Glossary

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Abandonment: The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).

Abatement: A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.

Abstract of Title: A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document.

Abut: To adjoin or share a common boundary, or share even a small portion of a boundary.

Acceleration Clause: Clause in a deed of trust or mortgage, which “accelerates,” or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.

Access: The right to enter and leave a tract of land from a public way, often the right to enter and leave over the lands of another.

Acre: A measure of land totaling 43,560 square feet. A square acre is 208.75 feet on each side.

Accommodation Recording: Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.

Acknowledgement: A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

Administrator: A person appointed by the probate court to carry out the administration of a decedent’s estate when the decedent has left no will.

Adverse Possession: A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.

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

Agreement of Sale: A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract.

Air Rights: The right of the landowner to the space above his land, extending upward for a reasonable distance.

Appurtenance: Anything that is or becomes part of the property because it is attached or closely related to the land. It may be a structure such as a well, barn or garage; or it may be a right or interest enjoyed by the previous owner, such as an easement.

All-Inclusive Rate: Rate which includes charges for title insurance, searching or abstract fees and examination fees.

A.L.T.A. (American Land Title Association): An organization composed of title insurance companies that decides the standards in the title insurance industry.

Amendment: A change either to alter, add to, or correct part of an agreement without changing the principal idea or essence.

Amortized Loan: A loan that is paid off, both interest and principal, by regular payments that are equal or nearly equal.

Annual Percentage Rate (A.P.R.): The yearly interest percentage of a loan, as expressed by the actual rate of interest paid.

Appraisal: An opinion of value based on a factual analysis of property.

Assessment: The estimating of value of property for tax purposes, or a charge against real estate made by a unit of government or a condo association to cover the proportionate cost of an improvement such as streets, sewers, etc.

Assignment: A transfer of real or personal property and all rights to said property to another.

Assumption of Mortgage: Agreement by a buyer to assume an existing mortgage or deed of trust.


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Bankruptcy: A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor’s creditors and the debtor.

Bill of Sale: An invoice signed by the seller reciting that he has sold to the buyer the personal property therein described.

Bona Fide Purchaser: One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.

Boundaries: The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description.

Breach of Contract: Failure to perform a contract, in whole or part, without legal excuse.

Broker: One who may carry on the business of dealing in real estate via license by the state.

Builder: A constructor of commercial buildings and individual homes.

Building Contract: An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure.

Building Permit: A document obtained from the local government, allowing for the construction of a structure in accordance with the terms of the permit.

Buydown: A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first one to five years of the loan.


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Capitalization Rate: The percentage (acceptable to an average buyer) used to determine the value of income property through capitalization.

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.

Chattel: Personal property.

Close of Escrow: The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

Closing: The final procedure in the real estate sales process, where the sale and pertinent loan are completed by the execution of documents for recording. In some areas, this procedure is known as the closing of escrow.

Closing Protection Letter: Sometimes referred to as an insured closing letter, is a document issued by title insurance underwriters that sets forth an underwriter’s responsibility for negligence, fraud and errors in closings performed by agents and approved attorneys. It indemnifies the indemnitee against loss or damage arising from a breach of certain fiduciary duties owed by the closing agent to the parties to the transaction. This document is necessary because the agency/principal relationship between an underwriter and a policy issuing agent or approved attorney is limited to the issuance of a policy and does not extend to escrow functions.

Cloud on Title: An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.

Coinsurance: Ordinary coinsurance is defined as a transaction under which each of two or more insurers assumes a designated portion of the liability for the total risk and is liable for only such portion of any loss beginning at the first dollar of loss.

Collateral: By or at the side, additional or auxiliary. Mistakenly used to mean collateral security.

Collateral Security: Most commonly used to mean some security in addition to the personal obligation of the borrower.

Commercial Property: Property that is zoned for business use.

Commitment: The written report of the title company showing status of title and pledging to issue a title insurance policy when the requirements shown therein are met. The commitment contains all information included in the preliminary title report, plus a list of the title company’s requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.

Comparable Sales: Sales that have similar characteristics as the subject property, used for analysis in the appraisal. Commonly called “comps.”

Condemnation: The taking of private property by the government for public use – as for a street or a storm drain – upon making just compensation to the owner. This right or power of government to take property for a necessary public use is called “eminent domain.”

Conservator: A person appointed by the court to care for the person and/or property of an incompetent adult or an adult unable to care for their person or property because of health.

County:A political division within a state, usually encompassing one or more cities or towns. A city may be in more than one county. Michigan has 83 such counties.

County Clerk: In Michigan, this is the office where all real estate documents are filed. Any documents filed in the Clerk’s office must have a check for the appropriate filing fees attached. See schedule for appropriate fees.

Courtesy Filing: The filing of documents as a courtesy to the customer, when no closing has been done by the company.


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Deed: Written document by which an estate or interest in real property is transferred from one person to another. The person who transfers the interest is called the “grantor.” The one who acquires the interest is called the “grantee.” Examples of deeds are grant deeds, administrators’ deeds, executors’ deeds, quitclaim deeds, etc. The deed to use depends on the language of the deed, the legal capacity of the grantor and other circumstances.

Deed of Trust or Trust Deed: A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the “trustor.” The party to whom the legal title is conveyed (and who may be called on to conduct a sale thereof if the loan is not paid) is the “trustee.” The lender is the “beneficiary.” When the loan is paid off, the trustee is asked by the beneficiary to issue a “recon” or reconveyance. This reconveyance corresponds to the release that the holder of a mortgage executes when the mortgage is paid off.

Defective Title: 1) Title to a negotiable instrument obtained by fraud. 2) Title to real property which lacks some of the elements necessary to transfer good title.

Demand Note: A note having no date for repayment, but due on demand of the lender.

Deposit: 1) Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. 2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.

Divorce Decree: A court’s formal order granting a termination of marriage. If a divorce case goes to trial and the judge issues a judgment, the judgment is confirmed when the decree is signed and dated by the judge and court clerk.


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Earnest Money Deposit: Down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment.

Easement:A recorded right of use affecting real property. An easement could be for utility purposes or for ingress or egress, for example. All easements of record would be shown originally on the title insurance commitment.

Eminent Domain: The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value. (See Condemnation.)

Encumbrance: A liability, claim or lien attached to, and therefore binding, upon real property.

Escrow: Delivery of all necessary sale instruments, including funds.

Executor: The person chosen in the will to carry out, or execute, the will’s terms, now often called the Personal Representative.


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Federal Tax Lien: Nonpayment of any federal tax, including income tax, can result in a Federal Tax Lien being attached to taxpayer’s property.

Fee Simple: An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.

Final Decree: A decree documenting the final decision of all pending matters in a case before a court.

Fixed Rate Mortgage: A mortgage having a rate of interest which remains the same for the life of the mortgage.

Foreclosure: The selling of a property in order to satisfy a lien against it, ending all rights, interests, or title of owners.

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. For example, a deed may be granted upon the condition that if liquor is sold on the land, the title to the land will be forfeited (that is, lost) by the buyer (or some later owner) and will revert to the seller.

Full Disclosure: In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease.


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Gap: The common title industry name for the period from the effective date on the commitment to the day of closing and recording of documents. A “Gap Check” is the title company’s search of the public records for this time period.

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Hazard Insurance: Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

Heir: One who receives the estate, or partial estate, of a deceased person by law.

Homestead: A statutory protection from execution or the establishment of title by occupation of real property in accordance with the laws of various states or the Federal Government.


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Indemnity Agreement: Agreement stating that Party A will reimburse Party B for any possible damage or loss suffered by Party B.

Instrument: Legal documents, such as deeds, mortgages, assignments, wills, etc., are also known as instruments.


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Joint Tenancy: The undivided equal owner interests with right of survivorship in a property held by two or more parties.

Judgment: The final decision in a court of law.


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Land Contract: An installment contract for the sale of land whereby the seller (vendor) holds legal title and the buyer (vendee) has equitable title until the sales price is paid in full.

Lease: An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period of time (term) and for a specified consideration (rent).

Legal Description: The description of a parcel of land, identifiable by metes and bounds, or designated as a Lot and/or Block number.

Lender: Any person or entity advancing funds which are to be repaid. A general term encompassing all mortgagees, and beneficiaries under deeds of trust.

Lien: An encumbrance for money against property.

Living Trust: A form of trust created by individuals that generally exists for the life of the trust according to the terms of the trust agreement that created it.

Lot: Referring to any parcel of land.


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Marketable Title: Title that may be sold to a buyer, knowledgeable of the facts and their legal meaning as to liens and encumbrances.

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

Metes and Bounds: Description of land by exact distance and direction.

Mortgage: Legal document showing a lien upon real property in exchange for money.

Mortgagee: The party lending the money.

Mortgagee Policy: Title insurance policy insuring the mortgagee against loss caused by title defects.

Mortgage Broker: One who may carry on the business of dealing in real estate loans via license by the state.

Mortgagor: The party borrowing the money.


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Note: A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage or trust deed.

Notary Public: A person legally empowered to witness or certify the validity of signatures on documents.


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Original Cost: The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.

Ownership: Rights of ownership include use and enjoyment of property, excluding others.

Owner’s Policy: A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner’s title.


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Parcel: Any area of land contained within a single description.

Partial Release: A partial release of property covered by a mortgage.

Payoff: Full payment of an existing loan.

PITI: A payment that combines Principal, Interest, Taxes, and Insurance.

Plat Book: A book that contains plat maps and numbers for a designated area.

Plat Map: A map of a subdivision, showing the division of a parcel of land into lots.

Point of Beginning: Used in metes and bounds descriptions to show where the property begins.

Power of Attorney: Enables one person to act for another.

Priority: The order of preference, rank or position of the various liens and encumbrances affecting the title to a particular parcel of land. Usually, the date and time of recording determine the relative priority between documents.

Priority Inspection: A title term referring to the type of inspection made in connection with insuring a new construction loan. In making the inspection of the property, the title company must be assured that the work of improvement had not yet begun when the lender’s deed of trust was recorded.

Probate: The legal term for the process of administering a deceased person’s estate or property through the state courts. General probate procedure is found in Title xx of the Michigan statutes.

Public Land: Land that belongs to the federal government.


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Quiet Title: Court action establishing ownership to real property, removing any cloud on the title.

Quit Claim Deed: A deed passing any interest, claim or title the grantor may have in the property to the grantee, without warranty of defects in title.


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Recorder’s Office: In Michigan, this is the County Clerk’s office. For further definition, see County Clerk.

Recording: This is the act of filing all documents that affect property for public record for the use of future reference and public notices.

Release: A document releasing property from lien or judgement.

Re-recording: If an error occurred on the original recorded document and is in need of correction, the corrected document must be re-recorded with the County Clerk’s office to show the correction.

Rescind: To cancel a transaction or agreement is to “rescind” it. In title terms, it most often refers to the right of rescission given individuals to cancel home loans when refinancing.

Restriction: As to title, this would mean any limitation on the right of use of a property. A restriction could be created by deed, covenants, or court order.

Right of Way: A strip of land used for roadway or easement purposes.

Revenue Stamps: In Michigan, this is known as Documentary Stamps. For further definition, see Documentary Stamps.


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Second Mortgage: A mortgage that ranks behind the first mortgage in lien priority due to its later filing of record.

Sheriff’s Deed: In Michigan, this means the final step in the official foreclosure of property. This type of deed would be filed after the public sale and court confirmation thereof.

Survey: The measurement of the boundaries of a parcel of land.


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Tax Exemption: Not having to pay property tax or other taxes, granted to religious, educational and governmental organizations.

Tax Lien: Lien against property for nonpayment of taxes.

Tax Roll: A list of descriptions of parcels of property, their owners and tax information, kept by the County Treasurer.

Termination of Joint Tenancy: A document that ends a joint tenancy, filed when one of the tenants dies. Must be accompanied by the original death certificate.

Title: Evidence of ownership of land.

Title Insurance: Generally, the form of insurance that guarantees title to a real property against claims that may arise related to matters occurring prior to the effective date of the policy.

Title Plant: An Michigan title industry term that means the set of title records that are identical to those of the county recorder (clerk). Such a “plant” is required by law to be updated for the abstract company to obtain an Michigan abstractor’s certificate of authority.

Title Report: A report showing the condition of title before a loan transaction. In Michigan, a title report is not an insurance policy according to state insurance commission guidelines. A title report is also known in other states as a Title Search.

Title Search: See Title Report.

Tract: A parcel of land.


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Unencumbered: Free from liens.

Uniform Commercial Code: The set of laws that provide for the legal rules and regulations governing “commercial” or “business” dealings and transactions involving personal property.


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Warranty Deed: A deed used to convey title of property from one party to another, whereby the seller guarantees title to be free from encumbrances.
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A

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Abandonment: The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).

Abatement: A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment, and levy.

Abstract of Title: A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document.

Abut: To adjoin or share a common boundary, or share even a small portion of a boundary.

Acceleration Clause: Clause in a deed of trust or mortgage, which “accelerates,” or hastens, the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.

Access: The right to enter and leave a tract of land from a public way, often the right to enter and leave over the lands of another.

Acre: A measure of land totaling 43,560 square feet. A square acre is 208.75 feet on each side.

Accommodation Recording: Recording of instruments with the county recorder by a title company merely as a convenience to a customer and without assumption of responsibility for correctness or validity.

Acknowledgement: A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

Administrator: A person appointed by the probate court to carry out the administration of a decedent’s estate when the decedent has left no will.

Adverse Possession: A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.

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

Agreement of Sale: A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract.

Air Rights: The right of the landowner to the space above his land, extending upward for a reasonable distance.

Appurtenance: Anything that is or becomes part of the property because it is attached or closely related to the land. It may be a structure such as a well, barn or garage; or it may be a right or interest enjoyed by the previous owner, such as an easement.

All-Inclusive Rate: Rate which includes charges for title insurance, searching or abstract fees and examination fees.

A.L.T.A. (American Land Title Association): An organization composed of title insurance companies that decides the standards in the title insurance industry.

Amendment: A change either to alter, add to, or correct part of an agreement without changing the principal idea or essence.

Amortized Loan: A loan that is paid off, both interest and principal, by regular payments that are equal or nearly equal.

Annual Percentage Rate (A.P.R.): The yearly interest percentage of a loan, as expressed by the actual rate of interest paid.

Appraisal: An opinion of value based on a factual analysis of property.

Assessment: The estimating of value of property for tax purposes, or a charge against real estate made by a unit of government or a condo association to cover the proportionate cost of an improvement such as streets, sewers, etc.

Assignment: A transfer of real or personal property and all rights to said property to another.

Assumption of Mortgage: Agreement by a buyer to assume an existing mortgage or deed of trust.


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Bankruptcy: A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor’s creditors and the debtor.

Bill of Sale: An invoice signed by the seller reciting that he has sold to the buyer the personal property therein described.

Bona Fide Purchaser: One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.

Boundaries: The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description.

Breach of Contract: Failure to perform a contract, in whole or part, without legal excuse.

Broker: One who may carry on the business of dealing in real estate via license by the state.

Builder: A constructor of commercial buildings and individual homes.

Building Contract: An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure.

Building Permit: A document obtained from the local government, allowing for the construction of a structure in accordance with the terms of the permit.

Buydown: A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first one to five years of the loan.


C

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Capitalization Rate: The percentage (acceptable to an average buyer) used to determine the value of income property through capitalization.

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.

Chattel: Personal property.

Close of Escrow: The date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.

Closing: The final procedure in the real estate sales process, where the sale and pertinent loan are completed by the execution of documents for recording. In some areas, this procedure is known as the closing of escrow.

Closing Protection Letter: Sometimes referred to as an insured closing letter, is a document issued by title insurance underwriters that sets forth an underwriter’s responsibility for negligence, fraud and errors in closings performed by agents and approved attorneys. It indemnifies the indemnitee against loss or damage arising from a breach of certain fiduciary duties owed by the closing agent to the parties to the transaction. This document is necessary because the agency/principal relationship between an underwriter and a policy issuing agent or approved attorney is limited to the issuance of a policy and does not extend to escrow functions.

Cloud on Title: An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.

Coinsurance: Ordinary coinsurance is defined as a transaction under which each of two or more insurers assumes a designated portion of the liability for the total risk and is liable for only such portion of any loss beginning at the first dollar of loss.

Collateral: By or at the side, additional or auxiliary. Mistakenly used to mean collateral security.

Collateral Security: Most commonly used to mean some security in addition to the personal obligation of the borrower.

Commercial Property: Property that is zoned for business use.

Commitment: The written report of the title company showing status of title and pledging to issue a title insurance policy when the requirements shown therein are met. The commitment contains all information included in the preliminary title report, plus a list of the title company’s requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.

Comparable Sales: Sales that have similar characteristics as the subject property, used for analysis in the appraisal. Commonly called “comps.”

Condemnation: The taking of private property by the government for public use – as for a street or a storm drain – upon making just compensation to the owner. This right or power of government to take property for a necessary public use is called “eminent domain.”

Conservator: A person appointed by the court to care for the person and/or property of an incompetent adult or an adult unable to care for their person or property because of health.

County:A political division within a state, usually encompassing one or more cities or towns. A city may be in more than one county. Michigan has 83 such counties.

County Clerk: In Michigan, this is the office where all real estate documents are filed. Any documents filed in the Clerk’s office must have a check for the appropriate filing fees attached. See schedule for appropriate fees.

Courtesy Filing: The filing of documents as a courtesy to the customer, when no closing has been done by the company.


D

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Deed: Written document by which an estate or interest in real property is transferred from one person to another. The person who transfers the interest is called the “grantor.” The one who acquires the interest is called the “grantee.” Examples of deeds are grant deeds, administrators’ deeds, executors’ deeds, quitclaim deeds, etc. The deed to use depends on the language of the deed, the legal capacity of the grantor and other circumstances.

Deed of Trust or Trust Deed: A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the “trustor.” The party to whom the legal title is conveyed (and who may be called on to conduct a sale thereof if the loan is not paid) is the “trustee.” The lender is the “beneficiary.” When the loan is paid off, the trustee is asked by the beneficiary to issue a “recon” or reconveyance. This reconveyance corresponds to the release that the holder of a mortgage executes when the mortgage is paid off.

Defective Title: 1) Title to a negotiable instrument obtained by fraud. 2) Title to real property which lacks some of the elements necessary to transfer good title.

Demand Note: A note having no date for repayment, but due on demand of the lender.

Deposit: 1) Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. 2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.

Divorce Decree: A court’s formal order granting a termination of marriage. If a divorce case goes to trial and the judge issues a judgment, the judgment is confirmed when the decree is signed and dated by the judge and court clerk.


E

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Earnest Money Deposit: Down payment made by a purchaser of real estate as evidence of good faith; a deposit or partial payment.

Easement:A recorded right of use affecting real property. An easement could be for utility purposes or for ingress or egress, for example. All easements of record would be shown originally on the title insurance commitment.

Eminent Domain: The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value. (See Condemnation.)

Encumbrance: A liability, claim or lien attached to, and therefore binding, upon real property.

Escrow: Delivery of all necessary sale instruments, including funds.

Executor: The person chosen in the will to carry out, or execute, the will’s terms, now often called the Personal Representative.


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Federal Tax Lien: Nonpayment of any federal tax, including income tax, can result in a Federal Tax Lien being attached to taxpayer’s property.

Fee Simple: An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.

Final Decree: A decree documenting the final decision of all pending matters in a case before a court.

Fixed Rate Mortgage: A mortgage having a rate of interest which remains the same for the life of the mortgage.

Foreclosure: The selling of a property in order to satisfy a lien against it, ending all rights, interests, or title of owners.

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. For example, a deed may be granted upon the condition that if liquor is sold on the land, the title to the land will be forfeited (that is, lost) by the buyer (or some later owner) and will revert to the seller.

Full Disclosure: In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease.


G

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Gap: The common title industry name for the period from the effective date on the commitment to the day of closing and recording of documents. A “Gap Check” is the title company’s search of the public records for this time period.

H

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Hazard Insurance: Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

Heir: One who receives the estate, or partial estate, of a deceased person by law.

Homestead: A statutory protection from execution or the establishment of title by occupation of real property in accordance with the laws of various states or the Federal Government.


I

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Indemnity Agreement: Agreement stating that Party A will reimburse Party B for any possible damage or loss suffered by Party B.

Instrument: Legal documents, such as deeds, mortgages, assignments, wills, etc., are also known as instruments.


J

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Joint Tenancy: The undivided equal owner interests with right of survivorship in a property held by two or more parties.

Judgment: The final decision in a court of law.


L

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Land Contract: An installment contract for the sale of land whereby the seller (vendor) holds legal title and the buyer (vendee) has equitable title until the sales price is paid in full.

Lease: An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period of time (term) and for a specified consideration (rent).

Legal Description: The description of a parcel of land, identifiable by metes and bounds, or designated as a Lot and/or Block number.

Lender: Any person or entity advancing funds which are to be repaid. A general term encompassing all mortgagees, and beneficiaries under deeds of trust.

Lien: An encumbrance for money against property.

Living Trust: A form of trust created by individuals that generally exists for the life of the trust according to the terms of the trust agreement that created it.

Lot: Referring to any parcel of land.


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Marketable Title: Title that may be sold to a buyer, knowledgeable of the facts and their legal meaning as to liens and encumbrances.

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

Metes and Bounds: Description of land by exact distance and direction.

Mortgage: Legal document showing a lien upon real property in exchange for money.

Mortgagee: The party lending the money.

Mortgagee Policy: Title insurance policy insuring the mortgagee against loss caused by title defects.

Mortgage Broker: One who may carry on the business of dealing in real estate loans via license by the state.

Mortgagor: The party borrowing the money.


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Note: A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage or trust deed.

Notary Public: A person legally empowered to witness or certify the validity of signatures on documents.


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Original Cost: The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.

Ownership: Rights of ownership include use and enjoyment of property, excluding others.

Owner’s Policy: A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner’s title.


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Parcel: Any area of land contained within a single description.

Partial Release: A partial release of property covered by a mortgage.

Payoff: Full payment of an existing loan.

PITI: A payment that combines Principal, Interest, Taxes, and Insurance.

Plat Book: A book that contains plat maps and numbers for a designated area.

Plat Map: A map of a subdivision, showing the division of a parcel of land into lots.

Point of Beginning: Used in metes and bounds descriptions to show where the property begins.

Power of Attorney: Enables one person to act for another.

Priority: The order of preference, rank or position of the various liens and encumbrances affecting the title to a particular parcel of land. Usually, the date and time of recording determine the relative priority between documents.

Priority Inspection: A title term referring to the type of inspection made in connection with insuring a new construction loan. In making the inspection of the property, the title company must be assured that the work of improvement had not yet begun when the lender’s deed of trust was recorded.

Probate: The legal term for the process of administering a deceased person’s estate or property through the state courts. General probate procedure is found in Title xx of the Michigan statutes.

Public Land: Land that belongs to the federal government.


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Quiet Title: Court action establishing ownership to real property, removing any cloud on the title.

Quit Claim Deed: A deed passing any interest, claim or title the grantor may have in the property to the grantee, without warranty of defects in title.


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Recorder’s Office: In Michigan, this is the County Clerk’s office. For further definition, see County Clerk.

Recording: This is the act of filing all documents that affect property for public record for the use of future reference and public notices.

Release: A document releasing property from lien or judgement.

Re-recording: If an error occurred on the original recorded document and is in need of correction, the corrected document must be re-recorded with the County Clerk’s office to show the correction.

Rescind: To cancel a transaction or agreement is to “rescind” it. In title terms, it most often refers to the right of rescission given individuals to cancel home loans when refinancing.

Restriction: As to title, this would mean any limitation on the right of use of a property. A restriction could be created by deed, covenants, or court order.

Right of Way: A strip of land used for roadway or easement purposes.

Revenue Stamps: In Michigan, this is known as Documentary Stamps. For further definition, see Documentary Stamps.


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Second Mortgage: A mortgage that ranks behind the first mortgage in lien priority due to its later filing of record.

Sheriff’s Deed: In Michigan, this means the final step in the official foreclosure of property. This type of deed would be filed after the public sale and court confirmation thereof.

Survey: The measurement of the boundaries of a parcel of land.


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Tax Exemption: Not having to pay property tax or other taxes, granted to religious, educational and governmental organizations.

Tax Lien: Lien against property for nonpayment of taxes.

Tax Roll: A list of descriptions of parcels of property, their owners and tax information, kept by the County Treasurer.

Termination of Joint Tenancy: A document that ends a joint tenancy, filed when one of the tenants dies. Must be accompanied by the original death certificate.

Title: Evidence of ownership of land.

Title Insurance: Generally, the form of insurance that guarantees title to a real property against claims that may arise related to matters occurring prior to the effective date of the policy.

Title Plant: An Michigan title industry term that means the set of title records that are identical to those of the county recorder (clerk). Such a “plant” is required by law to be updated for the abstract company to obtain an Michigan abstractor’s certificate of authority.

Title Report: A report showing the condition of title before a loan transaction. In Michigan, a title report is not an insurance policy according to state insurance commission guidelines. A title report is also known in other states as a Title Search.

Title Search: See Title Report.

Tract: A parcel of land.


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Unencumbered: Free from liens.

Uniform Commercial Code: The set of laws that provide for the legal rules and regulations governing “commercial” or “business” dealings and transactions involving personal property.


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Warranty Deed: A deed used to convey title of property from one party to another, whereby the seller guarantees title to be free from encumbrances.
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