Adjustable Rate Mortgage (ARM)

Mortgage loans under which the interest rate is periodically adjusted, in accordance with a market indicator, to more accurately reflect the current rates. The extent and number of these adjustments are agreed to at the time the loan is made.

Adverse Possession

The possession, by one person, of land belonging to another in a manner deemed adverse to the interest of the owner. In most states, by operation of law, title becomes vested in such person after a set number of years if the owner fails to assert his or her rights.


A written statement made under oath before a notary public or other judicial officer.


A legally binding contract made between two or more persons.

American Land Title Association (ALTA)

The trade association of the title insurance industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.


Payment to reduce the principal of a debt in regular, periodic installments.


A report from an independent third party giving the estimated value of real estate.

Approved Attorney

A practicing lawyer whose examination of title and title opinions are acceptable to a title insurance company as a basis for the issuance of its title insurance policies.


(1) The valuation of real estate for purposes of taxes or special improvement charges. (2) The amount of taxes or special improvement charges. Special improvement charges are usually for the costs of streets, sidewalks, sewers, etc.


(1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. (2) The instrument or paper by which one person transfers such ownership to another.

Balloon Note

A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.


A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.


A person who is entitled to receive funds or property under the terms and provisions of a will or trust or insurance policy.

Building Code

Laws specifying the type, kind, area and manner of construction of buildings, and prohibiting construction or repair of buildings in violation of such specifications.

Chain of Title

The successive ownerships or transfers in the history of title to a tract of land.


An adverse right or interest asserted by one party against another or against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as from hidden title defects such as fraud, forgery, missing heirs, etc.

Clear Title

Real property ownership free of liens, defects, encumbrances or claims.


Also called "settlement." A meeting of all parties involved in a property transaction during which the transaction is completed.

Clouded Title

An irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title.


The amount due a real estate broker or mortgage loan broker for services performed in such capacity. The term also applies to regulatory tribunals such as Real Estate Commissions.


Also called "binder." A document issued by a title insurance company that lays out the conditions under which a policy of title insurance will be issued.


A group or complex of residential units in the nature of apartments wherein each unit is separately and individually owned, the unit owners owning together the commonly used appurtenances such as gardens, sidewalks, supporting and dividing elements, elevators, and hallways. It is also possible for condominiums to encompass business buildings, office buildings, and manufacturing plants.

Commercial Loan

A loan secured by a mortgage or deed of trust for which the loan-to-value ratio falls within an acceptable range for the chosen lending institution.


The transfer of title to property from one person to another.


A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as covenants of warranty in a warranty deed.


A document through which a conveyance of property is effected.

Deed Restriction

A covenant contained in a deed imposing limits on the use or occupancy of the real estate or the type, size, purpose or location of improvements to be constructed on it.


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


A partial advance of the proceeds of a construction loan mortgage, to which the borrower is entitled when construction reaches a specified stage.

Earnest Money

A deposit of funds by the purchaser of a piece of real estate as evidence of good faith.


A right to use all or part of the land owned by another for a specific purpose. An easement may, for example, entitle its holder to install and maintain sewer or utility lines.


The right to a path or right-of-way over which a person may leave or go away from his own real estate.

Eminent Domain

The right of a government to take privately owned property for public purposes under condemnation proceedings subject to payment of its fair market value.


Any building, improvement or structure located on one property (such as a wall, fence or driveway) that intrudes upon the property of another.


Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden or charge upon the property.


The market value of real property, less the amount of existing liens.


A method or closing a real estate transaction in which all required documents and funds are placed with a third party for processing and disbursement.

Escrow Agreement

A written agreement usually made between buyer, seller, and escrow agent, but sometimes only between one person and the escrow agent. It sets forth the conditions to be performed incident to the object deposited in escrow, and gives the escrow agent instructions with respect to the disposition of the object so deposited.


A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.


The study of the instruments and muniments incident to a chain of title to determine their effect and condition in order to reach a conclusion as to the status of the title.


A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.


To sign a legal instrument. A deed is said to be executed when it is signed, sealed, witnessed and delivered.

Fannie Mae (FNMA)

Federal National Mortgage Association. A private corporation dealing in the purchase of first mortgages.

Fee Simple

The highest degree of ownership a person can have in real estate. An interest in real estate which gives the owner unqualified ownership and full power of disposition.

Federal Housing Administration (FHA)

A federal agency that insures first mortgages, enabling lenders to lend a very high percentage of the sale price.


In title industry parlance, this term relates to the delivery of real estate instruments to a recorder for recordings.

Fixed Rate Mortgage

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


Personal property that is attached to real property and is legally treated as real property while it is so attached. Example: medicine cabinets, window blinds and chandeliers.


A legal proceeding in which real estate secured by a mortgage or deed of trust is sold to satisfy the underlying debt.


The fraudulent signing of another's name to an instrument such as a deed, mortgage or check.

Freddie Mac (FHLMC)

Federal Home Loan Mortgage Corporation. A federal agency that purchases both conventional and federally insured first mortgages from members of the Federal Reserve System and the Federal Home Loan Bank System.

Ginnie Mae (GNMA)

Government National Mortgage Association. A federal association working with the FHA that offers special assistance in obtaining mortgages and purchases mortgages in the secondary market.


A transfer of real estate, between individuals, by deed.


One to whom a grant is made.


One who makes a grant.


An agreement in which a guarantee or assurance of a state of facts or the performance of an objective or obligation is given.


A person who is legally responsible for the care and management of the person or property of one who is legally incompetent to manage his own affairs.


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


(1) Property designated by the head of a family as his home, which is protected by law from forced sale to pay his debts. (2) Under some state laws, the real estate upon which one's home is situated.

Department of Housing and Urban Development (HUD)

The federal department responsible for the major housing programs in the United States.

Improvement Liens

Liens imposed by municipalities on real estate which has been directly benefited by municipal improvements such as the construction of streets, sidewalks and sewer lines. Such liens secure payment of the proportionate costs of such improvements.


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


The right or permission to enter; also the means or place of entry such as a right-of-way across adjoining land.

Installment Contract

A real estate purchase agreement providing for the payment of the purchase price in several successive payments such as monthly payments.


Any written document having a legal effect.


Estates, rights, or legal claims in and to real estate.


Dying without leaving a legal will.

Joint Tenants

Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent of all the other joint tenants.


A conclusion or determination by a court of law usually awarding the payment of money or relief of some kind to one of the parties to a lawsuit.

Junior Mortgage

A mortgage lower in lien priority than another.

Land Contract

A contract between buyer and seller for the purchase and sale of land, the purchase price usually being payable in installments over a considerable period.


The right to possession and use of land for a fixed period of time. The lease is the agreement that creates the right.

Legal Description

A description of real property by government survey, metes and bounds, unit numbers of a recorded condominium, or lot numbers of a recorded plat including a description of any portion thereof subject to an easement or reservation, if any. Such must be complete enough that a particular parcel of land can be located and identified.


A tenant holding a leasehold.


A landlord; one who gives a leasehold to a lessee.


A monetary charge imposed on a property, usually arising from some debt or obligation.

Lien Waiver

Also called "waiver of liens." A waiver of mechanics' lien rights, signed by contractors or subcontractors.

Life Estate

An estate of ownership in real estate which exists only during the term of a certain person's life.

Lis Pendens

A legal notice intending to bind third parties of litigation claiming an interest in real estate.

Loan Policy

Also called "mortgagee policy." A title insurance policy insuring a mortgage, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.

Market Value

The average of the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.

Mechanic's Lien

A lien on real estate, created by operation of law, that secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.

Metes and Bounds

A land description in which boundaries are described by courses, directions, distances and monuments.


A conditional pledge of property to a creditor as security for the payment of a debt.

Mortgage Insurance

Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price.


The holder of a mortgage. The party to whom a mortgage is made, generally the lender.

Mortgagee Policy

See Loan Policy.


A person who mortgages property. A person who executes a mortgage, generally the property owner.

Multiple Listing

The pooling in a central bureau of listings of properties for sale. These listings are held individually by members of a group of real estate brokers, with the agreement that any member of the group may sell the properties and, in the case of a sale, the commission will be divided between the broker making the sale and the broker who filed the listing.


Also called "promissory note." A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee.

Owner's Policy

A policy of title insurance insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketability of the owner's title.

Personal Property

Temporary or moveable property as distinguished from real estate.


Also called "plat map." A map dividing a parcel of land into lots, as in a subdivision. A map dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat maps for a given area.


Also called "commission points" or "discount points." One percent of the amount of the loan.

Power of Attorney

A legal instrument authorizing one to act as another's agent or attorney.


The amount payable for an insurance policy.


(1) A sum of money owed as a debt on which interest is payable. (2) A person who empowers another to act as his representative or agent. (3) The person having prime responsibility for an obligation as distinguished from one who acts as a surety or endorser.


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

Promissory Note

A written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.

Purchase Money Mortgage

A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price.

Quit Claim Deed

A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.

Real Estate

Also called "real property." (1) Land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items that would be personal property if not attached. (2) May refer to rights in real property as well as the property itself.


The noting in a public office of the details of a legal document- such as a deed or mortgage- affecting the title to real estate. When such an instrument is properly recorded, it is considered to be a matter of public record. Legally, that means that all subsequent purchasers are deemed to have constructive knowledge of that information.


(1) To relieve from debt or security or abandon a right, such as the release of a mortgage lien from a part or all of the land mortgaged. (2) The instrument effecting a release.


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

Riparian Rights

The rights of owners of lands bordering watercourses which relate to the water and its use.

Sale Agreement

A contract entered into between a buyer and seller, setting forth the terms, provisions and conditions of a sale of real estate.

Sale and Leaseback

The sale of an asset to a buyer who immediately leases it back to the seller.


(1) The payment of a debt or fulfillment of an obligation. (2) An instrument executed by the holder of a lien, debt or obligation which acknowledges payment or fulfillment.


The careful exploration and perusal of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Second Mortgage

A mortgage ranking in priority immediately below a first mortgage.

Statute of Limitations

A statute setting a time limit on the enforcement of a right or on the collection of a debt in certain cases.


The act or process by which a person's rights are ranked below the rights of others. For example, a second mortgagee's rights are subordinate to those of the first mortgagee.


(1) To determine the location, boundaries, area, or the elevations of land and structures upon the earth's surface by means of courses in relation to the North Star, and the measuring of angles and distances by using the techniques of geometry and trigonometry. (2) The map or plat drawn by a surveyor which represents the property surveyed and shows the results of a survey.

Tenants In Common

Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided interest.

Third Party

A term usually applied to persons who are not principal parties to a contract or other instrument, but who have some right, interest or duty which such contract or instrument affects. For example, where a sale contract between buyer and seller of real estate provides that the money and documents involved in the transaction will be deposited with a title company pending the closing of the deal, the title company becomes a third party to the transaction.


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

Title Defect

(1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.

Title Insurance Policy

A contract of title insurance under which the insurer, in keeping with the terms of the policy, agrees to indemnify the insured against loss arising from claims against the insured interest.

Title Plant

Also called "abstract plant" in some areas. A geographically filed assemblage of title information that helps in expediting title examinations, such as copies of previous attorney's opinions, abstracts, tax searches and copies or take-offs of the public records.


An insurance company that issues insurance policies to the public or to another insurer.

Variable Interest Rate

Also called "flexible interest rate." An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.


The purchaser under a sale contract of real estate.


The seller under a sale contract of real estate.

Veterans Administration (VA) Loans

Housing loans to veterans by banks, savings and loans, or other lenders that are guaranteed by the Veterans Administration, enabling veterans to buy a residence with little or no down payment.


The voluntary and intentional relinquishment of a known right, claim or privilege.


In a broad sense, and agreement or undertaking by a seller to be responsible for present or future losses of the purchaser occasioned by deficiency or defect in the quality, condition or quantity of the thing sold. In a stricter sense, the provision or provisions in a deed, lease or other instrument conveying or transferring an estate or interest in real estate under which the seller becomes liable to the purchaser for defects in or encumbrances on the title.


A testamentary disposition of property, usually in a form prescribed by law, that takes effect upon death.


Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.