REAL ESTATE DICTIONARY
We at Old Republic Title offer this dictionary as a reference tool for
individuals and organizations in the real estate community. We hope you
find useful its brief definitions of real estate-related terminology.
REAL ESTATE TERMS
- A -
Abstract of Title - A condensed history or summary of all transactions
affecting a particular tract of land.
Access - The right to enter and leave a
tract of land from a public way. Can include the right to enter and
leave over the lands of another.
Accretion - The slow build-up of lands by
natural forces such as wind or water.
Acknowledgment - The act by which a party
executing a legal document goes before an authorized officer or notary
public and declares the same to be his or her voluntary act and deed.
Acre - A tract of land 208.71 feet square
and containing 43,560 square feet of land.
Administrator - A person appointed by a
probate court to settle the affairs of an individual dying without a
will. The term is "administratrix" if such a person is a woman.
Adverse Possession - A claim made against
the lands of another by virtue of open and notorious possession of said
lands by the claimant.
Affidavit - A sworn statement in writing.
Agent - A person or company that has the
power to act on behalf of another or to transact business for another,
e.g., a title agent under contract with Old Republic Title to issue
policies of title insurance.
Air Rights - The right to ownership of
everything above the physical surface of the land.
ALTA - American Land Title Association, a
national association of title insurance companies, abstractors and
attorneys specializing in real property law. Its headquarters are in
Appurtenance - Anything so annexed to land
or used with it that it will pass with the conveyance of the land.
ARM - Adjustable Rate Mortgage. See
"Variable Rate Mortgage."
Assessment - The imposition of a tax,
charge or levy, usually according to established rates.
Assessor - A public official who evaluates
property for the purpose of taxation.
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.
Assumable Mortgage - A mortgage which, by
its terms, allows a new owner to take over its obligations.
Attachment -Legal seizure of property to
force payment of a debt.
Attorney in Fact - One who holds a power of
attorney from another allowing him or her to execute legal documents
such as deeds, mortgages, etc., on behalf of the grantor of the power.
- 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 are relieved of liability for their debts after surrender
of their assets to a court appointed trustee .
Bureau of Land Management - The branch of
government in charge of surveying and managing public lands.
- C -
C & R ' s - Covenants, Conditions and Restrictions.
See "Conditions and Restrictions ."
Chain - A term of land measurement that is
66 feet in length.
Chain of Title - A term applied to the past
series of transactions and documents affecting the title to a particular
parcel of land.
Clear Title - One which is not encumbered
or burdened with defects.
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 .
Clouded Title - An encumbered title.
Commitment to Insure - 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
Common Interest Community (CIC) - Ownership
characterized by mutual ownership of common areas, either jointly or
through membership in an association, e.g., condominiums, planned unit
developments, and townhomes.
Company Loan - Loan by employer to
facilitate relocation of employee. Usually short term .
Condemnation - Taking private property for
public use through court proceedings .
Condition or Conditions - A proviso in a
deed or will that, upon the happening or failure to happen of a certain
event, limits, enlarges, changes or terminates the title of the
purchaser or devisee.
Conditions and Restrictions - A common term
used to designate conditions and restrictions on the use of land.
Includes penalties for failure to comply. Commonly used by land
subdividers on newly platted areas.
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.
Conservator - See "Guardian . "
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; a deed. Also, the act of transferring title.
Cooperative - A residential multi-unit
building owned by a corporation in which each unit is occupied by a
member of the corporation pursuant to a lease or occupancy agreement .
Covenant - An agreement written into deeds
and other instruments promising performance or non-performance of
certain acts, or stipulating certain uses or non-uses of the property.
Cul-de-Sac - The terminus of a street or
alley. Usually laid out by modern engineers to provide a circular turn
around for vehicles.
- D -
Deed - A written document by which the ownership of land is transferred
from one person to another.
Deed of Trust - See " Mortgage."
Delivery - The final and absolute transfer
of a deed from seller to buyer in such a manner that it cannot be
recalled by the seller. A necessary requisite to the transfer of title.
Devise - The disposition of real property
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
Egress - The right to leave a tract of
land. Often used interchangeably with "access."
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.
Encumber - To burden a parcel of land with
a lien or charge, e.g., a mortgage.
Encumbrance - A lien, liability or charge
upon a parcel of land.
Escheat - A reversion of property to the
state in those cases where an individual dies without heirs or devisees,
and, in some states, without a will.
Escrow - A pro c e d u re 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.
Estate - A person's possessions. The extent
of a person's interest in real property.
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 objection to title or encumbrance on title.
Executor - A person appointed by the
probate court to carry out the terms of a will. The term is "executrix"
if that person is a woman.
Extended Mortgage - One in which the due
date of a mortgage is extended for a longer period, often at a higher
interest rate than the original mortgage.
- F -
Fannie Mae - Federal National Mortgage Association (also FNMA) is a
private corporation, federally chart e re d to provide financial
products and services that increase the availability and affordability
of housing by purchasing mortgage loans.
Fee Simple Estate - The greatest interest
in a parcel of land that it is possible to own. Sometimes designated
simply as "Fee."
Federal Housing Administration (FHA)
Guarantee - An insurance contract in which HUD through FHA insures that
the named lender will recover a specific percentage of the loan amount
from the insurer (FHA) in the event that the loan goes bad.
Financing Statement - A document filed with
the Register of Deeds or Secretary of State securing the title to
Fixtures - Any item of property so attached
to real property that it becomes a part of the real property.
Flood Certification - A common term for a
Federal Emergency Management Agency (FEMA) Standard Flood Hazard
Determination Form (SFHDF). This determines whether land or a building
is located within a Special Flood Hazard Area for purposes of flood
insurance requirements under the National Flood Insurance Pro g r a m .
Forfeiture of Title - Provision in a deed
creating a condition which will cause title to be passed to another
should certain circumstances occur.
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 (Farm e r s Home Administration) or VA (Veterans
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.
Guardian - One appointed by the court to
administer the affairs of an individual not capable of administering his
or her own affairs.
- H -
Harbor Line - An arbitrary line set by authorities on navigable rivers,
beyond which wharves and other structures may not be built. Also
designated as line of navigation.
Heir - One who might inherit or succeed to
an interest in land of an individual who dies without leaving a will
Hiatus - A gap or space unintentionally
left, when attempting to describe adjoining parcels of land.
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 Repair Loan - Used for repairs and
additions to existing structures without affecting existing mort g a g e
. Typically 10 years or less in length.
HUD 1 - A form settlement (closing)
statement required by the U.S. Department of Housing and Urban
Development (HUD) where federally related mortgages are being made on
residential properties. It is a balance sheet showing the source of
funds and the distribution of funds in connection with the purchase
and/or mortgaging of residential property.
- I -
Improvements - Those additions to raw lands tending to
Inchoate Dower - The imperfect interest
which the law gives a wife in the lands of her husband. This is an
interest which upon the death of the husband may ripen into possession
and use. Most states have abolished dower rights.
Inchoate Curtesy - The imperfect interest
which the law gives a husband in the lands of his wife. This is an
Indemnify - To make payment for a loss.
Ingress - The right to enter a tract of
land. Often used
Insurance - A contract of indemnity against
Insurance Loan - When cash value of a life
insurance policy is borrowed by the insured.
Interim Financing - Temporary or short term
loans. Often used with new construction. Usually replaced with a
permanent long-term mortgage.
Intestate - Designates the estate or
condition of failing to leave a will at death. "To die intestate."
- J -
Joint Tenancy - An estate where two or more persons hold real estate
jointly for life, the survivors to take the
Judgment - A decree of a court. In practice
this is the lien or charge upon the lands of a debtor resulting from the
Court 's award of money to a creditor.
See "Judgment Lien."
Judgment Docket - The record book of a
County Clerk where a judgment is entered in order that it may become a
lien upon the property of the debtor.
Judgment Lien - The charge upon the lands
of a debtor resulting from the decree of a court properly entered into
the judgment docket.
- K -
There are no items in this category.
- L -
Land Contract - See "Contract for Deed ."
Landmark - Any conspicuous object that
helps establish land boundaries.
Lease - A grant of the use of lands for a
term of years in consideration of the payment of a monthly or annual
Lender's Policy - A form of title insurance
policy which insures the validity, enforceability and priority of a
lender's lien. This form does not provide protection for the owner.
Lessee - One who takes lands upon a lease.
Lessor - One who grants lands under a
Lien - A hold, claim, or charge allowed a
creditor upon the lands of a debtor. Some examples are mortgage liens,
judgment liens, mechanics' liens.
Life Estate - A grant or reservation of the
right of use, occupancy and ownership for the life of an individual.
Link - A term of land measurement being
1/100th of a chain or 66/100ths of a foot.
Lis Pendens - A notice recorded in the
official records of a county to indicate that a suit is pending
affecting the lands where the notice is recorded.
Loan Policy - See " Lender's Policy ."
Loss Payable Clause - Provision added to a
Fire and Casualty Policy which says any loss will be paid to two or more
parties as their interest may appear. Usually the owner and the mortgage
Lot - A part of a subdivision or block
having fixed boundaries ascertainable by reference to a plat or survey.
- M -
Majority - The age at which a person is entitled to handle his or her
Marketable Title - A good title about which
there is no 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.
Minor - One who because of insufficient age
or status is legally incapable of making contracts.
Monument of Survey - Visible marks or
indications left on natural or other objects indicating the lines and
boundaries of a survey. May be posts, pillars, stones, cairns, and other
such objects. May also be fixed natural objects, blazed trees, roads and
even a water course.
Mortgage -An instrument used to encumber
land as security for a debt.
Mortgage-Backed Security - A security
evidencing either the ownership of an interest in a mortgage loan or
pools of mortgage loans, or a separate obligation secured by a mortgage
loan or pool of mortgage loans.
Mortgage Banker - A specialized lending
institution that lends money solely with respect to real estate and
secures its loans with mortgages on the real estate.
Mortgage Broker - A person or company that
buys and sells mortgages for another on commission or who arranges for
and negotiates mortgage contracts.
Mortgage Revenue Bonds - Issued by
communities as a means of providing lower cost mortgage funds to certain
Mortgagee - The mortgage lender.
Mortgagee's Policy - See "Lender's Policy
Mortgagor - The mortgage borrower.
- N -
Negative Amortization - An actual increase in the principal amount of
real estate loan because of the addition of matured but unpaid interest
to the loan balance. Usually the result of monthly payments which a re
temporarily set at a lower than needed level.
Notary - One authorized to take
Note - The instrument evidencing the
indebtedness secured by a security instrument such as a mortgage or deed
- O -
Owner's Policy - A policy of title insurance which
Ownership - The right to possess and use
property to the exclusion of others.
- P -
Patent - A document or grant by which the federal or state government
originally transferred title to public lands to an individual. The first
in the series of transfers by which title comes down to present owners.
Personal Representative - A person
appointed by the probate court to administer a decedent's estate.
See also "Executor" or "Administrator."
Plat or Plot - A map representing a piece
of land subdivided into lots with streets shown there on.
P.M.I. - Private Mortgage Insurance. An
insurance contract which insures that the named lender will re cover a
specific percentage of the loan amount from the insurer in the event the
loan goes bad. Many lenders require this on higher percentage loans.
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 - A written contract of title
Policyowner - The insured on a title
Power of Attorney - An instrument
authorizing another to act on one's behalf as his or her agent or
Power of Sale - A clause in a will,
mortgage, deed of trust or trust agreement authorizing the sale or
transfer of land in accordance with the terms of the clause.
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.
- R -
Range - A part of the government survey, being a strip of land six miles
in width, and numbered east or west of the principal meridian.
Real Property - Land, together with
fixtures, improvements and appurtenances.
Realtor® -A federally registered collective
membership mark which identifies a real estate professional who is a
member of the National Association of Realtors ® a n d subscribes to its
strict Code of Ethics.
Realty - A brief term for real property.
Redeem - Literally "to buy back." The act
of buying back lands after a mortgage foreclosure, tax foreclosure, or
other execution sale.
Registered Land - See " Torrens Ti t l e ."
Reinsurance - To insure again by
transferring to another insurance company all or part of an assumed
liability, thus spreading the loss risk any one company has to carry.
REIT - Real Estate Investment Trust. A
product of federal tax legislation formed as a business trust, under a
special state REIT statute or as a corporation for the purpose of
investing in real estate or mortgages on real estate.
REMIC - Real Estate Mortgage Investment
Conduit. A product of 1986 federal tax legislation in which a business
entity such as a corporation, partnership, or trust in which
substantially all of the assets consist of qualified mortgages and
permitted investments, elects to be treated as a REMIC. Qualification
avoids treatment as a corporation for tax purposes.
Reverse or Reverse 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.
See also "Home Equity Conversion Mortgage."
Right - of - Way - The right which one has
to pass across the lands of another. An easement.
Riparian - Rights to use of water and
waterways in adjoining lakes or rivers.
- S -
Second Mortgage - A second loan on real estate that a l ready has a
mortgage. It is subordinate to the first mortgage. Usually of shorter
term and often at a higher interest rate.
Section or Section of Land - A parcel of
land comprising one square mile or 640 acres.
Set Back Lines - Those lines which
delineate the required distances for the location of structures in
relation to the perimeter of the property.
Sub-surface Right - The right of ownership
to things lying beneath the physical surface of the property.
Survey - The process of measuring land to
determine its size, location and physical description and the resulting
drawing or map.
- T -
Tenancy by the Entirety - Ownership by married persons where each owns
the entire estate, with the survivor taking the whole upon the other's
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.
Tenant - Any person occupying real property
with the owner's permission.
Testament - Another term for a will.
Commonly referred to as "last will and testament."
Testate - The estate or condition of
leaving a will at death. "To die testate."
Testator - A man who makes or has made a
testament or will.
Testatrix - A woman who makes or has made a
testament or will.
Title - The evidence of right which a
person has to the ownership and possession of land. Commonly considered
as a history of rights.
Title Defect - Any legal right held by
others to claim property or to make demands upon the owner.
Title Insurance - Insurance against loss or
damage resulting from defects or failure of title to a particular parcel
of real property.
Title Plant - The total facilities -
records, equipment, fixtures, and personnel - required to function as a
title insurance operation. Technically, the organization of official
records affecting real property into a system which allows quick and
efficient recovery of title information.
Title Search - An examination of public
records, laws, and court decisions to disclose the current facts
regarding ownership of real estate.
Torrens Title - A system whereby, after
court proceedings, a certificate is issued setting forth the extent of
the applicant's estate in land subject to the exceptions shown. Most
popular in the early 1900's, the system was adopted in 19 states. It is
presently used only in parts of six states.
Township - A division of territory six
miles square, containing 36 sections or 36 square miles.
Tract - A particular parcel of land.
Trust - A property right held by one as a
fiduciary for the benefit of another.
Trustee - A person holding property in
trust as a fiduciary for the benefit of another.
- U -
There are no items in this category.
- V -
VA Guarantee - An insurance contract in which the Veterans
Administration (VA) insures that the named lender will recover a
specific percentage of the loan amount from the insurer in the event the
loan goes bad.
Variable Rate Mortgage - A loan in which
the interest rate fluctuates with the cost of funds or some other index.
Vendee - A purchaser of real property under
Vendor - A seller of real property under
Vest - To pass to a person an immediate
right or interest. Title may be said to vest in John Smith.
Vestee - A nonlegal term used by title
insurers to indicate the owner of real property in a policy or report.
- W -
Warranty - A 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
Will -A written document providing for the
distribution of property owned by a person after his or her death.
- X -
There are no items in this category.
- Y -
There are no items in this category.
- Z -
Zoning - The right of a municipality to regulate and determine the
compatible character and use of property.
- Note -
The terms contained in this booklet are defined in their most commonly
used form. Should more precise interpretations of these terms be
necessary, we advise you to seek the counsel of an attorney.