Title Glossary

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1031 Exchange

A 1031 exchange — named for Section 1031 of the Internal Revenue Code — lets an investor defer capital-gains tax by reinvesting the proceeds from the sale of an investment property into another "like-kind" investment property, following strict IRS identification and closing timelines.

A

Abstract

An abstract is a condensed summary of the essential points of all recorded deeds, mortgages, leases, and other instruments affecting the title to a particular piece of land.

Abstracter

An abstracter is the person or company engaged in making abstracts of title.

Abstracting

Abstracting is the process of making and compiling an abstract of title.

Adverse Possession

Adverse possession is the occupation of land belonging to another, without the owner's consent, in a way that is open and hostile to the owner's rights. By operation of law, title can vest in the occupier after a fixed number of years of continuous occupancy.

All-Inclusive Rate

When referring to title insurance, an all-inclusive rate is a rate that includes at least some part of the cost of researching the title or the cost of conducting the closing.

ALTA

ALTA is the American Land Title Association, the national trade association for the title insurance industry. Its members are title firms that conduct closings and issue owner's and loan policies of title insurance.

Amortization

Amortization is the gradual paying off of a debt through regular partial payments. The term traces to the Latin root for "death" — the same root behind the word "mortgage."

Appraisal

An appraisal is an estimate of the value of property derived from analysis of facts about the property — an informed opinion of value.

APR

APR (Annual Percentage Rate) is the yearly cost of a loan expressed as the actual rate of interest paid.

Attorney’s Opinion

An attorney's opinion is the written statement of an attorney setting forth what they believe to be the condition of a real estate title.

B

Basic Rate

When referring to title insurance, the basic rate is the rate charged to a consumer who does not qualify for a reduced rate.

Boundary Line Adjustment

A boundary line adjustment moves the boundary between two adjoining parcels without creating a new lot. It typically requires local government approval and recording of the revised description.

Broker

A broker is one who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.

Brokerage

Brokerage is a fee or commission paid to a broker.

C

CC&Rs

CC&Rs — covenants, conditions, and restrictions — are private rules recorded against property, often in a subdivision or homeowners association, that limit how the property may be used.

Certificate of Title

A certificate of title is a written opinion, executed by an examining attorney in areas where attorneys examine abstracts or chains of title, stating that title is vested as set out in the abstract.

Chain of Title

The chain of title is the succession of conveyances — each deed, will, or other transfer from an original source of title forward — by which ownership of a property has passed from owner to owner over time.

Claim

A claim is the assertion of a right to payment of money due, or to possession or recognition of some right — a demand for something as one's rightful due.

Closing

Closing — sometimes called settlement — is the final step of a real estate transaction, when deeds, mortgages, and other instruments are signed and delivered, an accounting is made between the parties, funds are disbursed, documents are recorded, and remaining details such as paying liens and transferring insurance are completed.

Closing Disclosure

A Closing Disclosure is the federal five-page form that lays out a mortgage borrower's final loan terms and closing costs. Lenders must provide it at least three business days before closing.

Closing Statement

A closing statement is a summary, in the form of a balance sheet, prepared at a closing that shows the debits and credits to which each party to the transaction is entitled.

Cloud on Title

A cloud on title is an irregularity, possible claim, or encumbrance that, if valid, would adversely affect or impair the title.

Commission

A commission is the amount due a real estate broker, mortgage loan broker, or real estate professional for services performed in that capacity.

Community Property

Community property is the system of marital ownership used in Idaho in which most property acquired by either spouse during marriage is owned equally by both. Property owned before marriage, or received by gift or inheritance, is generally separate property.

Conditions

Conditions are provisions in deeds and other real estate instruments that make a particular right contingent upon the occurrence of some future event. The term is closely related to restrictions and reservations.

Contract

A contract is an agreement between parties, usually in a more formal form.

Covenant

A covenant is a formal agreement between two parties in which one gives the other certain promises and assurances — such as the covenants of warranty in a warranty deed.

D

Deed

A deed is a written document by which title to real estate is conveyed from one party to another.

Deed Book

A deed book is a volume among the public records in which deeds are recorded.

Deed of Trust

A deed of trust is a security instrument, used in place of a mortgage, in which the borrower conveys title to a neutral trustee to hold until the loan is repaid. It is the common way real estate loans are secured in Idaho.

Default

Default is the failure to perform a promised task or to pay an obligation when it is due.

Defect

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

E

Earnest Money

Earnest money is a deposit — typically a small part of the purchase price — made by a buyer as evidence of good faith when entering a real estate contract. It is usually held in escrow and applied toward the purchase at closing.

Easement

An easement is a right held by one person to use or enjoy a limited part of another person's real property.

Egress

Egress is the right to a path or right-of-way by which a person may leave or exit their own real estate.

Ejectment

Ejectment is (1) eviction or dispossession, or (2) a lawsuit to regain possession of real estate held by another.

Eminent Domain

Eminent domain is the right of a government to take privately owned property for public purposes through condemnation proceedings, upon payment of its reasonable value.

Encroachment

An encroachment is the extension of a structure across a boundary line and onto adjoining property.

Encumbrance

An encumbrance is a claim, right, or lien upon the title to real estate held by someone other than the owner.

Endorsement

An endorsement is an addition to, or modification of, a title insurance policy that expands or changes the policy's coverage to meet specific requirements of the insured.

Escrow

Escrow is the process of depositing money and documents with a neutral third party — the escrow agent, usually the title company — who holds them until all conditions of a real estate transaction are met, then disburses funds and delivers documents to the rightful parties.

Escrow Agreement

An escrow agreement is a written agreement — usually among buyer, seller, and escrow agent — that sets the conditions to be performed for the item held in escrow and instructs the escrow agent on how to dispose of it.

Escrow Instructions

Escrow instructions are the written directions the buyer and seller give the escrow agent, setting the conditions that must be met before funds and documents are released.

Estate

In real estate, an estate is the nature and extent of an owner's rights in real property. (The term can also mean a large rural property, or the whole of a deceased or bankrupt person's possessions.)

Examination

In the title industry, examination is the study of the instruments in a chain of title to determine their effect and condition and reach a conclusion about the status of the title.

Examiner

An examiner — in the title industry, a title examiner — is one who examines and determines the condition and status of real estate titles.

Exception

An exception is an item that a title insurance policy does not cover — such as a recorded easement, CC&Rs, or a known lien — listed in the title commitment and the policy.

F

Fee Simple

Fee simple is the highest degree of ownership a person can hold in real estate — an interest that gives the owner unqualified ownership and full power of disposition.

First Mortgage

A first mortgage is a mortgage having priority as a lien over any other mortgage or lien on the same property.

Foreclosure

Foreclosure is a legal proceeding to collect on a real estate mortgage or other lien, cutting off the right to redeem the property and usually involving a judicial sale to pay the debt.

G

General Warranty

A general warranty is a warranty provision in a deed or other instrument that contains all of the common-law items of warranty. It is also known as a full warranty.

Good Faith Estimate

A good faith estimate (GFE) was an estimate of closing costs that a lender provided to a borrower shortly after a mortgage application, as required under the federal Real Estate Settlement Procedures Act.

H

Hazard Insurance

Hazard insurance is real estate insurance protecting against fire, certain natural causes, vandalism, and similar risks, depending on the policy. Buyers often add liability coverage and extended coverage for personal property.

Heir

An heir is a person who inherits, or is entitled to inherit, real estate by law or under the provisions of a will.

Homestead Exemption

A homestead exemption protects a portion of the equity in a person's primary residence from certain creditors.

I

Ingress

Ingress is the right or means of entry — for example, a right-of-way across adjoining land to reach a property.

Intestate

Intestate means dying without leaving a legal will.

J

Joint Tenants

Joint tenants are two or more people who hold title to real estate together with equal rights of enjoyment and a right of survivorship — when one joint tenant dies, their share passes to the surviving tenants until title vests in the last survivor.

Judgment

A judgment is a determination by a court of law, usually awarding payment of money or some form of relief to a party in a lawsuit. A recorded judgment can become a lien on real estate.

L

Lease

A lease is an agreement granting the use or occupancy of land for a specified period in exchange for rent.

Legal Description

A legal description is the precise, legally sufficient description of a parcel of land — by metes and bounds, by lot and block on a recorded plat, or by the public-land survey system (section, township, and range).

Lien

A lien is the liability of real estate as security for the payment of a debt. It may be created by contract, such as a mortgage, or by operation of law, such as a mechanic's lien.

Lis Pendens

A lis pendens is a pending lawsuit. A lis pendens notice is legal notice to the world that a lawsuit affecting the property is pending.

Loan Estimate

A Loan Estimate is the federal three-page form a lender must provide within three business days of a mortgage application, summarizing the estimated interest rate, monthly payment, and closing costs. It replaced the Good Faith Estimate in 2015.

Loan Policy

A loan policy is a policy of title insurance issued to the mortgage lender, insuring against loss from defects in, liens against, or unmarketability of the title.

Long-Term Escrow

Long-term escrow is a service in which the title company holds the documents and collects and disburses payments over time for a seller-financed (owner-carry) sale.

M

Market Value

Market value is, in effect, the price a willing but not compelled buyer would pay and a willing but not compelled seller would accept for a property.

Marketable Title

A marketable title is a title so free of material defects and liens that a court of equity would compel a hesitant purchaser to accept it. It is also called a merchantable title.

Mechanic’s Lien

A mechanic's lien is a lien on real estate, created by operation of law, securing payment owed to persons who provide labor, services, or materials for construction or improvements on the property.

Metes and Bounds

Metes and bounds is a method of describing land by its boundaries — using courses, directions, distances, and monuments.

Mortgage

A mortgage is a conditional pledge of property to a creditor as security for the payment of a debt, which is released when the debt is paid.

O

Opinion

In the title industry, an opinion — or title opinion — is the conclusion of a skilled person about the status of a title, based on a title examination.

Owner’s Policy

An owner's policy is a policy of title insurance that insures an owner of real estate against loss from defects in, liens against, or unmarketability of the owner's title.

P

Plat

A plat is a recorded map of a subdivision showing the lots, blocks, streets, and easements. Lots are often described by reference to the recorded plat.

Power of Attorney

A power of attorney is a legal instrument authorizing one person to act as another's agent or attorney-in-fact.

Preliminary Title Report

A preliminary title report is an early report on the condition of title — ownership, liens, easements, and other matters of record — provided before closing so the parties can review and resolve issues.

Premium

A premium is (1) the amount payable for an insurance policy, or (2) a sum paid in addition to the regular price.

Probate

Probate is a legal procedure in which the validity of a document, such as a will, is proven.

Promissory Note

A promissory note is a written promise to pay a specified sum of money at a stated time or on demand to a named person, usually with interest in addition to principal.

Public Records

Public records are the transcriptions in a recorder's office of instruments that have been recorded, together with the indexes pertaining to them.

Q

Quiet Title Suit

A quiet title suit is a lawsuit brought by an owner of real estate to cancel and put to rest immaterial, unenforceable, or invalid claims and interests that cloud the title.

Quit Claim Deed

A quitclaim deed transfers whatever interest the grantor may have in a property to the grantee, without warranting that the grantor actually holds title. It makes no promises about the quality of the title — it simply releases the grantor's potential interest.

R

Realtor

Realtor is a trademarked name that may be used only by members of the National Association of Realtors.

Reconveyance

A reconveyance is the document that releases a deed of trust and returns title to the borrower once the loan is paid in full.

Record Title

Record title is the part of a title that appears in the public records, as distinguished from unrecorded title interests.

Recording Fee

A recording fee is the charge a county recorder collects to record a document into the public record.

Refinance Rate

When referring to title insurance, the refinance rate is the reduced rate for a loan policy issued on a new loan in a refinance, where the original loan was previously insured within a set period of years.

Reissue Rate

When referring to title insurance, the reissue rate is the reduced rate for an owner's policy issued on a property that was previously insured within a set period of years. In some states the term is also used for a refinance rate.

Right of Way

A right of way is (1) the right to pass over property owned by another, usually based on an easement; (2) a path or thoroughfare used for passage; or (3) a strip of land over which facilities such as highways, railroads, or power lines are built.

Riparian Rights

Riparian rights are the rights of a landowner in and over the bank, bed, shore, and water of a stream or body of water that borders the owner's land.

Risk Rate

When referring to title insurance, the risk rate is a rate that does not include the cost of researching the title or the cost of conducting the closing.

S

Search

In the title industry, a search is a careful examination of the public records to find all recorded instruments relating to a particular chain of title.

Second Mortgage

A second mortgage is a mortgage ranking in priority immediately below a first mortgage.

Seller Carry / Owner Financing

Seller carry, or owner financing, is an arrangement in which the seller finances all or part of the purchase price for the buyer, instead of or in addition to a bank loan.

Simultaneous Issue Rate

When referring to title insurance, the simultaneous issue rate is the reduced rate for a loan policy or owner's policy issued on the same property at the same time as another policy — often a loan policy issued together with an owner's policy in a purchase.

Special Warranty Deed

A special warranty deed warrants the title only with respect to the acts of the seller and the interests of anyone claiming by, through, or under the seller — not the entire history of the title.

Subdivision

A subdivision is an area of land laid out and divided into lots, blocks, and building sites, with public facilities such as streets, alleys, parks, and utility easements.

Survey

A survey is the process of determining the location, boundaries, area, or elevations of land and structures, and the map or plat that a surveyor prepares to represent the property surveyed.

T

Tax Lien

A tax lien is a lien imposed on real estate by operation of law to secure the payment of real estate taxes.

Tax Proration

Tax proration is the allocation of property taxes between buyer and seller at closing, so each pays for the portion of the year they owned the property.

Tenancy by Entireties

Tenancy by the entirety is a form of joint ownership by a married couple, recognized in some states, in which each spouse owns the whole and the survivor takes full title.

Tenant

A tenant is (1) one who holds possession of real estate under a lease, or (2) more broadly, one who holds or possesses land by any kind of title.

Tenants in Common

Tenants in common are two or more people who each hold a separate, individual interest in a single property with equal rights to possession but no right of survivorship — each owner may sell, encumber, or devise their interest, and on death it passes to their heirs.

Third Party

A third party is someone who is not a principal party to a contract but who has a right, interest, or duty affected by it — for example, a title company holding funds and documents in escrow pending closing.

Title

Title is the combination of all elements that make up the highest legal right to own, possess, use, control, enjoy, and dispose of real estate — the rights of ownership recognized and protected by law.

Title Commitment

A title commitment is the title company's written promise to issue a title insurance policy once stated requirements are met. It identifies the current owner, the policy amount, the requirements to clear before closing, and the exceptions that will not be covered.

Title Covenants

Title covenants are promises inserted in conveyances to protect the purchaser against insufficiency of the title received. The common-law covenants include covenants against encumbrances, for further assurance, of good right to convey, of quiet enjoyment, of seisin, and of warranty.

Title Defect

A title defect is any claim or right outstanding in a chain of title that is adverse to the claim of ownership, or any material irregularity in an instrument in the chain of title.

Title Examination

Title examination is the study of the instruments in a chain of title to determine the status of the title. (See also Examination.)

Title Insurance

Title insurance is indemnity coverage that protects against financial loss from defects in, or liens upon, the title to real estate. Unlike insurance for future events, a title policy protects against problems that already exist in a property's history as of the closing.

Title Plant

A title plant is a geographically organized assembly of title information — such as copies of prior opinions, abstracts, tax searches, and take-offs of the public records — maintained to speed title examinations. In some areas it is synonymous with an abstract plant.

Title Search

A title search is an examination of the public records for recorded instruments that affect the title to a particular piece of land. (See also Abstract and Examination.)

Title Searcher

A title searcher is one who searches titles.

Trustee’s Deed

A trustee's deed is the deed a trustee issues to the successful bidder after a non-judicial foreclosure (trustee's sale) of a deed of trust.

U

Underwriter

An underwriter is an insurance company that issues insurance policies, either to the public or to another insurer.

W

Waiver

A waiver is the voluntary and intentional relinquishment of a known right, claim, or privilege.

Warranty Deed

A warranty deed is a deed containing one or more title covenants in which the grantor guarantees they hold clear title and will defend the grantee against claims. A general warranty deed offers the broadest protection, covering the entire history of the title.

Wire Fraud

Wire fraud, in real estate, is a scam in which criminals impersonate a party to the transaction and send fake wiring instructions to divert closing funds. Always verify wiring instructions by calling a known, trusted phone number before sending money.