Real Estate Title Lingo

Don’t let real estate title lingo bog you down; finding a home or finally getting your house sold can be hard enough. We’ve created an A-Z guide or cheatsheet of common words used throughout the real estate transaction. Staying educated on the terminology can go a long way in ensuring a smooth closing. If you have any questions along the way, your real estate agent has a wealth of knowledge and our several branches throughout Dallas-Fort Worth are always willing to help. Happy Real Estating!

Abstract:
In real estate, an abbreviated list of all of the recorded deeds, mortgages, leases, and instruments affecting the title to a particular piece of land.

Appurtenance:
Anything that becomes a part of the property because it is attached or closely related to the land. It may be a structure such as a well, barn, garage; it may be a right or interest enjoyed by the previous owner, such as an easement.

Bill of Sale:
An invoice signed by the seller reciting that he has sold to the buyer the personal property therein described.

Certified Check:
A personal check drawn by an individual which is certified (guaranteed) to be good. The bank holds the funds to pay the certified check and will not pay any other checks drawn on the account if such payment would impede payment of the certified check. The bank also will not honor a stop payment of the certified check.

Chain of Title:
The successive ownership or transfer in the history of title to a tract of land.

Closing:
The final step in the sale and purchase or refinance of a property, when the title is transferred from the seller to the buyer; the buyer/borrower signs all closing documents, pays the settlement costs, and any money due the seller or buyer is handed over.

Closing Agent / Escrow Officer:
At the final stage in a real estate transaction, or the closing, a closing agent assures that all documentation, including sale related documents and loan/mortgage documents for the entire transaction, are completed and signed properly, including the title search and title insurance.

Commitment:
A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued, also called a “binder”.

Deed:
A written document which conveys ownership or land from one person to another.

Deed of Trust:
A type of security instrument conveying title in trust to a third party covering a particular piece of property.

Encumbrance:
Any right to, or interest in, land that effects its value including outstanding loans, unpaid taxes, easements, or deed restriction also called a cloud on title.

Escrow:
The depositing of money or documents from a real estate transaction with an impartial third party (escrow agent), to be disbursed to the rightful party when all conditions of the transactions have been met.

Examination of Title:
An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Indemnity:
Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.

Intestate:
The situation in which a person dies without leaving a valid will.

Legal Description:
A description of a specific parcel of real estate which is acceptable to the courts in that state, which allows an independent surveyor to locate and identify it.

Lender’s Title Insurance Policy:
An insurance policy which protects the lender against claims and losses that may arise if the title is unmarketable or defective.

Metes and Bounds:
A means of describing land by directions and distances rather than reference to a lot number. Generally used when land has not be subdivided into lots.

Note:
A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.

Owner’s Title Insurance Policy:
A policy of title insuring an owner of real estate against possible loss from defects in, liens against, or unmarketability of the owner’s title.

Probate:
A court whose jurisdiction not only determines who will inherit a decedent’s property but is also responsible for the settlement and supervision of the estate’s assets. It has come to be understood as the legal process whereby a dead person’s estate is administered and distributed.

Purchase Agreement:
A written document in which the purchaser agrees to buy a certain real estate and the seller agrees to sell under stated terms and conditions. (Also known as a Sales Agreement or Sales Contract.)

Quit Claim Deed:
A deed operating as a release of vested interest, intended to convey any title, interest, or claim which the grantor may have in the property to another. Differing from a warranty deed in that it only conveys the interest if there is any.

RESPA:
(Real Estate Settlement Procedures Act) A federal law governing real estate transactions. RESPA requires lenders to provide home mortgage borrowers in advance with information of known or estimated settlement costs. RESPA also limits the amount lenders can hold in escrow for real estate taxes and insurance. It requires the disclosure of known settlement costs to both buyers and sellers by the person conducting the settlement and outlaws certain referral fees.

Real Property:
Land, and generally whatever is erected or affixed to the land, such as buildings, fences and including light fixtures, plumbing and heating fixtures or other items which would be personal property if not attached.

Recording:
The act of entering a record of documents affecting or conveying interest in real estate in a country recorder’s office. Until recorded, a deed or mortgage generally is not effective against subsequent purchasers or mortgages or other third parties.

Tax Certificate:
Certificate obtained to determine any unpaid property taxes or assessments that may constitute liens against the property.

Title:
A legal document that provides evidence of property ownership.

Title Defect:
Any title problem which “clouds” the property’s title. A title defect can be a lien, a person or entity who may have had interest in the property and never surrendered it, or any number of other situations making title less than perfect.

Title Insurance:
Protection for lenders and homeowners against financial loss resulting from legal defects in or other claims against the property’s title, essentially guaranteeing you and your lender’s financial interest in the property. The cost of the policy is determined by the value of the property, and is a one-time fee due at the time of closing.

Title Search:
A review of all recorded documents affecting specific parcel of land to determine the present condition of title.

Warranty Deed:
Offering the greatest protection of any property deed, a warranty deed legally assures that the title conveyed is good, free or legal claims and possession will be undisturbed.

NOTE: This list is not exhaustive, and this information was collected as a guide and as not to be used for legal advice.