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GLOSSARY OF TITLE TERMS

Abstract of Judgment

  • A summary of the essential provisions of a court judgment, which when recorded in the county recorder’s office creates a lien upon the property of the defendant in that county, both presently owned or after acquired.

Closing

  • In regard to real estate sales, this is the final procedure in which documents are executed and recorded along with funds being disbursed to the appropriate parties causing the sale and/or loan to be complete.

Commitment

  • The written guaranty by a title company committing (Title Commitment) said company to issue title insurance on a specific property once certain requirements have been met. The requirements are outlined in the commitment, along with the items which will be excluded from coverage (the “subject to” section of the title commitment).

Community Property

  • Property owned in common by husband and wife, which was not acquired as separate property.

Deed

  • Generally a conveyance instrument used to pass fee title to property upon sale.

Deed of Trust

  • An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor) in favor of the lender (beneficiary) and reconveyed (released) upon payment in full.

Easement

  • A right granted to a utility or individual for the purpose of use, ingress, egress or other special use.

Escrow

  • The contract between two parties which is governed and controlled by an independent disinterested third party (the title company) under which the requirements are met to transfer real property ownership from one party to the other.

Guardian

  • An individual appointed by the courts to manage the affairs of a minor or incompetent.

Encumbrance

  • A claim, lien, charge of liability attached to and binding real property. Any right to or interest in land which may exist in one other than the owner, but which will not prevent the transfer of fee title.

Legal

  • The legal description of a property includes the street address, lot number, block number, section or phase, subdivision name, volume and page of the map records of the county. A specific description of the property that cannot be used to describe any other property in that county.

Lien

  • An encumbrance against property for money whether voluntary or involuntary. All liens are encumbrances, but all encumbrances are not liens.

Mechanic's Lien

  • A lien created by statute for the purpose of securing priority of payment for the price or value of work preformed and materials furnished in construction or repair of improvements to land, and which attaches to the land, as well as the improvements.

Ownership

  • Name of owner of record on real property.

Plat

  • Refers to map of records of a subdivision showing lot dimension, street setbacks, etc.

Power of Attorney

  • An authority by which one person (principal) enables another (attorney in fact) to act for him. Specific Power of Attorney specifies property, buyer, price and terms.

Title Insurance

  • Protects a homeowner from any loss incurred due to a defect in title, such as forgeries, liens on the property, errors of recording clerks and legal errors.

Title Plant

  • A duplicate set of public records maintained by a title company.

Title Search

  • An inspection of publicly available records and documents to determine the current ownership and title condition for a property.

DEFINITIONS OF CLOSING COSTS

Amortization Schedule

  • A schedule showing the principal and interest payments throughout the life of the loan.

Appraised Value

  • An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.

Assumption Transfer Fee

  • A fee assessed by the lender to buyer to assume the present loan.

Credit Report

  • A report on the past ability of a loan applicant to pay installment payments.

Document Preparation

  • A fee charged by an attorney for preparing legal documents for a transaction.

Escrow Fee

  • A fee charged by the title company to service the transaction, to escrow monies and to cover document costs. The amount varies with company; usually split between buyer and seller.

Escrow / Impound Account

  • Funds held by the lender for payment of taxes and insurance when due. Usually does not include maintenance fees.

Homeowners Insurance

  • Protects the property and contents in case of loss; must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.

Earnest Money

  • Do we have the earnest money check from the buyer? Does it match the dollar amount provided for in the contract? Is it made payable to South Land Title Company?

EXPLANATION OF THE TITLE COMMITMENT

The first time you receive a copy of a title company commitment, you might find it difficult to understand. Actually, the commitment is an easy document to read. Once familiar with the commitment, it becomes a road map to follow to ensure that the property being transferred is in insurable condition. To make your job a little easier, we have enclosed a sample title commitment report with numbered reference points and a reference sheet explaining those numbered points. Please call your area marketing representative or escrow officer if you need further clarification.

SCHEDULE “A”

GF NUMBER (1)

  • An inspection of publicly available records and documents to determine the current ownership and title condition for a property.

DATE (2)

  • This is the date and time to which the records have been examined.

POLICY OR POLICIES (3)

  • This indicates what type of policy is to be issued, who is to be insured and for what amount.

ESTATE OR INTERST (4)

  • Shows what type of interest is presently being held in the land.

VESTING (5)

  • Name of parties appearing to have title to the property according to the public records.

LEGAL DESCRIPTION (6)

  • Full description of the property, must be sufficient to enable the examiner to locate the property in the public records.

SCHEDULE "B"

  • Items 1 through 9 preprinted exceptions to Schedule B, will appear on all commitments.

SCHEDULE "C"

  • The third part of the commitment – Schedule C – tells the Escrow Officer and all other persons who are privy to the information contained therein, exactly what needs to be taken care of or resolved prior to closing and issuing the policies.

    If the Schedule C items are not resolved to the satisfaction of the title insurer, they may (1) elect not to insure the title at all; or (2) may add these matters to Schedule B as exceptions to coverage. Items 1 through 4 are preprinted items that must be dealt with before a policy can be issued.

    Items 5 through ____ (can be infinite) are items that must be cleared in order to issue the title policy, and insure the new owner and lender.

SCHEDULE "D"

  • This divulges the directors and officers of the underwriting company. These disclosures are made pursuant to procedural rule P-21, promulgated by the State Board of Insurance.

OTHER INFORMATION NEEDED BY THE TITLE COMPANY

Lender

  • Existing lender: Do you have the seller’s loan number?

  • New lender: Do you have the new lender’s name and phone number? Please don’t forget the loan officer’s name!

Power of Attorney

  • If a Power of Attorney is required, have you notified the title company and the new lender?

Homeowners Insurance

  • Has the purchaser provided the title company with his homeowners insurance carrier?

Listing Agreement

  • Confirm your contract with the seller.

Quick Closing

  • Look at the closing date. If we have a quick turn around, a copy of the seller’s owners policy, existing lien information (name of lender and loan number) and/or assumption information (name of lender and loan number) is essential to complete the transaction.

Good Funds

  • “Good Funds” is required under Article 9.39A of the Texas Insurance Code. Good funds are normally classified as a cashier’s check or wire transfer. Should you need any further information, please ask your South Land Marketing Representative or Escrow Officer.

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