Real Estate Terms

Abandonment

The voluntary relinquishment of rights of ownership or another interest(such as easement) by faliure to use the property, coupled with an intent to abandon (give up the interest).

Abatement

A reduction of decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.

Abstract

A summary of title.

Abstract of Judgement

A summary of money judgement obtained in court. (When this summary or abstract is recorded in the county recorder’s office, in some states the judgement becomes a lien on the debtor’s property, both presently owned or after-acquired.

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.

Accelerated Tax Sale

Tax lien sale in which a county/municipality is selling the current year’s taxes, and not the previous year’s taxes. There are no open taxes that can be paid on liens bought at an accelerated sale.

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.

Accomodation 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-Policy.

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.

Adjustable Mortgage Loans (AML'S)

Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. Also called: Adjustable Rate Loans, Adjustable Rate Mortgages (ARM’S), Flexible Rate Loans, Variable Rate Loans. (See also: Indexing, Rate Index).

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. If a woman is appointed, she is called an administratrix.

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 or declaration, sworn to before an officer who has authority to administer an oath. A sworn statement in writing. Whenever you have any recording, search, or foreclosure fees you need to give the tax collector an affidavit. You should also provide the tax collector with an affidavit for any subsequent taxes that you pay. This is the only way to ensure that you receive your subsequent tax payments with interest when the lien is redeemed. Some tax collectors also require affidavits to be notarized.

Agent

One who has authorization, either expressed or implied, to act for or represent another party, usually in business matters, such as issuing title insurance policies on behalf of a title insurer for a portion of the premium.

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.

All-Inclusive Rate

Rate which includes charges for title insurance, searching or abstract fees and examination fees.

ALTA

(American Land Title Association) Organization composed of title insurance firms which sets standards for the industry, including title insurance policy forms used on a national basis.

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. For example: 6% add-on interest would be much more than 6% simple interest, even though both would say 6%. The A.P.R. is disclosed as a requirement of federal truth in lending statutes.

APN

See ‘Assessor’s parcel number’

Appraisal

An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

Approved Attorney

An attorney whose opinion is acceptable to a title company as the basis for issuance of a title insurance policy by the insurer. The insurer, rather than the attorney, executes the policy.

Assessor's parcel number

An assessor’s parcel number, or APN, is a number assigned to parcels of real property by the tax assessor of a particular jurisdiction for purposes of identification and record-keeping. The assigned number is unique within the particular jurisdiction, and may conform to certain formatting standards that convey basic identifying information such as the property type or location within the plot map. In the United States, APNs are typically assigned by the local taxing authority, such as the city or county within which the property is located. Many taxing authorities will provide property tax information to the public, indexed by APN. Alternative terms with the same meaning include: Assessor’s identification number (AIN), Property identification number (PIN), Property account number, Tax account number, and Sidwell number.

Assignment

Transfer of a tax lien certificate or tax deed from one individual or entity to another. For the transfer to be effective it must be registered with the county and filed with the tax collector. Usually there is a fee involved to record the assignment of a lien/deed. If the tax collector doesn’t have record of the assignment, the taxing authority will pay the original owner of the tax lien certificate or tax deed when it is redeemed. Likewise if the assignment is not recorded then the property could be sold or foreclosed on and only the original lien holder will be notified, not the assignee.

Assumption

The act of conveying real property; taking title to a property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the property.

Back Title Letter or Certificate

See ‘Starter’.

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.

Beneficiary

See ‘Deed of Trust’.

Bidder Information Sheet or Bidder Registration Form

This is a form that you must fill out in order to bid at a tax sale. This form along with a W-9 form must be filled out and handed in either before you are allowed to bid or once you are a successful bidder, depending on the state and county you are bidding in. At some of the smaller live tax sales you will only be required to hand in these forms if you are the successful bidder on any liens. The Bidder Information form lists all your contact information, including your Social Security Number or federal ID Number (if you’re bidding under a company name). There may also be a disclaimer on this form that you are required to sign in order to bid.

Blanket or Trust Deed

A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance from the blanket mortgage is ordinarily obtained.

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.

Branch

A subordinate or division office of First American Title Insurance Company, as opposed to an affiliate, agent, subsidiary or underwritten firm associated with the Company.

Breach of Contract

Failure to perform a contract, in whole or part, without legal excuse.

Bring down

Update to title search.

Building Contract

An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure.

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. (See also: Certificate Backed Mortgage).

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.

Clean title

Title to property that is free from any encumbrances. This type of title is usually not conveyed when you purchase property at a tax deed sale, nor when you foreclose on a tax lien property. In order to get clean title to a property you must be issued a warrantee deed. Most tax deed states deliver a tax deed or quit claim deed, not a warrantee deed. In order to clear the title on a tax deed property or a foreclosed tax lien property it is often necessary to file a legal action known as a “quiet title action,” or go through a “title certification process” with a title company.

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.

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. See ‘Reinsurance’.

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.

Commitment

A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. 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.

Community Driveway

A driveway which is jointly owned, used and maintained by two or more persons. Usually, a portion of each owner’s property is burdened by the driveway.

Community Property

Property acquired by husband, wife or both during marriage which gives each spouse an interest in the property whether each appears in title or not.

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.

Constructive Notice

Notice imparted by the public records of the county when documents entitled to recording are recorded.

Conveyance

An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.

Corporation

An entity authorized by law and established by a group of people, the stockholders, which is endowed with certain rights, privileges and duties similar to an individual.

Covenant

(1) A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as the covenant of warranty in a warranty deed. (2) Agreements or promises contained in deeds and other instruments for performance or nonperformance of certain acts, or use or nonuse of property in a certain manner.

Covenants, Conditions and Restrictions

Commonly called “CC & R’s” the term usually refers to a written recorded declaration which sets forth certain covenants, conditions, restrictions, rules or regulations established by a subdivider or other landowner to create uniformity of buildings and use within tracts of land or groups of lots. The restrictions also can be established by deed. CC & R’s are sometimes referred to as private zoning.

Debt

Money owing from one person to another.

Debtor

One who owes a debt.

Decree of Distribution

A probate court decree which determines how the estate of a decedent shall be distributed.

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.

Deed Restrictions

Limitations in the deed to a property that dictate certain uses that may or not be made of the property.

Defect

A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.

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.

Description

The exact location of a piece of real property stated in terms of lot, block, tract, part lot, metes and bounds, recorded instruments, or U.S. Government survey (sectionalized). This is also referred to as legal description of property.

Earnest Money Deposit

Down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment.

Easement

A right or interest in the use of the land of another which entitles the holder to some use, privilege or benefit, such as to place pole lines, pipe lines or roads thereon.

Effective Demand

The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value. See Condemnation.

Encroachment

The presence of an improvement such as a building, a wall, a fence or other fixture which overlaps onto the property of an adjoining owner.

Encumbrance

An encumbrance is a claim against a property by a party that is not the owner. An encumbrance can impact the transferability of the property and restrict its free use until the encumbrance is lifted. The most common types of encumbrance apply to real estate; these include mortgages, easements and property tax liens. Not all forms of encumbrance are financial, easements being an example of non-financial encumbrances. An encumbrance can also apply to personal – as opposed to real – property.

Endorsement

Addition to or modification of a title insurance policy which expands or changes coverage of the policy, fulfilling specific requirements of the insured.

Equity

(1) A legal doctrine based on fairness, rather than strict interpretation of the letter of the law. (2) The market value of real property, less the amount of existing liens. (3) Any ownership investment (stocks, real estate, etc.) as opposed to investing as a lender (bonds, mortgages, etc.).

Escheat

The reversion of property to the state when an owner dies leaving no legal heirs, devisees or claimants.

Escrow

An independent third party, such as First American Title, who acts as the agent for buyer and seller, or for borrower and lender, carrying out instructions of both and disbursing documents and funds. Escrow closes and the transfer of property or document is completed upon fulfillment of certain conditions specified in the written instructions, whereupon the necessary deeds and other instruments are recorded.

Estate

(1) The interest or nature of the interest which one has in property, such as a life estate, the estate of a decreased, real estate, etc. (2) A large house with substantial grounds surrounding it, giving the connotation of belonging to a wealthy person.

Execution

An order directing a sheriff, constable, marshal or court-appointed commissioner to enforce a money judgment against the property of a debtor. This officer, if necessary, may sell the property to satisfy the judgment.

Executor

A person appointed in a will and affirmed by the probate court to cause a distribution of the decedent’s estate in accordance with the will. (The one who makes the will is called a “testator.”) If a woman is appointed, she is referred to as the “executrix.”

Face value

The face value or face amount of a lien is the amount of the certificate along with any interest due, subsequent payments made by the certificate holder, interest due on the subs, and any fees incurred that will be refunded to the lien holder when the lien is redeemed. In other words, it is the amount that the lien holder would receive if the lien were to be redeemed. This value, of course, depends on the date on which the lien is redeemed.

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.

File and Use

In most states, title insurers file rate schedules, title insurance policies and endorsement forms with the State Insurance Department or other state agency and then may use such items or rates starting within a specified period of time after filing. Rates so filed usually are mandatory.

Fixed Rate Mortgage

A mortgage having a rate of interest which remains the same for the life of the mortgage.

Foreclosure

The sale of property used as security for a debt after default in payment. A legal procedure for a creditor to take possession of property in which the creditor has an interest, in order to receive payment of debt. Some states require legal action to be taken to foreclose on a tax lien or tax deed and some do not. In some states the property owner can still redeem the property even after foreclosure. If you are foreclosing on a property in a state where court action is required, you should seek legal counsel. Foreclosure proceedings need to be followed according to the state laws or you could lose your rights to the property.

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.

Good Faith or ||Mortgage Savings|| CLAUSE

A clause in CC & R’s which provides that ” a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value.”

Good Faith Purchaser or Mortgagee

A person who buys or lends in good faith, that is, without notice of any existing problem, where value is paid or lent.

Grant

A transfer of real estate, between individuals, by deed. A transfer of real estate from a sovereign is accomplished by patent or royal decree.

Grant Deed

One of the many types of deeds used to transfer real property. Contains warranties against prior conveyances or encumbrances. When title insurance is purchased, warranties in a deed are of little practical significance.

Grantee

In real estate, the grantee is the recipient of a property – the person who will be taking title, as named in the the legal document used to transfer the real estate. See ‘Deed’.

Grantor

The person who is relinquishing the property.  See ‘Deed’.

Guardian

A person appointed by a court to manage the person and/or property of one who is legally incompetent to handle his/her own affairs.

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.

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.

Impounds

A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security.

Indemnity

Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.

Judgment Lien

A lien against the property of a judgment debtor. An involuntary lien.

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

A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

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

A legal claim on someone’s property for the satisfaction of a debt. An encumbrance against property for money, either voluntary or involuntary. All liens are encumbrances but all encumbrances are not liens.

Lien holder

Person or entity in whose name a lien has been registered with the county against real property.

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.

Mortgage

(1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property. (2) The instrument by which real estate is hypothecated as security for the repayment of a loan.

Mortgagee

The party lending the money and receiving the mortgage.

Mortgagor

The party who borrows the money and gives the mortgage.

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.

Obligee

One to whom an obligation (promise) is owned.

Obligor

One who legally binds (obligates) oneself, such as the maker of a promissory note.

Open Taxes

Current unpaid taxes at the time of the tax sale. Most tax sales are for previous year’s taxes, in which case there are subsequent taxes that can be paid once you have the tax lien certificate, in states that allow you to pay subsequent taxes.

Original Cost

The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.

Over the counter liens or deeds

Liens or deeds that were not sold at the tax sale and taken over by the county or municipality. In some states these liens and/or deeds are available for private bids. These are sometimes referred to as left over liens. “Over the counter” refers to the way they are purchased, by private bid and not at auction. If left over liens are available and purchased over the counter, they are usually made available at the default interested rate. In states that sell left over deeds over the counter, they can sometimes be purchased for less than the taxes owed.

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.

P.I.Q.

A title term referring to Property In Question.

Parcel

Any area of land contained within a single description.

Parcel Number

See ‘Assessor’s parcel number’

Partnership

An association of two or more persons who have contracted to join in business and share the profits.

Party Wall

A wall generally erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.

Patent

A conveyance of title to land by the Federal or State Government.

Personal Property (Movable)

Any property that is not designated by law as real property (i.e., money, goods, evidences of debt, rights of action, furniture, automobiles).

PITI

A payment that combines Principal, Interest, Taxes, and Insurance.

PLAT

A plan, map or chart of a tract or town site dividing a parcel of land into lots.

Power of Attorney

A document by which one person (called the “principal”) authorizes another person (called the “attorney-in-fact”) to act for him/her in a specific manner in designated transactions.

PRE, ||PRELIM|| OR Preliminary Report

A written report issued by a title company, preliminary to issuing title insurance, which shows the recorded condition of title of the property in question. See ‘Commitment’.

Premium

An amount paid to the county/municipality over and above the lien amount in order to win the lien at auction.

Prior Lien Holder

A person or entity that holds a previous tax lien on a property.

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.

Public Records

The transcriptions in a recorder’s office of instruments which have been recorded, including the indexes pertaining to them.

Quiet Title

To free the title to a piece of land from the claims of other persons by means of a court action called a “quiet title” action. The court decree obtained is a “quiet title” decree. Legal action taken to quiet the title to a property that does not have clear title. When the proceedings of the quiet title action are done, title to the property is cleared and a warranty deed can be issued.

Quitclaim Deed

A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.

Real Property (Immovable)

Land, from the center of the earth and extending above the surface indefinitely, including all inherent natural attributes and any man-made improvements of a permanent nature place thereon. For example: minerals, trees, buildings, appurtenant rights.

Realty Transfer Fee

This is a fee that you may be required to pay in order to file a deed with the county clerk. In some states, any time real property changes hands a fee is charged.

Reconveyance

An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed. Also called a deed of reconveyance or release.

Recording

Filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statute and usually requires the witnessing and notarizing of an instrument to be recorded.

Recording or Filing Fee

This fee is charged by the County Clerk for recording of the lien (or deed) with the county. A copy of the lien is filed in the county records. The tax lien certificate or tax deed is given a book and page number where it can be found in the county records. Most tax lien state allow this fee to be returned to the investor when the lien is redeemed (if an affidavit has been filed with the tax collector).

Redeemable Deed

Deed that is encumbered for a period of time during which it may be redeemed by the delinquent property owner. Usually there is a hefty penalty applied for redemption.

Redemption

A tax lien certificate is redeemed (bought back) when the owner pays the tax collector the amount of the lien plus any subsequent payments, interest, and penalties. The redemption is paid to the tax collector. The investor must send the tax lien certificate in to the tax collector to collect payment. Redeemable tax deeds may also be redeemed. In this case, the property is bought back for the price of the deed plus penalties and interest.

Redemption Penalty

A redemption penalty is assessed to the property owner upon redemption of the lien or redeemable deed. A penalty differs from an interest rate in that it is not calculated per annum. Some tax lien states also have a penalty in addition to the interest accrued.

Redemption Period

The period of time that the property owner has to redeem a tax lien or redeemable deed. If a lien is not redeemed within the redemption period, the purchaser of the lien can either foreclose on the property or apply for a deed, depending on the state. If a redeemable deed is not redeemed within the redemption period, the purchaser obtains the property. Redemption periods vary greatly among states.

Reinsurance

A contract which one insurer makes with another to protect the first insurer, wholly or partially, against loss or liability by reason of a risk under a separate and distinct contract as insurer of a third party. Reinsurance differs from coinsurance in that, in the case of reinsurance, only one insurer has a direct contractual relationship with the insured, and that insurer (commonly referred to as the “lead insurer”) purchases reinsurance in order to lessen or spread the risk. The “lead insurer” will assume a risk up to a limit (the amount of which is referred to as the “retention”) and any loss which exceeds this limit would be borne by the reinsurers. In the case of coinsurance, each coinsurer has a direct contractual relationship with the insured, and the risk is shared in agreed-upon proportions from the first dollar of loss.

Restrictions

Often called restrictive covenants. Provisions in a deed or other instrument whereby an owner of land prohibits or restricts certain use, occupation or improvement of the land.

Right of Way

(1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads or power lines are built.

Sale and Leaseback

A situation in which the grantor in a deed to a parcel of property sells it and retains possession by simultaneously leasing it from the grantee.

Search

In title industry parlance, a careful exploration and examination of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Separate Property

Real property owned by one spouse exclusive of any interest of the other spouse.

Sewer Lien (Most Frequent Type of Utility Lien)

This is a lien placed on a property for sewer taxes. Sometimes there are more sewer liens available than tax liens due to the fact that in many cases the mortgage company pays the property taxes, but the homeowner pays the sewer taxes.

Special Assessments

These are assessments levied by the city or municipality for various reasons. These are normally not extinguished by tax sales and must be paid by the purchaser of a tax deed. They also need to be paid by the purchaser of a tax lien in order to foreclose if the lien is not redeemed.

Squatter

One who settles upon unoccupied land without legal claim or authority. See ‘Adverse Possession’.

Starter

A copy of the last policy or report issued by a title insurer which described the title to land upon which a new search is to be made. In some states, this is called a back title letter or back title certificate.

Street Improvement Bonds

Interest-bearing bonds issued, usually by a city or county, to secure the payment of assessments levied against land to pay for street improvements. The property owner may pay off the particular assessment against the property, or may allow the assessment to “go to bond” and pay installments of principal and interest over a period of years, usually at the city or county treasurer’s office. The holder of a bond received payments from these offices.

Subdivision

An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.

Subordination Agreement

An agreement by which one encumbrance (for example, a mortgage) is made subject to another encumbrance (for example, a mortgage) is made subject to another encumbrance (perhaps a lease). To “subordinate” is to “make subject to,” or to make of lower priority.

Subsequent Taxes

Also referred to by investors as “subs.” In many states, once you own a tax lien certificate, you can pay any subsequent taxes when the owner is delinquent in paying them. The timing in which you can pay the subsequent taxes depends on the state. Some states collect taxes annually and others collect taxes more often. In New Jersey, taxes are paid quarterly and are considered delinquent on the 10th of the month in which they are due. In Florida, you do not pay the subsequent taxes on a lien, instead another lien will be sold each year when the taxes go unpaid, but when it’s time to apply for the lien to be sold in a deed sale, then all the subsequent taxes must be paid and subsequent liens redeemed and the investor gets that default interest (18%) on all the sub tax payments from here on. In states that do allow you to pay the subsequent taxes, it’s a good idea to pay the subs as soon as you can. This is because in most states you earn the default interest on the subsequent tax payments and it will keep the property from being sold in next year’s tax sale.

Surface Rights

Rights to enter upon and use the surface of a parcel of land, usually in connection with an oil and gas lease or other mineral lease. They may be “implied” by the language of the lease (no explicit reservation or exception of the surface rights) or “explicitly” set forth.

Survey
The measurement by a surveyor of real property which delineates the boundaries of a parcel of land. An ALTA survey additionally delineates the exact location of all improvements, encroachments, easements and other matters affecting the title to the property in question. A survey may be required by a title insurance company whenever the company is requested to issue an ALTA Extended Coverage Policy.
Tax Deed

A deed executed by the tax collector to the state, county or city when no redemption is made from a tax sale. Some states do not sell tax liens. If you are delinquent in paying your property taxes, they sell the deed to your property. Some states that sell tax deeds provide a redemption period in which the owner can redeem his or her property even after it is sold in a tax sale and some do not.

Tax Lien

A legal claim on someone’s property for the satisfaction of a debt related to taxes.

Tax Lien Certificate

This is a certificate of sale for unpaid municipal or county liens, issued by the tax collector of a municipality or county tax collector or treasurer, verifying payment. The certificate lists the certificate number, name of the tax collector, the taxing district, the date of the sale. Also on the face of the certificate is the buyer’s name and address, a description of the property (in New Jersey, its block, lot and address), the name of the property owner, and the amount of the sale. The certificate is not valid unless it is signed by the tax collector and notarized. Keep your tax lien certificates in a safe place. You must sign the back of the certificate, usually in front of a notary, and return it to the tax collector before receiving payment upon redemption by the property owner.

Tax Sale

Property on which current county taxes have not been paid is “sold to the state.” No actual sale takes place – the title is transferred to the state and the owner may redeem it by paying taxes, penalties and costs. If it has not been redeemed within five years, the property (referred to as “tax sold property”) is actually deeded to the state. (Similar “sales” to cities take place for unpaid city taxes).

Testate

Leaving a legally valid will at death. See ‘Intestate’.

Title

(1) A combination of all the elements that constitute a legal right to own, possess, use, control, enjoy and dispose of real estate or a right or interest therein. (2) The rights of ownership recognized and protected by the law.

Title Insurance

Insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens and encumbrances existing as of the date of the policy and not specifically excluded from it. In the event of a claim, the title company provides legal defense from the policyholder and pays any covered losses incurred as a result of such claim.

Title Report

See Preliminary Report.

Title Search

A review of all recorded documents affecting a specific parcel of land to determine the present condition of title. An experienced title officer or attorney reviews and analyzes all material relating to the search, then determines the sufficiency and status of title for insurance of a title insurance policy.

Trustee

The deed of trust involves three parties: the trustee, the lender and the borrower. The borrower signs a deed of trust when he gets the home loan. The deed gives the trustee, a third party, ownership interest in the home. The trustee acts as the lender’s agent and must take steps to secure the property if the borrower defaults on the loan.  See ‘Deed of Trust’.

Trustor

The individual that creates the Trust.  See ‘Deed of Trust’.

Underwritten Company

A title firm which conducts title searches but is not qualified to insure, and therefore issues policies of a qualified title insurer (underwriter) in return for a portion of the premium.

Underwritten Company

A title firm which conducts title searches but is not qualified to insure, and therefore issues policies of a qualified title insurer (underwriter) in return for a portion of the premium.

Utility lien

Lien on a property for unpaid utilities – can be unpaid sewer, water, or electricity or other service that is billed by a local government agent.

Variable Interest Rate

An interest rate that fluctuates with the current cost of money; subject to adjustment if the prevailing rate moves up or down.

Vendee

Used in reference to a buyer of real property.  See ‘Agreement of Sale’.

Vendor

A person who sells real property.  See ‘Agreement of Sale’.

Vendor's Lien

An implied lien given by law to a vendor for the remaining unpaid and unsecured part of a purchase price.

Venue

Neighborhood; often used to refer to the county or place in which an acknowledgment is made before a notary; also refers to the county in which a lawsuit may be filed or tried.

Vesting

The names, status and manner in which title of ownership is held with a fixed or determinable interest in a particular parcel of real property; also that portion of a title report or policy setting forth the above.

W-9 Form

Tax form that you give to the tax collector if you are a successful bidder at a tax lien sale or in the case of online tax sale, that you fill out online. The form lists your name or your company name and your tax ID. This information may also be on the Bidder Registration Form.

Waive

To voluntarily and intentionally relinquish a known right, claim or privilege.

Warranty Deed

A deed used in many states to convey fee title to real property.