HOME FIND US ON MAP ALL LOCATIONS SERVICES RESOURCES SERVICES ABOUT US Dictionary of Real Property A ALTA: American Land Title Association, a national association of title insurance companies, abstractors and attorneys specializing in real property law. Its headquarters are in Washington, D.C. Annual Percentage Rate (APR): An expression of the percentage relationship of the total finance charges to the total amount to be financed as required under the federal Truth-in-Lending Act. Appraisal: A written opinion of market value based upon a factual analysis of relevant local market information. Appurtenance: Anything so annexed to land or used with it that it will pass with the conveyance of the land. ARM: Adjustable Rate Mortgage. Also see “Variable Rate Mortgage.” Assessment: The imposition of a tax, charge or levy, usually according to established rates. Assignee: One to whom a transfer of interest is made. For example, the assignee of a mortgage or contract. Assignor: One who makes an assignment. For example, the assignor of a mortgage or contract. B Balloon Mortgage: A mortgage that is amortized over a specific period of years, but requires a lump-sum payment in full at an earlier date. Bankruptcy: A federal court proceeding in which debtors may be relieved of liability for their debts after surrender of their nonexempt assets to a court-appointed trustee. C Chain of Title: A term applied to the past series of transactions and documents affecting the title to a particular parcel of land. Changed Circumstance: In accordance with the TRID Rule, events which allow a creditor to revise a Loan Estimate or a Closing Disclosure include: (i) an extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction; (ii) information specific to the consumer or transaction that the creditor relied upon when providing the Loan Estimate and that was inaccurate or changed after the disclosures were provided; (iii) new information specific to the consumer or transaction that the creditor did not rely on when providing the Loan Estimate; (iv) revisions requested by the consumer; (v) when the Loan Estimate expires; or (vi) on the day of the rate lock. Cloud on Title: An irregularity, possible claim, or encumbrance which, if valid, would affect or impair the title. Closing: Also known as “escrow” or “settlement.” The process of executing legally binding documents, such as deeds and mortgages, most commonly associated with the purchase of real estate and the borrowing of money to assist in the purchase. Closing Costs: Expenses for services incidental to a sale of real estate, such as sales commissions, loan fees, title fees, appraisal fees, etc. Closing Disclosure: The five-page Closing Disclosure, also referred to as CD, must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all of the costs associated with the mortgage transaction. Closing Statement: A summation, in the form of a balance sheet, made at a closing showing the amounts of debits and credits to which each party to a real estate transaction in entitled. Condemnation: Taking private property for public use through court proceedings. Also see “Eminent Domain.” Condominium: A system of individual fee ownership of units in a multi-unit structure, combined with joint ownership of common areas of the structure and land. Consummation: Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes legally obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction. Contract for Deed: An agreement to sell and purchase, under which title is held as security by the seller until such time as the required payments to the seller have been completed. Convey: The act of deeding or transferring title to another. Conveyance: An instrument by which title is transferred, e.g., a deed. Also the act of transferring title. Covenant: An agreement written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property. D Deed: A written document by which the ownership of land is transferred from on person to another. Deed of Trust: An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the trustor (borrower), in favor of the beneficiary (lender) and reconveyed (satisfied) upon payment in full. Due-on-Sale Clause: Provision in a mortgage or deed of trust which requires loan to be paid in full if property is sold or transferred. E Earnest Money: Advance payment of part of the purchase price to bind a contract for property. Easement: An interest in land owned by another that entitles its holder to a specific limited use, such as laying a sewer, putting up electric power lines or crossing the property. Also see “Right of Way.” Egress: The right to leave a tract of land. Eminent Domain: The power of the state to take private property for public use upon payment of just compensation. Encroachment: A trespass or intrusion onto another’s property, usually by a structure, wall or fence. Encumbrance: A lien, liability or charge upon a parcel of land, e.g. a mortgage or easement. Escrow: A procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer, and delivers them upon performance by the parties. Examination of Title: The investigation and interpretation of the record title to real property based on the title search or abstract. Exception: In legal descriptions, that portion of land to be deleted or excluded. The term often is used in a different sense to mean an encumbrance on title, excluded from coverage in a title insurance policy. F Fannie Mae: Federal National Mortgage Association (also FNMA) is a private corporation, federally chartered to provide financial products and services that increase the availability and affordability of housing by purchasing mortgage loans. Fee Simple Estate: The greatest possible estate in land where the title is held completely and without any limitations or conditions. Sometimes designated simply as “Fee.” FHA: Federal Housing Administration: A federal agency that insures first mortgage enabling lenders to lend a very high percentage of the sale price. Fixed Rate Mortgage: A mortgage on which the same rate of interest is charged for the life of the mortgage. Fixtures: An item of property so attached to real property that it becomes a part of the real property. Foreclosure: A legal proceeding in which real estate secured by a mortgage or deed of trust is sold to satisfy the underlying debt. Freddie Mac: Federal Home Loan Mortgage Corporation (also FHLMC) is a stockholder-owned corporation chartered by Congress that purchases mortgage loans. G Ginnie Mae: Government National Mortgage Association (also GNMA) is a wholly owned United States corporation that guarantees privately issued securities backed by pools of mortgages insured by FHA (Federal Housing Administration), FMHA (Farmers Home Administration) or VA (Veterans Administration). Graduated Payment Mortgage: A loan in which monthly payments are relatively small in the beginning and gradually increase in dollar amount over the life of the mortgage. Grantee: A person who acquires an interest in land by deed, grant or other written instrument. Grantor: A person, who, by a written instrument, transfers to another an interest in land. H Home Equity Conversion Mortgage: A reverse or reverse annuity mortgage in which HUD, through FHA, guarantees that the borrower will receive monthly payments from the insurer (FHA), in the event the lender is unable to make payments to the borrower. Home Equity Line of Credit (HELOC): A loan in which the lender agrees to lend a maximum amount within an agreed period (called a term), where the collateral is the borrower’s equity in his/her house. Homeowners Insurance: Insurance protection paying benefits for damage to improved real property or possessions in the home. Also provides liability coverage against accidents in the home or on the property. HUD-1: The HUD-1 is a type of settlement statement which, prior to the TILA-RESPA Integrated Disclosure (TRID) Rule, was required for use with all federally related mortgage loans. It has been supplanted by the “Closing Disclosure” as a required form, but the HUD-1 will continue to be used for reverse mortgage and HELC transactions. In addition, it may remain in use for some transactions that do not involve federally related mortgage loans since it functions well as a balance sheet of the settlement. I, J Joint Tenancy: An estate where two or more persons hold real estate jointly for life, the survivors to take the entire interest on the death of one of the joint tenants. Judgment: A decree of a court. In practice, this is the lien or charge upon the land of a debtor resulting from the court’s award of money to a creditor. Also see “Judgment Lien.” Judgment Lien: The charge upon the land of a debtor resulting from the decree of a court properly entered into the judgment docket. K, L Lease: A grant of the use of land for a term of years in consideration of the payment of a monthly or annual rental. Lender’s Policy: A form of title insurance policy which insures the validity, enforceability and priority of a lender’s lien. This policy does not provide protection for the owner. Lien: A hold, claim or charge allowed a creditor upon the land of a debtor. Some examples are mortgage liens, judgment liens and mechanics’ liens. Lis Pendens: A notice recorded in the official records of a county to indicate that a suit is pending affecting title to the land in the jurisdiction where the notice is recorded. Loan Estimate: A three-page Loan Estimate (also called LE) must be provided to the consumer no later than three business days after they submit a loan application for most mortgages. The Loan Estimate provides information about key features, costs and risks of the mortgage loan for which the consumer is applying. Lot: A part of a subdivision or block having fixed boundaries ascertainable by reference to a play or survey. M Marketable Title: A good title about which there is not fair or reasonable doubt. Mechanic’s Lien: A lien allowed by statute to contractors, laborers and material suppliers on buildings or other structures upon which work has been performed or materials supplied. Metes and Bounds: A description of land by courses and distances. Mortgage: An instrument used to encumber land as security for a debt. Mortgage Insurance: Insurance protecting against the nonpayment of, or default on, an individual mortgage or loan involved in a residential mortgage transaction. It protects the mortgage lender against loss incurred by a reason of nonpayment or mortgage default. Mortgagee: The mortgage lender. Mortgagee’s Policy: See “Lender’s Policy.” Mortgagor: The mortgage borrower. N Non-Public Personal Information (NPPI or NPI): Means “personally identifiable financial information” that is (i) provided by a consumer to a financial institution, (ii) about a consumer resulting from a transaction or service performed for the consumer, or (iii) otherwise obtained by the financial institution. Personally identifiable financial information includes any information obtained by a financial institution in connection with its provision of a “financial product or service,” even if the information is not typically considered financial in nature. Notary: One authorized to take acknowledgments. Note: The instrument evidencing the indebtedness. A note is usually secured by a security instrument such as a mortgage or deed of trust. O Owner’s Policy: A policy of title insurance, which insures a named owner against loss by reason of defects, liens and encumbrances not excepted to in the policy or unmarketability of the title. The company also agrees to defend covered claims made against the title. P Plat: A map representing a piece of land subdivided into lots with streets shown thereon. Points: A one-time special fee or extra charge paid to a lender in order to secure a loan. Expressed as a percentage of face amount of mortgage. Policy: See Title Insurance Policy. Prepayment Penalty: A clause in a mortgage or loan contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed. The penalty can be based on percentage of the remaining mortgage balance or some other calculation as described in the clause. Privacy Rule: The GRAMM-LEACH-BLILEY ACT requires financial institutions (which includes title insurance companies_ to give notice to all of their “customers” about their privacy practices. The Privacy Policy is a “clear and conspicuous” written notice describing their privacy policies and practices. Prorate: To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, a proration of real property taxes or fire insurance premiums. Q Quiet Title: An action in a proper court to remove record defects or possible claims of other parties named in the action. Quit Claim Deed: A deed that does not imply title but transfers to the grantee an interest the grantor may hold in the property. R Real Property: Land, together with fixtures, improvements and appurtenances. Redisclosure: For covered transaction under the TILA-RESPA Integrated Disclosure (TRID) Rule and under very specific circumstances, the Loan Estimate and/or the Closing Disclosure may be revised ad delivered to the consumer. Reverse or Revers Annuity Mortgage: A mortgage for which the borrower pledges home equity in return for regular (monthly) payments, rather than a lump sum distribution of loan proceeds. Repayment is usually not required until the home is sold or the borrower’s estate is settled, provided the borrower continues to live in the home and keeps current all taxes and insurance. Also see “Home Equity Conversion Mortgage.” Right of Way: The right which one has to pass across the land of another. S Second Mortgage: A second loan on real estate that already has a mortgage. It is subordinate to the first mortgage. T Tenancy in Common: An estate or interest in land held by two or more persons, each having equal rights of possession and enjoyment, but without any right of succession by survivorship between the owners. Three-Day Review Period: For covered transactions under the TILA-RESPA Integrated Disclosure (TRID) Rule the creditor is generally required to ensure that the consumer (borrower) receives the Closing Disclosure no later than three business days prior to the consummation of the loan. Title: (i) ownership of real property, which stand against the right of anyone else to claim the property; (ii) the evidence of right which a person has to the ownership and possession of land. Title Defect: Any legal right held by others to claim property or to make demands upon the owner. Title Commitment: A report issued by a title insurance company or its agent, committing the title insurance company to issue the form of policy designated in the commitment upon compliance with and satisfaction of requirements set forth in the commitment. Title Insurance Underwriter: An insurance company that issues insurance policies either to the public or to another insurer. Title Insurance: An agreement to indemnify the insured against loss arising from a covered defect in title to a particular parcel of real property, which is typically issued to both the buyer to protect their property rights (through an owner’s title insurance policy), and the lender to protect its lien rights (through a lender’s title insurance policy). Total Interest Percentage (TIP): The total amount of interest that the consumer will pay over the life of the loan as a percentage of the principal of the loan, assuming the consumer makes each monthly payment in full and on time, and does not may any overpayments. Total Loan Costs: Fees the lender charges to make the loan, as well as fees paid to providers selected by the lender and fees paid to providers chosen by the borrower. Total Loan Costs are found under Section D of the Loan Estimate. V, W Variable Rate Mortgage: A loan in which the interest rate fluctuates with the cost of funds or some other index. Warranty: A limited promise by the grantor of real property that he or she is the owner and will be responsible to the buyer if title is other than as represented. 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