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A
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 Abandonment: The voluntary
relinquishment of rights of ownership or another
interest (such as an easement) by failure to use
the property, coupled with an intent to abandon
(give up the interest).
Abatement: A reduction or
decrease. Usually applies to a decrease of
assessed valuation of ad valorem taxes after the
assessment, and levy.
Abstract of Title: A summary prepared by
a licensed abstractor of all documents recorded in
the public records of the political subdivision
where the land is located. An abstract in some
states or areas is reviewed by an attorney or
other experienced title examiner to determine the
status of title. Virtually every abstractor today
provides actual copies of the records rather than
an abstract of each document.
Abut: To adjoin or share a
common boundary, or share even a small portion of
a boundary.
Acceleration Clause: Clause in
a deed of trust or mortgage, which "accelerates,"
or hastens, the time when the indebtedness becomes
due. For example, some deeds of trust contain a
provision (an acceleration clause) stating that
the note shall become due immediately upon the
sale of the land or upon failure to pay interest
or an installment of principal and interest.
Access: The right to enter and
leave a tract of land from a public way, often the
right to enter and leave over the lands of
another.
Acre: A measure of land
totaling 43,560 square feet. A square acre is
208.75 feet on each side.
Accommodation Recording:
Recording of instruments with the county recorder
by a title company merely as a convenience to a
customer and without assumption of responsibility
for correctness or validity.
Acknowledgement: A formal
declaration before a duly authorized officer (such
as a notary public) by a person who has executed
an instrument that such execution is his own act
and deed. An acknowledgment is necessary to
entitle an instrument (with certain specific
exceptions) to be recorded, to impart constructive
notice of its contents and to entitle the
instrument to be used as evidence without further
proof. The certificate of acknowledgment is
attached to the instrument or incorporated
therein.
Administrator: A person
appointed by the probate court to carry out the
administration of a decedent's estate when the
decedent has left no will.
Adverse Possession: A process
of acquiring title to real property by possession
for a certain (statutory) period of time, in
addition to fulfilling other conditions.
Affidavit: A written statement
made under oath before a notary public or other
judicial officer.
Agreement of Sale: A written
contract entered into between the seller (vendor)
and buyer (vendee) for sale of real property
(land) on an installment or deferred payment plan.
It is also known as an agreement to convey, a long
form Security Agreement or a real estate
installment contract.
Air Rights: The right of the
landowner to the space above his land, extending
upward for a reasonable distance.
Appurtenance: Anything that is
or becomes part of the property because it is
attached or closely related to the land. It may be
a structure such as a well, barn or garage; or it
may be a right or interest enjoyed by the previous
owner, such as an easement.
All-Inclusive Rate:
Rate which includes charges for title insurance, searching or abstract
fees and examination fees.
A.L.T.A. (American Land Title
Association): An organization composed of
title insurance companies that decides the
standards in the title insurance industry.
Amendment: A change either to
alter, add to, or correct part of an agreement
without changing the principal idea or
essence.
Amortized Loan: A loan that is
paid off, both interest and principal, by regular
payments that are equal or nearly equal.
Annual Percentage Rate
(A.P.R.): The yearly interest percentage
of a loan, as expressed by
the actual rate of interest
paid.
Appraisal: An opinion of
value based on a factual analysis of property.
Assessment: The estimating of
value of property for tax purposes, or a charge
against real estate made by a unit of government
or a condo association to cover the proportionate cost
of an improvement such as streets, sewers,
etc.
Assignment: A transfer of
real or personal property and all rights to said
property to another.
Assumption of
Mortgage:
Agreement by a buyer to assume an existing
mortgage or deed of trust.
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B
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Bankruptcy: A special
proceeding under federal, or in some instances
state, laws by which the property of a debtor is
protected by the court and may be divided among
the debtor's creditors and the debtor.
Bill of Sale: An
invoice signed by the seller reciting that he has
sold to the buyer the personal property therein
described.
Bona Fide Purchaser: One who
buys property in good faith, for fair value, and
without notice of any adverse claim or right of
third parties.
Boundaries: The
perimeters or limits of a parcel of land as fixed
by legal description which is usually a metes and
bounds description.
Breach of Contract: Failure to
perform a contract, in whole or part, without
legal excuse.
Broker: One who may carry on
the business of dealing in real estate via license
by the state.
Builder: A constructor
of commercial buildings and individual homes.
Building Contract: An
agreement between an owner or lessee and a
building contractor, setting forth terms relative
to the construction of a proposed structure.
Building Permit: A
document obtained from the local government,
allowing for the construction of a structure in
accordance with the terms of the permit.
Buydown: A payment to the
lender from the seller, buyer, third party, or
some combination of these, causing the lender to
reduce the interest rate during the early years of
a loan. The buydown is usually for the first one
to five years of the loan.
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C
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Capitalization Rate: The
percentage (acceptable to an average buyer) used
to determine the value of income property through
capitalization.
Certificate of Title: In areas
where attorneys examine abstracts or chains of
title, a written opinion, executed by the
examining attorney, stating that title is vested
as stated in the abstract.
Chattel: Personal
property.
Close of Escrow: The date the
documents are recorded and title passes from
Seller to Buyer. On this date, the Buyer becomes
the legal owner, and title insurance becomes
effective.
Closing: The final
procedure in the real estate sales process, where
the sale and pertinent loan are completed by the
execution of documents for recording. In some
areas, this procedure is known as the closing of
escrow.
Closing Protection
Letter: Sometimes referred to as an
insured closing letter, is a document issued by
title insurance underwriters that sets forth an
underwriter's responsibility for negligence, fraud
and errors in closings performed by agents and
approved attorneys. It indemnifies the indemnitee
against loss or damage arising from a breach of
certain fiduciary duties owed by the closing agent
to the parties to the transaction. This document
is necessary because the agency/principal
relationship between an underwriter and a policy
issuing agent or approved attorney is limited to
the issuance of a policy and does not extend to
escrow functions.
Cloud on Title: An
irregularity, possible claim, or encumbrance
which, if valid, would adversely affect or impair
the title.
Coinsurance: Ordinary
coinsurance is defined as a transaction under
which each of two or more insurers assumes a
designated portion of the liability for the total
risk and is liable for only such portion of any
loss beginning at the first dollar of
loss.
Collateral: By or at the side,
additional or auxiliary. Mistakenly used to mean
collateral security.
Collateral Security: Most
commonly used to mean some security in addition to
the personal obligation of the borrower.
Commercial Property: Property
that is zoned for business use.
Commitment: The written report
of the title company showing status of title and
pledging to issue a title insurance policy when
the requirements shown therein are met. The
commitment contains all information included in
the preliminary title report, plus a list of the
title company's requirements to insure the
transaction. It also includes the standard
exceptions from coverage that will appear in the
policy.
Comparable Sales: Sales that
have similar characteristics as the subject
property, used for analysis in the appraisal.
Commonly called "comps."
Condemnation: The taking of
private property by the government for public use
- as for a street or a storm drain - upon making
just compensation to the owner. This right or
power of government to take property for a
necessary public use is called "eminent
domain."
Conservator: A person
appointed by the court to care for the person
and/or property of an incompetent adult or an
adult unable to care for their person or property
because of health.
County:A political division within
a state, usually encompassing one or more cities
or towns. A city may be in more than one county.
Michigan has 83 such counties.
County Clerk: In Michigan, this is
the office where all real estate documents are
filed. Any documents filed in the Clerk's office
must have a check for the appropriate filing fees
attached. See schedule for appropriate
fees.
Courtesy Filing: The
filing of documents as a courtesy to the customer,
when no closing has been done by the
company.
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D
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Deed: Written document by
which an estate or interest in real property is
transferred from one person to another. The person
who transfers the interest is called the
"grantor." The one who acquires the interest is
called the "grantee." Examples of deeds are grant
deeds, administrators' deeds, executors' deeds,
quitclaim deeds, etc. The deed to use depends on
the language of the deed, the legal capacity of
the grantor and other circumstances.
Deed of Trust or Trust Deed: A
written document by which the title to land is
conveyed as security for the repayment of a loan
or other obligation. It is a form of mortgage. The
landowner or debtor is called the "trustor." The
party to whom the legal title is conveyed (and who
may be called on to conduct a sale thereof if the
loan is not paid) is the "trustee." The lender is
the "beneficiary." When the loan is paid off, the
trustee is asked by the beneficiary to issue a
"recon" or reconveyance. This reconveyance
corresponds to the release that the holder of a
mortgage executes when the mortgage is paid
off.
Defective Title: 1) Title to a
negotiable instrument obtained by fraud. 2) Title
to real property which lacks some of the elements
necessary to transfer good title.
Demand Note: A note having no
date for repayment, but due on demand of the
lender.
Deposit: 1) Money given by the
buyer with an offer to purchase. Shows good faith.
Also called earnest money. 2) A natural
accumulation of resources (oil, gold, etc.) which
may be commercially recovered and marketed.
Divorce Decree: A court’s
formal order granting a termination
of marriage. If a divorce case goes to
trial and the judge issues a judgment, the
judgment is confirmed when the decree is signed
and dated by the judge and court clerk.
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E
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Earnest Money Deposit: Down
payment made by a purchaser of real estate as
evidence of good faith; a deposit or partial
payment.
Easement:A
recorded right of use affecting real property. An
easement could be for utility purposes or for
ingress or egress, for example. All easements of
record would be shown originally on the title
insurance commitment.
Eminent Domain:
The
right of a government to take privately owned property
for public purposes under condemnation proceedings upon payment
of its reasonable value. (See
Condemnation.)
Encumbrance: A
liability, claim or lien attached to, and
therefore binding, upon real property.
Escrow: Delivery of all necessary
sale instruments, including
funds.
Executor: The person
chosen in the will to carry out, or execute, the
will's terms, now often called the Personal
Representative.
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F
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Federal Tax Lien:
Nonpayment of any federal tax, including income
tax, can result in a Federal Tax Lien being
attached to taxpayer's property.
Fee Simple: An estate under
which the owner is entitled to unrestricted powers
to dispose of the property, and which can
be left by will or inherited. Commonly, a synonym
for ownership.
Final Decree: A decree documenting the final
decision of all pending matters in a case before a
court.
Fixed Rate Mortgage: A
mortgage
having a rate of interest which remains
the same for the life of the
mortgage.
Foreclosure: The selling
of a property in order to satisfy a lien against
it, ending all rights, interests, or title of
owners.
Forfeiture of Title: A common
penalty for the violation of conditions or
restrictions imposed by the seller upon the buyer
in a deed or other proper document. For example, a
deed may be granted upon the condition that if
liquor is sold on the land, the title to the land
will be forfeited (that is, lost) by the buyer (or
some later owner) and will revert to the
seller.
Full Disclosure: In real
estate, revealing all the known facts which may
affect the decision of a buyer or tenant. A broker
must disclose known defects in the property for
sale or lease.
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G
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Gap: The common title
industry name for the period from the effective
date on the commitment to the day of closing and
recording of documents. A "Gap Check" is the title
company's search of the public records for this
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Hazard Insurance: Real estate
insurance protecting against fire, some natural
causes, vandalism, etc., depending upon the
policy. Buyer often adds liability insurance and
extended coverage for personal property.
Heir: One who
receives the estate, or partial estate, of a
deceased person by law.
Homestead: A statutory
protection from execution or the establishment of
title by occupation of real property in accordance
with the laws of various states or the Federal
Government.
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I
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Indemnity Agreement:
Agreement stating that Party A will reimburse
Party B for any possible damage or loss suffered
by Party B.
Instrument: Legal
documents, such as deeds, mortgages, assignments,
wills, etc., are also known as instruments. |
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J
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Joint Tenancy: The undivided
equal owner interests with right of survivorship
in a property held by two or more
parties.
Judgment: The final
decision in a court of law. |
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L
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Land Contract: An installment
contract for the sale of land whereby the seller
(vendor) holds legal title and the buyer (vendee)
has equitable title until the sales price is paid
in full.
Lease: An agreement by which
an owner of real property (lessor) gives the right
of possession to another (lessee), for a specified
period of time (term) and for a specified
consideration (rent).
Legal Description:
The description of a parcel of land, identifiable
by metes and bounds, or designated as a Lot and/or
Block number.
Lender: Any person or entity
advancing funds which are to be repaid. A general
term encompassing all mortgagees, and
beneficiaries under deeds of trust.
Lien: An
encumbrance for money against property.
Living Trust: A
form of trust created by individuals that
generally exists for the life of the trust
according to the terms of the trust agreement that
created it.
Lot: Referring to
any parcel of land.
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M
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Marketable Title: Title that may be sold to a buyer,
knowledgeable of the facts and their legal meaning
as to liens and encumbrances.
Mechanics Lien: A lien created
by statute for the purpose of securing priority of
payment for the price or value of work performed
and materials furnished
in construction or repair of improvements to land, and which
attaches to the land as well as the
improvements.
Metes and Bounds:
Description of land by exact distance and
direction.
Mortgage: Legal document
showing a lien upon real property in exchange for
money.
Mortgagee: The party lending
the money.
Mortgagee Policy: Title
insurance policy insuring the mortgagee against
loss caused by title defects.
Mortgage
Broker: One who may carry on the business of
dealing in real estate loans via license by the
state.
Mortgagor: The party
borrowing the money.
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N
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Note: A unilateral agreement
containing an express and absolute promise of the
signer to pay to a named person, or order, or
bearer, a definite sum of money at a specified
date or on demand. Usually provides for interest
and, concerning real property, is secured by a
mortgage or trust deed.
Notary Public: A
person legally empowered to witness or certify the
validity of signatures on documents.
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O
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Original Cost: The purchase
price of property, paid by the present owner. The
present owner may or may not be the first
owner.
Ownership: Rights of ownership
include use and enjoyment of property, excluding
others.
Owner's Policy: A policy of
title insurance usually insuring an owner of real
estate against loss occasioned by defects in,
liens against or unmarketability of the owner's
title.
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P
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Parcel: Any area of land
contained within a single description.
Partial Release: A partial
release of property covered by a
mortgage.
Payoff: Full payment of
an existing loan.
PITI: A payment that combines Principal, Interest, Taxes,
and Insurance.
Plat Book: A book
that contains plat maps and numbers for a
designated area.
Plat Map: A map of
a subdivision, showing the division of a parcel of
land into lots.
Point of Beginning:
Used in metes and bounds descriptions to show
where the property begins.
Power of
Attorney: Enables one person to act for
another.
Priority: The order of
preference, rank or position of the various liens
and encumbrances affecting the title to a
particular parcel of land. Usually, the date and
time of recording determine the relative priority
between documents.
Priority Inspection: A title
term referring to the type of inspection made in
connection with insuring a new construction loan.
In making the inspection of the property, the
title company must be assured that the work of
improvement had not yet begun when the lender's deed of trust was
recorded.
Probate: The legal term for
the process of administering a deceased person's
estate or property through the state courts.
General probate procedure is found in
Title xx of the Michigan
statutes.
Public Land: Land that
belongs to the federal government.
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Q
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Quiet Title: Court action
establishing ownership to real property, removing
any cloud on the title.
Quit Claim
Deed: A deed passing any interest, claim or
title the grantor may have in the property to the
grantee, without warranty of defects in
title. |
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Recorder's Office: In
Michigan, this is the County Clerk's office. For
further definition, see County
Clerk.
Recording: This is the act of
filing all documents that affect property for
public record for the use of future reference and
public notices.
Release: A document
releasing property from lien or
judgement.
Re-recording: If an error
occurred on the original recorded document and is
in need of correction, the corrected document must
be re-recorded with the County Clerk's office to
show the correction.
Rescind: To
cancel a transaction or agreement is to "rescind"
it. In title terms, it most often refers to the
right of rescission given individuals to cancel
home loans when
refinancing.
Restriction: As to
title, this would mean any limitation on the right
of use of a property. A restriction could be
created by deed, covenants, or court
order.
Right of Way: A strip of land
used for roadway or easement
purposes.
Revenue Stamps: In
Michigan, this is known as Documentary Stamps. For
further definition, see Documentary Stamps. |
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Second Mortgage: A mortgage
that ranks behind the first mortgage in lien
priority due to its later filing of
record.
Sheriff's Deed: In Michigan,
this means the final step in the official
foreclosure of property. This type of deed would
be filed after the public sale and court
confirmation thereof.
Survey: The
measurement of the boundaries of a parcel of
land. |
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Tax Exemption: Not having to
pay property tax or other taxes, granted to
religious, educational and governmental
organizations.
Tax Lien: Lien
against property for nonpayment of
taxes.
Tax Roll: A list of
descriptions of parcels of property, their owners
and tax information, kept by the County
Treasurer.
Termination of Joint Tenancy:
A document that ends a joint tenancy, filed
when one of the tenants dies. Must be accompanied
by the original death
certificate.
Title: Evidence of
ownership of land.
Title Insurance:
Generally, the form of insurance that guarantees
title to a real property against claims that may
arise related to matters occurring prior to the
effective date of the policy.
Title
Plant: An Michigan title industry term that
means the set of title records that are identical
to those of the county recorder (clerk). Such a
"plant" is required by law to be updated for the
abstract company to obtain an Michigan
abstractor's certificate of
authority.
Title Report: A report
showing the condition of title before a loan
transaction. In Michigan, a title report is not an
insurance policy according to state insurance
commission guidelines. A title report is also
known in other states as a Title
Search.
Title Search: See Title
Report.
Tract: A parcel of
land. |
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Unencumbered: Free from
liens.
Uniform Commercial Code: The
set of laws that provide for the legal rules and
regulations governing "commercial" or "business"
dealings and transactions involving personal
property. |
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Warranty Deed: A deed used
to convey title of property from one party to
another, whereby the seller guarantees title to be
free from
encumbrances. | | |
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