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TITLE INSURANCE GLOSSARY OF TERMS

"Title Tuesday" continues with an overview of common title terms.  

Title terminology isn’t part of everyone’s daily vocabulary and sometimes needs translation. 

 

This glossary of title terms can help you understand the title insurance process.

Bargain and Sale Deed
A deed in which the transferor of title conveys the property without guarantee of title or covenants.

Certificate of Occupancy
A document which states that a dwelling has been inspected and has met all building codes. This document is often required by lenders before they will authorize a loan to close.

Chain of Title
The chronological listing of transfers of a piece of property from the original owner to the present owner.

Easement
An interest in another's land that entitles the holder of the easement only to use the land of another in the specified manner.

Encroachment
An improvement/structure that intrudes illegally on another's property.

Endorsement
A title endorsement is an addition or limitation of coverage that is attached to a title insurance policy. Endorsements provide coverage that tailors the policy to fit the needs of the insured for a specific transaction.

Most Lenders typically require that the borrowers purchase the following endorsements to the mortgage insurance policy:

  • 8.1 Environmental Lien Endorsement - Insures the lender against environmental protection liens that are not excluded in the policy.
  • Residential Mortgage Endorsement - Provides affirmative coverage to the lender for covenants, restrictions, and easements.
  • Waiver of Arbitration Endorsement - Allows the lender to file a title claim without committing to binding arbitration.

Fee Simple
The level of ownership in real estate that gives the owner unqualified ownership in a property and unlimited power to sell the property.

Grantee
The person or entity to whom an interest in real property is conveyed.

Grantor
The person or entity that conveys real property.

Joint Tenancy
Joint Tenancy and Tenancy in Survivorship is a form of ownership by two or more individuals together. It differs from other types of co-ownership in that the surviving joint tenant immediately becomes the owner of the whole property upon the death of the other joint tenant.

Legal Description
A formal depiction of the dimensions and location of a property; generally included in deeds, leases, sales contracts, and mortgage contracts for real property.

Lender's Policy (also known as Loan Policy)
A title policy that is issued in the amount of the borrower's mortgage loan. It protects the lender up to the amount of the outstanding balance of the mortgage if a title claim is made. If you are financing a property with a commercial lender, they will require that you purchase a lender's policy of title insurance.

Owner's Policy (also known as Fee Policy)
A title policy that provides coverage up to the purchase price of the property. When compared to a lender's policy, an owner's policy protects owner's equity in the property.

Quitclaim Deed
A deed intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.

Re-issue Rate
A discounted rate of title insurance that is offered when the property being insured was previously insured by an existing title insurance policy. The amount or availability of a discount may vary, based upon the length of time since the issuance of the existing title policy. In refinance transactions, the re-issue rate is often referred to as a refinance rate.

Real Property
Land and any improvements permanently affixed to it, such as buildings.

Recording
The filing of a document with a government agency that becomes part of the permanent records of the registrar's office.

Right of First Refusal
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease a property before he or she offers it for sale or lease to others. Can also require that the person holding the right of first refusal be given the opportunity to match any offers made to buy or lease the property.

Survey
A drawing or map that details the legal boundaries of a property and the location of improvements, easements, rights of way, encroachments, and other physical features.

Tenancy by the Entirety
A form of ownership by husband and wife, whereby each owns the entire property. In the event of the death of one, the survivor owns the property without probate.

Tenancy in Common
A form for taking title when two or more people buy property and own it together with either equal or unequal shares. The shares are treated as the individual property of the person holding the share, and when an owner dies, the ownership of the share passes to the owner's estate, not to the other owner/owners.

Title
A person's right or series of rights to or for ownership in real property.

Title Insurance
A contractual obligation between a homeowner and/or a lender and the title insurance company, wherein the title insurer, in exchange for a premium payment, provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing.

Title Search
A review of all recorded documents affecting a specific piece of property to determine the present condition of the title.

Warranty Deed
A deed that contains covenants and guarantees that affirmatively state that the seller holds clear title to a piece of real estate and has a right to sell it.