Glossary of Terms


Abstract of Title: A written report prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located, that shows the history of every change of ownership on a piece of real estate, and any claims against the property.

Adjustable Mortgage Loans (AML): Mortgage loans under which the interest rate applied on the outstanding balance is periodically adjusted throughout the life of the loan.

Administrator: A person appointed by the court to handle the administration of a decedent's estate when the decedent has died without leaving a will.

Adverse Possession: A process of acquiring title to real property by occupancy for a certain (statutory) period of time, while claiming ownership for the period set by the law of the state where the property exists.

Affidavit: A written document, where the signer swears before an officer or notary who has authority to administer an oath, that the statements in the document are true.

Agent: A person who has authorization to act for another through employment, by contract or by apparent authority, 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 and buyer for sale of real property. It is also known as contract of purchase, contract for sale, contract agreement or sale agreement.

All-Inclusive Rate: Rate which includes charges for insurance premium, and at least part of the cost of title search, examination and the cost of conduction the closing.

Amendment: A change or correction to the original contract that doesn’t affect the principal idea or essence.

Amortized Loan: A loan where both interest and principal are paid off over the life of the loan, by regular payments that are equal. For example, each payment to the lender will consist of a portion of interest and a portion of principal.

Annual Percentage Rate (APR): The annual interest rate of a loan, as expressed as a percentage that represents the actual yearly cost of funds over the term of the loan.

Appraisal: An estimate of value of property based upon a variety of factors and conducted by a licensed and authorized person.

Approved Attorney: An attorney whose opinion is approved by a title company as the basis for issuance of a title policy by the insurer, who issues the policy.

ARM: Adjustable rate mortgage


Balloon Mortgage: A mortgage loan where a large portion of the borrowed principal is repaid in a single payment at the end of the loan period.

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, where those properties are pledged or conveyed as security for the debt. It allows the borrower to obtain partial reconveyance when a parcel or lot is sold.


Capitalization Rate: The rate of return based on the value of income the property is expected to generate.

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.

Close of Escrow: The process of completing the real estate transaction during which the documents are signed and recorded, money is disbursed, and title passes from Seller to Buyer, thereby making the buyer legal owner; the title insurance goes into effect on this date.

Closing Costs: Expenses and fees (over and above the price of the property) that buyers and sellers normally incur in order to complete the closing transaction.

Closing Disclosure: Document detailing all of the costs associated with a mortgage transaction.

Cloud on Title: An irregularity, possible claim, or encumbrance that might invalidate or impair the property title.

Collateral: Property pledged to secure a loan. If the borrower defaults, the lender can typically seize the property pledged.

Conservator: A person appointed by the court to care for the affairs and/or property of another person who may be mentally or physically disabled and unable to manage their affairs on their own.

Conveyance: A legal document, such as a deed or trust deed, which transfers title of property from one person to another.


Deed: Written document by which an title to real property is conveyed from one person to another.

Deed of Trust or Trust Deed: A written document by which the title to real property is transferred to a trustee as security for the repayment of a loan or debt between a borrower and a lender.

Deed Restrictions: Agreements in the deed to a property that restrict the use of the property in some way.

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

Defective Title: A title to real property that is invalid due to a claimed prior holder not having title, an error in the description of the property, a lien, or some other encumbrance.


Earnest Money: Down payment or part of purchase price made by a purchaser of real estate as evidence of good faith in the transaction.

Easement: A right or interest held by another to make use of another’s real property, such as to place pole lines, pipe lines or roads thereon.

Encroachment: The extension of a structure such as a wall, a fence, or other fixture which crosses a boundary onto the property of an adjoining owner.

Encumbrance: A right or claim upon title to real property held by someone other than the property owner.

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

Equity: Market value of real property less the value of liabilities such as a lien.Escrow: The process by which anything pertaining to a real estate transaction, including money and documents, is handled by a neutral third party, such as BRPS Title. The purpose is to facilitate the process by overseeing the disbursement of funds and documents to the appropriate parties once all conditions of the process have been met.

Exception: A list of items on a title policy that are excluded from coverage. These items are found in Section 2 Schedule B of the policy.

Executor: An individual appointed to manage the estate of a deceased person, according to the deceased’s will.


Fee Simple: An estate which is owned completely, without limitations or conditions.

Fixed Rate Mortgage: A mortgage loan that has a rate of interest which remains the same for the entire term of the loan.

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.

Full Disclosure: Revealing all significant information and facts which may affect the decision of a buyer or tenant.


Grantee: The person or entity who receives title to real property (buyer) from the grantor (seller) by a grant deed or quitclaim deed.

Grantor: The person or entity (seller) who transfers title of real property to another (buyer) by grant deed or quitclaim deed.

Guardian: A person appointed by a judge to manage/handle the affairs of a person and/or property of a person who is legally incompetent.


Hazard Insurance: Insurance that protects against a number of perils including fire, wind, storms and other similar risks, depending on the policy.

Heir: (1) A person who acquires property upon the death of another, based on the rules of descent and distribution (2) Anyone who receives something according to the terms of a will.

Homestead: The house and lot of an owner, which the head of household can declare in writing to be the principal dwelling of the family, thereby exempting part of its value from judgement creditors; the written declaration must be recorded with the County Recorder or Recorder of Deeds .


Improvements: A permanent addition to or betterment of real property that is designed to make the property more useful, adding to the value, and involves expenses for labor or services; Is distinguishable from ordinary repairs.

Indemnity: Protection against possible loss or damage which has occurred or will occur. A title insurance policy is a contract of indemnity.


Judgment Lien: A court ruling giving a creditor the right take possession of a debtor’s real property if that debtor fails to fulfill his/her contractual obligations. It is a nonconsensual lien (a lien that attaches to your property without your agreement).


Land Contract: A contract for the sale of land between the seller and buyer in which the seller holds legal title while simultaneously allowing the buyer to pay stipulated amounts at specified intervals until the total purchase price is paid in full, at which tie the seller transfers his interest in the property to the buyer.

Lease: A written agreement in which an owner of real property (lessor) allows the right of possession to another (lessee), for a specified period of time, for specific periodic payments, and other terms and conditions.

Legal Description: A description of land that is sufficient to identify it for legal purposes and be recognized by law.

Lender: Any person or entity that makes funds available to another with the expectation that the funds will be repaid.

Lender’s Policy: A title insurance policy that insures the lender against losses related to title defects or liens on the property.

Lien: An official claim against property for payment of a debt or amount owed.


Mechanics Lien: An interest in the title to the property, for the benefit of those who have supplied labor or materials for the improvement of the property.

Mortgage: The instrument by which the borrower (mortgagor) pledges his/her/its title to real property to the lender (mortgagee) as security for a loan described in the note.

Mortgagee: The person(s) or business lending the money that is secured by the real property of the mortgagor.

Mortgagor: The person(s) who borrows the money and pledges his/her real property as security for the mortgage.


Note: A promissory note or written statement by one or more people to one or more people, with a statement of a specific amount owed or due, due date, interest and other terms and conditions.


Original Cost: The purchase price of the property that was paid by the current owner.

Owner's Policy: A policy of title insurance usually insuring an owner of the property against loss caused by defects in title or liens.


Power of Attorney: A document signed by one person granting another person (called the "attorney-in-fact") the power to act in conducting his/her business in a specific manner in designated transactions.


Quitclaim Deed: A deed which conveys any title, interest, or claim which the grantor may have in the property.


Real Property (immovable): Land, including anything growing on the land, any man-made improvements of a permanent nature, and all interests in the property.

Recording: The act of filing documents affecting real property into the official records at the County Recorders or Recorder of Deeds office, giving notice to future purchasers, creditors, or other interested parties.

Restrictions: Agreements in the deed that restrict the use of the property for certain use, occupation or improvement.

Right of Way: (1) The right to pass over a specific route through property owned by another (2) The right to build facilities such as highways, railroads or power lines on a strip of land belonging to another.


Sale and Leaseback: A transaction where the owner of a parcel of property sells it and retains possession by simultaneously leasing it from the buyer.

Search: An examination of the public records in order to find all recorded instruments relating to a particular chain of title.

Separate Property: Real property owned by one spouse where the other spouse has no rights concerning that property.

Subdivision: An area of land divided from a larger area whose purpose is to divide a large tract of land into smaller ones called lots and blocks, which can be easily developed to increase growth and maximize use of space.

Survey: An assessment of property lines to determine the amount of land that is owned.


Tax Deed: Document granting legal ownership of a property to the government when taxes go unpaid by the property owner. This gives the government the right to sell the property to collect the owed taxes and transfer the property to the buyer.

Tax Sale: Property on which current county taxes are owed. The title is transferred to the state and the owner may redeem it within 5 years by paying taxes, penalties and costs. After 5 years, the property is deeded to the state.

Testate: Leaving a legally valid will at death.

Title: A deed, judgement or other appropriate document recorded in the public records of a county that shows ownership of real property, which stands against the right of anyone else to claim it.

Title Defect: Any encumbrance or claim that hinders title verification. Also called cloud on title.

Title Commitment: Provided by the title company as the binding instrument to insure the loan and/or buyer of the property as to the prior owners’ acts against the property.

Title Insurance: Type of insurance that insures against financial loss from defects in title to real property.

Title Search: The review of records for the property’s title history to determine the chain of title, current status of title, ownership, legal description, easements, property taxes due, mortgages or deeds of trust, leases, judgements or liens.

Trustee: A person or body of persons appointed to administer the affairs of a company or person who hold the title to property for the benefit of another.

Trustor: The creator of a trust.


Variable Interest Rate: An interest rate that fluctuates as market interest rates change.

Vendee: A buyer of real property.

Vendor: A seller of real property.

Vendor's Lien: An implied lien that gives the seller the right to repossess the property sold until the buyer makes all payments for the full purchase price.

Vesting: Refers to the fact that the seller has absolute right of title as well as ownership rights.


Waive: To relinquish a known right, interest or claim intentionally.

Warranty Deed: A deed used in many states to guarantee a clear title of real property.

Will: A written document declaring how a person would like his/her estate to be disbursed after death.