Mortgage: Pledge of an estate in real estate as collateral security for payment of money borrowed by the Mortgagor to pay to the Mortgagee within a stated period of time. It must be recorded to be a lien.

Municipal Claim:  Claims filed by municipalities for unpaid taxes, assessments and nuisances.

Open-end Mortgage:  Credit line or a mortgage securing future advances.

Planned Residential or Planned Unit Development or PRDs and PUDs:  A development of individually owned parcels contiguous to common area owners by an association whose members are the individual parcel owners.

Policy:  A written opinion of the issuing company as to the validity of the title backed by an agreement to make that opinion good in case it should be proved to be mistaken and the insured suffers a loss. 

Premium:  The title insurance "fee" which includes search, examination, closing fees and every other charge made by the Company to an Insured for any policy or contract for title insurance. 

Private Mortgage Insurance or PMI:  Required on conventional loans with less than 20 percent down payment.  The premiums for PMI are included in the mortgage payment, and protect the lender should default occur. On FHA loans, you pay MIP (mortgage insurance premium) is paid which accomplishes the same purpose. 

Property Tax - also called Real Estate Tax:  Property taxes are government assessments on real estate property.  With mortgage financing, the local and county tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender in an escrow account for payment.

Quiet Title:  A proceeding to establish a Plaintiff's title to land in a court of law and to forever bar a Defendant from asserting any claim to the  land.

Realtor:  A real estate agent, broker or an associate who holds active membership in a local real estate board that is affiliated with the National Association of Realtors.

Recital:  Statement in a Deed or other instrument explaining the grantors/mortgagors chain of title or source of title which is usually placed after the legal description in the instrument.

Requirements or Objections:  a list of items which must be taken care of (or cleared) before title policy can be issued. Such requirements might be payment of mortgage, taxes, judgments and other liens.  

RESPA:  Real Estate Settlement Procedures Act of 1975 as amended, a Federal Act which must be followed to the letter by all Title Insurance Companies, Realtors, etc.

Riparian Rights:  Rights of owner bounding any type of waters in and to the ordinary flow of the water. Riparian rights do not attach to flood waters. 

Secured Transaction:  A transaction to create a security interest in personal property of fixtures, goods and equipment based on a security agreement, also known as Financing Statement or UCC.

Settlement - also called Closing:  The completion of a real estate transfer, where the title passes from seller to buyer and/or a mortgage lien is given to secure debt undertaken to purchase the home. 

Settlement Agent - also called a Closing Agent, Closer or Escrow Officer:  The person responsible for facilitating a closing. The settlement agent is usually either an attorney or a representative of the title company.

Suit: Any proceeding by one party against another in a court of law which has not been reduced to a judgement.

Tenancy:  An interest in real estate which passes to the owner or to the tenant who has acquired control and possession of the property.

Tenancy by Entireties:  An interest created only between a husband and wife by which they each hold title to the whole of the property, title passing directly to the survivor upon death of one.

Tenancy in Common: Two or more parties, each holding an undivided interest in the property with no right of survivorship, the interest of a deceased tenant in common passing to the decedent's estate.

Tenancy in Partnership:  Merely an estate belonging to a partnership: partnership property being part of the partnership assets and is treated as personal property among the partners.

Tenancy with Right of Survivorship or Joint Tenancy:  Two or more parties, each holding an undivided interest in the property with a right of survivorship, the interest of a deceased joint-tenant passing directly to the surviving joint-tenants subject to payment of Federal Estate and Inheritance Tax on Estate.

Title Commitment:  Written agreement or pledge to insure title to real estate under certain terms, conditions and exclusions.

Title Insurance:  A one-time premium agreement to indemnify a Policy holder issued by title company after search and examination of title to property, representing the state of the title and the accuracy of the search; insuring, guaranteeing or indemnifying against loss or damage suffered by owners of real estate, defect in or the unmarketability of title.

Title Search:  Review of appropriate court house records by researcher of a title to be insured to determine whether or not it is insurable.

Transfer Tax:  A tax or assessment imposed by the states due upon the transfer of property by some form of conveyance.

Trust:  A legal entity created by a Grantor/Trustor/Settlor for the benefit of designated beneficiaries wherein a party or parties is/are named Trustee to manage assets and income. There are many types of Trusts: Active (Trustee has certain duties to perform); Passive (trustee has no active duties & is just a custodian); Implied (by implication of law such as parent buying property with children's' money); Express (one created for a specific purpose); Inter-Vivos (may not be revoked); Revocable (Settlor reserves right to revoke trust); and many other types.

Underwriting: The process or the signing of agreement to insure real property under certain terms, conditions, stipulations and exclusions: also, that which is done in connection with the final title commitment to assure a smooth closing and subsequent issuance of the final policy.

Usury: Lending of money at an illegal rate on interest: can result in the loss of the lien of the mortgage.  

Wetlands:  Land areas frequently, if not always, covered by waters which support vegetation. Covered under State and Federal laws, the use or development of wetlands is severely restricted.