Title Terminology

Acknowledgment: A formal declaration, before a notary public, by a person signing a document that his or her signature on a document is their own and was voluntarily given. Notarized documents may be introduced as evidence in court without further proof to the genuineness of the signature.

Administrator: Person appointed by the Judge of Probate to take possession of the property who died without a will, to pay debts and distribute the property to those entitled to it according to the law. Must have a court order to sell the property.

Adverse Possession: The actual, visible, hostile, notorious, exclusive and continuous possession of another's real estate.

American Land Title Association (ALTA): A national association of title insurance companies, abstractors, and attorneys specializing in real property law. The association speaks for the title insurance and abstracting industry and establishes standard procedures and title policy forms.

Beneficiary: The person designated to receive the income from a trust or estate.

Clear Title: Title which is not encumbered or burdened with defects.

Cloud on Title: Any claim or condition (valid or invalid), which adversely affects the title to a property. Generally these cannot be removed except by a quit claim deed, release or court action.

Commitment (Title): The initial product delivered by a title company which reports the status of title as a specific date. It is called a commitment because the company is committing to issue a title insurance policy that conforms with its provisions.

Common Areas: Those portions of a building, land, and amenities owned or managed by a PUD or Condominium Project's Owner's Association that are used by all of the unit owners. Common areas include swimming pools, tennis courts, other recreational facilities, corridors of buildings, parking areas, means of ingress and egress, etc.

Contiguous: Adjoining or touching

Covenants, Conditions and Restrictions (CC&R): Constraints in a deed or other recorded document which delineate the uses to which the land may be put and the penalties for failure to comply. CC&R's will often be used by land developers when the property is subdivided and platted. It may restrict the size, price range, location, character and other features of buildings which may be constructed there. The covenants are said to "run with the land", meaning that they will be binding on future owners of the property.

Deed: A written instrument by which some degree of ownership interest in real estate is transferred from the grantor to a grantee. Deeds must meet certain legal requirements in order to be effective.

Deed of Trust: Used in place of a mortgage. Property is transferred to a trustee by the borrower in favor of the lender. (Not to be confused with a Trustee's Deed)

Deed-In-Lieu of Foreclosure: A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure; also called a voluntary conveyance.

Devise: Transferring title to real property by means of a will.

Easement: Right of interest in land owned by another entitling the holder to a specific limited use, privilege, or benefit such as laying a sewer, putting in electric power lines or crossing the property.

Encumbrance: A claim, lien, charge or liability attached to and binding real property, such as a mortgage, lease, easement or restriction.

Executor: A person named in a will to administer an estate. The court will appoint an administrator if no executor is named.

Fee Simple: An unconditional, unlimited estate of inheritance that represents the greatest estate and most extensive interest in land that can be enjoyed without limitation on the owner's right to sell, mortgage or devise. It is of perpetual duration.

Fiduciary: A person who essentially holds the character of trustee regarding financial transactions and must carry out his or her duties in a manner which best serves the interest of the party for whom the fiduciary relationship is established.

Financing Statement (UCC): Under the Uniform Commercial Code, this is a prescribed form filed by a lender with the recorder of deeds and/or secretary of state to perfect a security interest in personal property.

FIRPTA: Foreign Investment in Real Property Tax Act designed to protect the interest of the U.S. government and property buyers when foreign nationals sell property in the United States. This act compels the purchaser to make sure that all Federal taxes are paid by the appropriate party.

Forbearance: The act of refraining from taking legal action despite the fact that a mortgage is in arrears. It is usually granted only when a mortgagor makes a satisfactory arrangement by which the arrearage will be paid at a future date.

Foreclosure: The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at a public auction with the proceeds of the sale being applied to the mortgage debt.

General Partnership: A business owned by two or more persons who share equally in the right and responsibility to manage the business, with each partner responsible for all the debts and obligations of the business.

Grantee: The person to whom an interest in real property is conveyed. Generally, the buyer.

Grantor: The person conveying an interest in real property. Generally, the seller.

Heir: A person who succeeds to the ownership of real estate upon the death of the current owner. The identity of who constitutes a person's heirs is established by state law.

Homestead Property: Land that is owned and occupied as a primary residence.

Indemnify: Reimburse. In an indemnity agreement, one party agrees to repay another for any loss or damage suffered by that party.

Ingress and Egress: A right to enter upon and pass through land.

Intestate: To die without leaving a valid will so that the property of the estate passes by the laws of succession rather than by direction of the deceased.

Joint Tenancy: An equal undivided ownership of property by two or more persons. The interest must be equal, occurring under the same conveyance and beginning at the same time. Upon the death of a joint tenant, their interest passes to the surviving joint tenant(s) rather than to the heirs of the deceased.

Judgment Lien: A lien upon the property of a debtor resulting from the decree of a court.

Judicial Sale: A sale made under court order, by one appointed by the court, rather than a voluntary sale by the owner.

Leasehold Estate: A way of holding title to a property wherein the mortgagor does not actually own the property but rather has a recorded long-term lease on it.

Life Estate: An interest in real property which lasts only for the term of the life or lives of one or more persons. The estate then reverts back to the grantor or on to a third party.

Loan Policyitle insurance policy insuring a mortgagee (and their assignees) against loss caused by invalid title in the borrower, or loss of priority of the mortgage.

Marketable Title: A marketable title is one that may be completely clear or have only minor objections that would not jeopardize the validity of the lien, and a that well-informed and prudent buyer of real estate would accept.

Mortgagee: The institution which lends the money

Mortgagor: An individual, corporation, or partnership that borrows money from the lending institution.

Owner's Title Policy: A policy insuring the owner of real estate rather than a lienholder.

Plat: A map showing a parcel of land subdivided into lots and blocks, streets and easements.

Priority: That which comes first in time or importance and so has precedence over other claims. Priority is usually established with regard to real property by the date of filing or recording a document rather than by the date of on which the document was executed.

Probate: A court proceeding in which the property of a deceased person is administered for the purpose of paying the decedent's creditors and distributing the remaining estate either in accordance with the deceased's will or, if the decedent left no will, to his heirs in accordance with state law.

Real Estate Owned (REO): Most commonly refers to property acquired by a lender through foreclosure or deed-in-lieu of foreclosure.

Real Estate Settlement Procedure Act (RESPA): The Real Estate Settlement Procedures Act is a federal law covering most mortgage loans made on one-to-four family residential property which requires lenders to provide loan applicants with pertinent information regarding loan terms and fees so that the applicants may make an informed decision when choosing financing.

Redemption Period: In the context of a foreclosure proceeding or tax sale, the time period established by state law within with an owner must fully pay a judgment so that he may retain title to the real estate.

Riparian Rights: A legal right of a landowner who owns the land next to a natural watercourse to reasonable use of whatever water flows past the property.

Sheriff's Deed: A deed given when property is sold by a court order to satisfy a judgment for money or for foreclosure of a mortgage. The giving of said deed begins a statutory redemption period.

Special Warranty Deed: A deed in which the grantor warrants, or guarantees the title only against defects arising during the period of his ownership of the property. A special warranty deed does not warrant against defects existing before that time.

Tenancy by Entirety: A method of co-ownership which is available only between a husband and wife and only for their homestead property. Property owned in tenancy by the entirety is protected from the claims of certain creditors.

Tenancy in Common: A form of concurrent ownership where two or more persons hold separate titles in the same estate which need not be equal. There is no right of survivorship with tenancy in common. If one tenant dies, his or her undivided interest in the estate passes to his or her heirs rather than to the remaining tenants in common.

Testate: To die having left a written will.

Title: Evidence of the right to or ownership in property.

Trust Deed: Document that borrower grants a security interest to a "trustee" for the purpose of securing the repayment of a loan. A trust deed differs from a mortgage in that the trustee is neither the actual lender nor the note holder. Rather, the trustee merely accepts the original trust deed and note for identification and then later, after repayment of the loan and when presented with the original canceled trust deed and note, issues and records the release deed.

Trustee's Deed: An instrument in which a titleholder trustee conveys title to real estate.

Trustee: The entity holding legal title to property that is held in a trust.

Warranty Deed: A deed which conveys title and in which the grantor warrants (guarantees) that the title conveyed is valid, that there are no liens, mortgages, etc. other than those disclosed and that the grantee will have the right to an undisturbed possession of the property.