Common Terms

The abstract of title is a condensed history of the transfer of a piece of land or property including claims that could be made against it.

The chain of title is the ownership history of a real estate property that shows how title was conveyed.

The closing is the last step in a real estate transaction. The buyer meets with the signing agent to review and sign paperwork, including the Closing Disclosure, funds are transferred, and title is transferred from seller to buyer.

The Closing Disclosure (CD) provides the details about the mortgage loan, including projected monthly payments, fees, and closing costs, as well as the purchase price of the home and any previous deposits. The lender is responsible for preparing and delivering the buyer’s CD. The title company generally prepares the seller’s CD.

A clear title is a property title that has no defects. Before a title can be conveyed, it must be cleared.

The deed is a document filed with county or parish records that records the transfers in ownership of a piece of property.

A defect is any claim that could render a property title unmarketable. Common defects include unknown heirs, forged signatures and competing ownership claims.

An easement is the right to use a property, regardless of who owns it, for a specific purpose. Common easement examples include authorizations for utility poles, water lines and roads to cross into or through a property boundary.

An encumbrance is a charge or claim resulting from a title defect, easement, lien or encroachment.

An encroachment is when a fence, driveway, sewer line, or other item crosses a property’s boundary line.

Escrow is a neutral third party, frequently an attorney, who handles the exchange of money and documents.

An HOA is the administrative body for a multi-family development that is responsible for upholding rules, managing finances and providing building maintenance.

These are dues collected by an HOA.

The legal owner is the rightful owner of a property as recognized by law.

A lien is a notice that a claim for payment has been made against a property by a second party, typically a creditor, lender or contractor. Many kinds of liens exist, including IRS liens, mechanic’s liens, property tax liens and judgement liens.

Sometimes homeowners associations (HOA) employ property management companies to help administer shared communities.

A quote is an estimate of the cost of title insurance, settlement fees, and more based on the kind of title policy required, the sale price and the loan limit.

A document is recorded in county or parish records to make public the transfer in property ownership.

Real Estate Settlement Procedures Act (RESPA) is Federal legislation that requires real estate professionals to provide borrowers with disclosures concerning the real estate transaction.

The closing is also called a settlement. The terms are interchangeable.

A signing agent is a trained and licensed real estate professional that conducts the closing by explaining documents and performing notarizations.

Title refers to the ownership of a piece of real property.

A title commitment is a report that summarizes the findings of the title search and includes the property’s ownership history and any title issues.

Title insurance protects the homeowner or lender from financial losses up to the coverage limit resulting from defects or liens against the property title.