Glossary

Abstract of Judgment

A rundown of the fundamental procurements of a court judgment. At the point when recorded, an abstract of judgment makes a lien on the real property of the judgment account holder in the county in which it is recorded.

 

Acknowledgement

A formal presentation made before an appropriately approved officer (generally a notary) by an individual who has executed an instrument that such execution is his or her act and deed.

 

Adjustable Rate Mortgage (ARM)

A home loan in which the interest rate is balanced occasionally as per a preselected index. The terms, adjustment timetable and index to be utilized can differ in view of the specific lender.

 

Balloon Payment

The unpaid principal due on a particular date later on. Normally the sum that must be paid in an irregularity entirety toward the end of the term.

 

Beneficiary

The individual entitled to receive property or finances under the terms and provisions of a trust, will, insurance policy or security instrument.

 

Beneficiary’s Statement

The statement of a bank which gives the staying primary funds receivable on a note and other data concerning the loan. It is generally obtained when the proprietor wishes to sell or renegotiate.

 

CC & Rs (Covenants, Conditions and Restrictions)

Limitations set on the use of real property. These are discovered frequently in townhouses and arranged unit improvements.

 

Chain of Title

A sequential rundown of recorded instruments following title to land from the first owner to the present owner.

 

Cap

The limit which a adjustable rate home loan may increase despite index changes.

 

Deed of Trust

A security agreement creating a lien by which title to real property is transferred to a third-party trustee as security for an obligation owed by the trustor (borrower) to the beneficiary (lender).

 

Demand:

The lender’s statement of the amount due to pay off a loan.

 

Documentary Transfer Tax:

The tax, based on sales price, less loans which are being assumed, which is charged by the city and/or county on the transfer of real property.

 

Earnest Money:

The cash deposit paid by a prospective buyer as evidence of good faith to bind a sale of real estate.

 

Easement:

A limited right or interest in land of another that entitles the holder of the right to some use, privilege or benefit over the land.

 

Encumbrance:

A claim, right or lien upon real property held by someone other than the owner.

 

Fair Market Value:

An appraisal term for the price which a property would bring in a competitive market given a willing seller and willing buyer, each of whom has a reasonable knowledge of all pertinent facts, with neither being under any compulsion to buy or sell.

 

Fee Simple:

An estate under which the owner owns a complete interest in the property and is entitled to the unrestricted use and enjoyment of the property, including the right to dispose of the property.

 

Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac):

An agency that purchases conventional mortgages in the secondary mortgage market from depository institutions and Department of Housing and Urban Development (HUD) approved mortgage bankers.

 

Grantee:

One to whom a grant is made. The purchaser of real property.

 

Grantor:

One who has made a grant. The seller of real property.

 

Hidden Defect:

An encumbrance on a title that is not apparent in the public records; for example, unknown heirs, secret marriages and forged instruments.

 

Impound Account:

An account held by a lender for the payment of taxes, insurance or other periodic debts against real property.

 

Joint Tenancy:

A means of ownership in which two or more persons own legal shares in real property. Upon the death of one tenant, his/her share passes to the remaining tenant(s) until the title is vested in the last survivor.

 

Legal Description:

A description by which property can be definitely located by reference to surveys or recorded maps.

 

Lien:

A recorded document which claims an interest in real property as security to a debt owed. Such liability may be created by contract such as a deed of trust, or by court judgment.

 

Lis Pendens:

Legal notice that a lawsuit is pending. Also called notice of action.

 

Loan Estimate:

The Loan Estimate Form will replace the separate disclosures required under the TILA, called the “initial TIL” and Real Estate Settlement Procedures Act (RESPA), known as the Good Faith Estimate or “GFE”.

 

Market Value:

An appraisal term denoting the highest price that a buyer, willing but not compelled to buy, would pay and the lowest a seller, willing but not compelled to sell, would accept.

 

Mechanic’s Lien:

A lien on real estate which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvement on real estate.

 

Metes and Bounds:

A form of land description in which boundaries are described by courses, directions, distances and monuments.

 

Notarization:

The certification by a notary public that a person signing a document has been properly identified. Notarization does not certify the content of a document, only validity of signature.

 

Perfecting Title:

Process involving the elimination of any adverse claims against title.

 

PITI:

Refers to principal, interest, taxes and insurance, the four major components of a usual monthly mortgage payment.

 

PITI Ratio:

The principal, interest, tax and insurance payment-to-income ratio. Used in mortgage lending decisions.

 

Qualification:

The process of reviewing a prospective borrower’s credit and payment capacity prior to approving a loan.

 

Quitclaim Deed:

A deed relinquishing all interest, title or claim in a property by a grantor. Accomplished without representing that such title is valid, nor containing any warranty or covenants of title.

 

Real Estate Settlement Procedures Act (RESPA):

A federal statute requiring disclosure of certain costs in the sale of residential, improved property which is to be financed by a federally insured lender.

 

Reconveyance:

The conveyance to the landowner of the title, held by a trustee under a deed of trust, when the performance of the debt is satisfied.

 

Recordation:

Involves filing for record in the office of the county recorder for the purpose of giving constructive notice of title, claim or interest in real property.

 

Statement of Information (SI):

A confidential information statement completed by the buyer, seller and borrower in every transaction where a policy or policies of title insurance are requested.

 

“Subject To” Clause:

A clause in a contract of sale setting forth any contingencies or special conditions of purchase and sale, such as an offer made and accepted subject to financing, securing certain zoning or similar requirements.

 

Subordination Agreement:

An agreement under which a prior or superior lien is made inferior or subject to an otherwise junior lien.

 

Tax Lien:

A statutory lien imposed against real property for nonpayment of taxes.

 

Tenancy in Common:

Co-ownership in a property by two or more persons, each of whom has an undivided interest in the whole property.

 

Title Plant:

The information warehouse of a title company in which it has accumulated, and is constantly updating title records of properties in its area which it can use to search title to real property.

 

Uniform Settlement Statement:

The standard HUD Form 1 required to be given to the borrower, lender and seller at, or prior to, settlement.

 

Unmarketable Title:

Title which contains defects that would allow a purchaser to be released from his obligation to purchase.

 

Vesting:

Denotes the manner in which title is held. Examples of common vestings are: Community Property, Joint Tenancy and Tenancy in Common.

 

Veterans Administration (VA):

VA has power and authority to guarantee or insure payment of loans made to veterans by private lending institutions. This function is similar to that of FHA. VA also makes direct loans to veterans in non-urban areas where private loan funds are not available.