Glossary

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Abandonment

The giving up of the possession and control of property with the intention of relinquishing all claim to it. Losing property is an involuntary act. The abandonment of property is a voluntary act.

Abatement

A termination of or the eliminiation of, the act of abating.

Abstract

A history of all transactions shown in the public records affecting a particular tract of land.

Abstract of Judgement

Summary of essential provisions of a money judgment. When recorded, it creates a general lien on the real property of the judgment debtor in the couty in which the abstract is recorded.

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)

The total cost of credit, including one-time fees, is known as the annual percentage rate of a loan. It can be considered the effective interest rate for a borrower and is used to standardize how rates are expressed and to compare loan options. Lenders are required to disclose the APR before the loan is finalized.

Appraisal

A report from an independent third party detailing the estimated value of real estate.

Appreciation

The increase in value of a property caused by changes in the market, inflation or other factors.

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

The valuation of real estate for purpose of taxes or special improvement charges. The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.

Assignment

The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. The instrument or paper by which one person transfers such ownership to another.

Assumable Mortgage

A loan that can be taken over by the buyer is known as an assumable mortgage. This is an alternative to the traditional method of a buyer obtaining a mortgage directly from a lender.

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 Note

A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.

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 certificate' or 'commitment.' (1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain 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.

Bridge Loan

Also known as a swing loan or interim financing, a bridge loan is a short-term loan used until permanent financing is secured. Bridge loans can be used for up to one year and carry relatively high interest rates. A bridge loan might be used, for instance, to purchase a new property when the homebuyer hasn’t yet sold his or her current dwelling.

Buydown

A seller can assist a buyer in qualifying for a mortgage and securing a lower interest rate by making payments to the lender for the first several years of the loan. The buyer benefits by having lower monthly payments initially; the seller will increase the price of the home to offset the buydown costs.

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

Also called 'settlement.' A meeting of all parties involved in a property transaction during which the transaction is consummated.

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.

Comparative Market Analysis (CMA)

An estimate of the value of property using indicators taken from sales of comparable properties, such as price per square foot, combined with expert market commentary and information on the importance of marketing a home properly. A CMA is not the same as an appraisal report of the market value of the subject property prepared by a licensed professional appraiser.