This is a glossary of terms that are in use on this site and that you will encounter when dealing with realtors, mortgages and title insurance.
Thank you for considering Peninsula Title Services for your title needs in the Palm Bay and Melbourne, Florida area. We hope this glossary is helpful.
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- Abstract
A history of all transactions shown in the public records affecting a particular tract of land.
- Abstract Plant
A geographically filed assemblage of title information that helps in expediting title examinations, such as copies of previous attorneys’ opinions, abstracts, tax searches and copies or take-offs of the public records.
- Adjustable Rate Mortgage (ARM)
Mortgage loans under which the interest rate is periodically adjusted, in accordance with some market indicator, to more closely coincide with the current rates. The extent and number of these adjustments are agreed to at the inception of the loan.
- Adverse Possession
The possession, by one person, of land belonging to another in a manner deemed adverse to the interest of the owner. In most states, by operation of law, title to the land becomes vested in such person after a fixed number of years if the owner fails to assert his or her rights.
- Affidavit
A written statement made under oath before a notary public or other judicial officer.
- Agreement
A legally binding contract made between two or more persons.
- ALTA (American Land Title Association)
The trade association of the title insurance industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.
- Amortization
Payment to reduce the principal of a debt in regular, periodic installments.
- Annual Percentage Rate (APR)
Annual cost of credit over the life of a loan, including interest, service charges, points, loan fees, mortgage insurance, and other items.
- Appraisal
A report from an independent third party detailing the estimated value of real estate.
- Appreciation
The increase in the value of a property.
- Appurtenance
A right or privilege that is a part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.
- Assessment
( l) The valuation of real estate for purposes of taxes or special improvement charges.
(2) The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.
- Assignment
( 1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another.
(2) The instrument or paper by which one person transfers such ownership to another.
- Assumption
Allows a buyer to assume responsibility for an existing loan instead of getting a new loan.
- Attorney’s Opinion
A statement by an attorney as to the validity of a title, arrived at after investigation of the history of the title as recorded in the public records.
- Back Title Letter
Also called “back title certificate” in some areas, and “starter” in others. When titles previously have been examined up to a certain date by reliable examiners, title companies sometimes give subsequent examiners of such titles a letter that sets forth the condition of the title at the time of the previous examination and authorizes them to begin their subsequent examination with the terminal date of the previous examination.
- Balloon
A loan that has a series.of monthly payments with the remaining balance due in a large lump sum payment at the end.
- Bankruptcy
A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.
- Binder
Sometimes called “preliminary cettificate” or “commitment.”
(1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a ce1tain manner when certain conditions are met.
(2) A deposit in escrow of a small part of the purchase price of real estate as evidence of good faith and to bind an agreement to purchase.
- Buydown
A subsidy (usually paid by a builder or developer) to reduce monthly payments on a mortgage.
- Cap
A limit to the amount an interest rate or a monthly payment can increase for an adjustable rate loan either during an adjustment period or over the life of the loan.
- Certificate of Occupancy
A document from an official agency stating that the property meets the requirements of local codes, ordinances, and regulations.
- Certificate of Title
A certificate issued by a title examiner stating the condition of a title.
- Chain
In real estate measurements (surveying), a chain is 66 feet long or 100 links; each link being 7.92 inches. The measurement may change when used in fields other than surveying.
- Chain of Title
The successive ownerships or transfers in the history of title to a tract of land.
- Claim
An adverse right or interest asserted by one party against another or against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as from hidden title defects such as fraud, forgery, missing heirs, etc.
- Clear Title
Real property ownership free of liens, defects, encumbrances or claims.
- Closing
A meeting to sign documents that transfer property from a seller to buyer (settlement).
- Closing Costs
Charges paid at settlement for obtaining a mortgage loan and transferring a real estate title. For a more detailed explanation, consult this useful guide to closing costs.
- Clouded Title
An irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title.
- Coinsurance
Two or more policies of title insurance issued by different insurers, each covering a portion of the same risk, which together provide total coverage of the risk.
- Commitment
Also called “binder.” A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.
- Condemnation
(1) The taking of private property for a public purpose, with compensation to the owner under the right of eminent domain. Governmental units, railroads and utility companies have the right to condemn and take private property.
(2) The destruction by government of private property that imperils the life, health or safety of the public.
- Conditions, Covenants, and Restrictions (CC and Rs)
The standards that define how a property may be used and the protections the developer makes for the benefit of all owners in a subdivision.
- Conventional Loan
A mortgage loan not insured by a government agency (such as FHA or VA).
- Convertibility
The ability to change a loan from an adjustable rate schedule to a fixed rate schedule.
- Conveyance
The transfer of title to property from one person to another.
- 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.
- Credit Rating
A report ordered by a lender from a credit agency to determine a borrower’s credit habits.
- Curtesy
A right that a husband has in his wife’s property at her death. It does not exist in all states.
- Dedication
The setting aside of certain land by the owner and declaring it to be for public use. Examples: streets, sidewalks and parks.
- Deed
A document through which a conveyance of property is effected.
- Deed Restriction
A covenant contained in a deed imposing limits on the use or occupancy of the real estate or the type, size, purpose or location of improvements to be constructed on it.
- Default
Breach of a mortgage contract (not making the required payments).
- Defect
A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.
- Density
The number of homes built on a particular acre of land. Allowable densities are determined by local jurisdictions.
- Depreciation
Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
- Devise
A gift of real estate made by a will.
- Dominant Estate
The property for the benefit of which a right-of-way easement exists ,across another’s adjoining piece of land is said to be the dominant estate. The land across which the easement runs is said to be the servient estate.
- Dower
A right that a wife has in her husband’s property at the time of his death. Does not exist in all states.
- Down payment
The difference between the sales price and the mortgage amount. A down payment is usually paid at closing.
- Due-on-Sale
A clause in a mortgage contract requiring the borrower to pay the entire outstanding balance upon sale or transfer of the property.
- Earnest Money
A sum paid to the seller to show that a potential purchaser is serious about buying.
- Easement
The right-of-way granted to a person or company authorizing access to the owner’s land; for example a utility company may be granted an easement to install pipes or wires. An owner may voluntarily grant an easement, or can be ordered to grant one by a local jurisdiction.
- Eminent Domain
The right of a government to take privately owned property for public purposes under condemnation proceedings subject to payment of its fair market value.
- Encroachment
Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.
- Encumbrance
Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden or charge upon the property.
- Endorsement
Title endorsements expand the coverage of a standard owner’s title insurance policy, usually either by removing exceptions to the standard policy or by adding coverage specific to the property’s situation. For a more detailed understanding of common title insurance endorsements consult this guide.
- Equity
The difference between the value of a home and what is owed on it.
- Escheat
The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.
- Escrow
The handling of funds or documents by a third party on behalf of the buyer and /or seller.
- Estoppel
A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.
- Examination
The study of the instruments and muniments incident to a chain of title to determine their effect and condition in order to reach a conclusion as to the status of the title.
- Exception
A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.
- Execute
To sign a legal instrument. A deed is said to be executed when it is signed, sealed, witnessed and delivered.
- Fannie Mae (FNMA)
Federal National Mortgage Association. A private corporation dealing in the purchase of first mortgages.
- Fee Simple Deed
The absolute ownership of a parcel of land. The highest degree of ownership that a person can have in real estate, which gives the owner unqualified ownership and full power of disposition.
- FHA (Federal Housing Administration)
A federal agency that insures mortgages with lower down payment requirements than conventional loans.
- Fixed Rate Mortgage
A mortgage with an interest rate that remains constant over the life of the loan.
- Fixed Schedule Mortgage
Mortgage with a payment schedule established at closing for the life of the loan. The payment and interest rate are not necessarily level.
- Fixtures
Personal property that is attached to real property and is legally treated as real property while it is so attached. Examples: medicine cabinets, window blinds and chandeliers.
- Foreclosure
A legal proceeding in which real estate secured by a mortgage or deed of trust is sold to satisfy the underlying debt
- Forgery
The fraudulent signing of another’s name to an instrument such as a deed, mortgage or check.
- Freddie Mac (FHLMC)
Federal Home Loan Mortgage Corporation. A federal agency that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.
- Ginnie Mae (GNMA)
Government National Mortgage Association. A federal association working with the FHA that offers special assistance in obtaining mortgages.
- Graduated Payment Mortgage (GPM)
A fixed-rate, fixed-schedule loan. It starts with lower payments than a level payment loan; payments rise annually over the first S to 10 years and then remain constant for the remainder of the loan. GPMs involve negative amortization.
- Grant
To bestow or confer, with or without compensation, a gift such as land or money by one having control or authority over the gift.
- Grantee
One to whom a grant is made.
- Grantor
One who makes a grant.
- Growing Equity Mortgage (Rapid Payoff Mortgage)
A fixed-rate, fixed-schedule loan that starts with the same payments as a level payment loan; the payments rise annually, with the entire increase being used to reduce the outstanding balance. No negative amortization occurs, and the increase in payment may enable the borrower to pay off a 30-year loan in 15 to 20 years, or less.
- Hazard Insurance
Protection against damage caused by fire, windstorm, or other common hazards. Many lenders require borrowers to carry it in an amount at least equal to the mortgage.
- Hereditaments
Any and all kinds of estates, interest and rights in real estate that can be inherited.
- Homeowners Insurance
Real estate insurance protecting 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.
- Housing Finance Agency
A state agency that offers below-market-rate home financing for low and moderate income households.
- HUD (Department of Housing and Urban Development)
The federal department responsible for the major housing programs in the United States.
- Index
(1) An alphabetical listing in the public records of the names of parties to recorded real estate instruments together with the book and page number of the record.
(2) The listing in abstract and title plants of recorded real estate instruments in groups according to land descriptions, known as a geographic index.
(3) The alphabetical listing in abstract and title plants, by names of the parties, of all recorded instruments that affect but do not describe particular real estate, such as judgments, powers of attorney, wills and probate proceedings. Such indexes are known by various names, such as “general index,” ‘judgment index” and “name index.”
(4) The interest rate or adjustment standard that determines the changes in monthly payments for an adjustable rate loan.
- Infrastructure
The public facilities and services needed to support residential development, including highways, bridges, schools, and sewer and water system.
- Instrument
Any written document having a legal effect.
- Interest
The cost paid to a lender for borrowed money.
- Joint Tenancy
A form of ownership in which the tenants own a property equally. If one dies, the other automatically inherits the entire property.
- Judgment
The determination of a court regarding the rights of parties in an action. A judgment of debt on a property owner can create a lien on all of that owner’s land within a certain jurisdiction.
- Junior Mortgage
A mortgage lower in lien priority than another.
- Leasehold
The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.
- Lessee
A tenant holding a leasehold.
- Lessor
A landlord; one who gives a leasehold to a lessee.
- Level Payment Mortgage
A mortgage with identical, monthly payments over the life of the loan.
- License
Permission to go upon or use the land of another, the permission being a personal privilege and not constituting an interest in the land.
- Lien
A monetary charge imposed on a property, usually arising from some debt or obligation.
- Lien Waiver
Also called “waiver of liens.” A waiver of mechanics’ lien rights, signed by contractors or subcontractors.
- Link
In surveying, a length of 7 .92 inches.
- Lis Pendens
A legal notice intending to bind third parties of litigation claiming an interest in real estate.
- Loan Policy
Also called “mortgagee policy.” A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.
- Lot
Generally, any portion or parcel of real property. Usually refers to a portion of a subdivision.
- Market Value
The average of the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.
- Mechanic’s Lien
A lien on real estate, created by operation of law, that 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.
- Metes and Bounds
A land description in which boundaries are described by courses, directions, distances and monuments.
- Mortgage
A contract in which the borrower’s property is pledged as collateral. It is repaid in installments. The mortgagor (buyer) promises to repay principal and interest, keep the home insured, pay all taxes, and keep the property in good condition.
- Mortgage Broker
A broker who represents numerous lenders and helps consumers find affordable mortgages. The broker charges a fee only if the consumer finds a loan.
- Mortgage Commitment
A formal written communication by a lender, agreeing to make a mortgage loan on a specific property, detailing the loan amount, length of time and conditions.
- Mortgage Company
A company that borrows money from a bank, lends it to consumers to buy homes then sells the loans to investors.
- 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.
- Mortgage Origination Fee
A charge for work involved in preparing and servicing a mortgage application (usually one percent of the loan amount).
- Mortgagee
The holder of a mortgage. The party to whom a mortgage is made, generally the lender.
- Mortgagee Policy
Also called “loan policy.” A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.
- Mortgagor
A person who mortgages property. A person who executes a mortgage, generally the property owner.
- Multiple Listing
The pooling in a central bureau of listings of properties for sale. These listings are held individually by members of a group of real estate brokers, with the agreement that any member of the group may sell the properties and, in the case of a sale, the commission will be divided between the broker making the sale and the broker who filed the listing.
- Muniments of Title
Written evidence (documents) that an owner possesses to prove his or her title to property.
- Negative Amortization
An increase in the outstanding amount when a monthly payment does not cover the monthly interest due.
- Note
Also called “promissory note.”
A formal document showing the existence of a debt and stating the terms of repayment.
- Owner’s Policy
A policy of title insurance insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketability of the owner’s title.
- PITI
Principal, interest, taxes and insurance (the four major components of monthly housing payments).
- Plat
Also called “plat map.” A map dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat maps for a given area.
- Point
Also called “commission points” or “discount points.”
A one-time charge assessed by the lender at closing to increase the interest yield on a mortgage loan. Generally, it is one percenL of the mortgage amount
- Premium
The amount payable for an insurance policy.
- Prepayment
Payment of a debt prior to maturity.
- Prescriptive Easement
A right to use another’s property that is not inconsistent with the owner’s rights and that is acquired by an open, notorious, adverse and continuous use for the statutory period, for example 20 years.
- Principal
The amount borrowed, excluding interest and other charges.
- Property Survey
A survey to determine the boundaries of your property. The cost depends on the complexity of the survey.
- Purchase Money Mortgage
A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price.
- Quit Claim Deed
A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.
- R-Value
The resistance of insulation materials (including windows) to heat passing through it. The higher the number, the greater the insulating value.
- Real Estate
Also called “real property.”
(1) Land and anything permanently affixed to the land, such as buildings, fences and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items that would be personal property if not attached.
(2) May refer to rights in real property as well as the property itself.
- Real Estate Settlement Procedure Act (RESPA)
A federal law requiring lenders to provide home buyers with information about settlement costs.
- Recording
The noting in a public office of the details of a legal document – such as a deed or mortgage – affecting the title to real estate. When such an instrument is properly recorded, it is considered to be a matter of public record. Legally, that means that all subsequent purchasers are deemed to have constructive knowledge of that information.
- Recording Fee
A charge for recording the transfer of a property, paid to a city, county, or other appropriate branch of government.
- Reinsurance
A contractual relationship between two insurance companies under which one insurer assumes a portion of the risk of the insurance policy written by the other.
- Release
(1) To relieve from debt or security or abandon a right, such as the release of a mortgage lien from a part or all of the land mortgaged.
(2) The instrument effecting a release.
- Restrictions
Limitations on the use of property imposed or created by deeds or other documents in the chain of title. A restriction, for example, may prohibit the placement of a trailer or the constriction of a commercial structure on the property.
- Riparian Rights
The rights of owners of lands bordering watercourses which relate to the water and its use.
- Sale Agreement
A contract entered into between a buyer and seller, setting forth the terms, provisions and conditions of a sale of teal estate.
- Sale and Leaseback
The sale of an asset to a buyer who immediately leases it back to the seller.
- Sales Contract
A contract between a buyer and seller which should explain, in detail, exactly what the purchase includes, what guarantees there are, when the buyer can move in, what the closing costs are, and what recourse the parties have if the contract is not fulfilled or if the buyer cannot get a mortgage commitment at the agreed-upon terms.
- Search
A careful exploration and perusal of the public records in an effort to find all recorded instruments relating to a particular chain of title.
- Second Mortgage
A mortgage ranking in priority immediately below a first mortgage.
- Seller’s Net Sheet
A document that details the net proceeds a home seller can expect to make after factoring in closing costs and existing obligations. For a detailed guide to seller’s net sheets, consult this useful guide.
- Shared Appreciation Mortgage
A loan in which partners agree to share specified portions of the down payment, monthly payment and appreciation.
- Subordination
The act or process by which a person’s rights are ranked below the rights of others. For example, a second mortgagee’s rights are subordinate to those of the first mortgagee.
- Surety
( 1) A person who agrees to be responsible for a debt or obligation of another.
(2) The pledge or agreement by which one undertakes responsibility for the debt or obligation of another.
- Tenancy in Common
A form of ownership in which the tenants own separate but equal parts. To inherit the property, a surviving tenant would either have to be mentioned in the will or in the absence of a will, be eligible through state inheritance laws.
- 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.
(3) Evidence (usually in the form of a certificate or deed) of a person’s legal right to ownership of a property.
- 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: covenants against encumbrances; covenants for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); covenants of good right and authority to convey; covenants of quiet enjoyment; covenants of seisin; covenants of warranty. (See Warranty or Covenant.)
- 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 Insurance Policy
A contract of title insurance under which the insurer, in keeping with the terms of the policy, agrees to indemnify the insured against loss arising from claims against the insured interest.
- Title Plant
Also called “abstract plant” in some areas. A geographically filed assemblage of title information that helps in expediting title examinations, such as copies of previous attorneys’ opinions, abstracts, tax searches and copies or take-offs of the public records.
- Transfer Taxes
Taxes levied on the transfer of property or on real estate loans by state and/or local jurisdictions.
- Underwriter
An insurance company that issues insurance policies to the public or to another insurer.
- Variable Interest Rate
Also called “flexible interest rate.” An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.
- Veterans Administration (VA) Loans
Housing loans to veterans by banks, savings and loans, or other lenders that are guaranteed by the Veterans Administration, enabling veterans to buy a residence with little or no down payment.
- Waiver
The voluntary and intentional relinquishment of a known right, claim or privilege.
- Walk-Through
A final inspection of a home before settlement to search for problems that need to be corrected before ownership changes hands.
- Warranty
A promise, either written or implied, that the material and workmanship of a product is defect free or will meet a specified level of performance over a specified period of time. Written warranties on new homes are either backed by warranty companies or by the builders themselves.
- Will
A testamentary disposition of property, usually in a form prescribed by law, that takes effect upon death.
- Zoning
Regulations established by local governments regarding the location, height and use for any given piece of property within a specific area.
The foregoing terms are defined only in their real estate or title insurance contexts and may have completely different meanings in other contexts. For more precise definitions, you are advised to seek legal counsel.