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Glossary of Terms

Abstract: A history of all transactions shown in the public records affecting a particular tract of land.

Closing: This is the final meeting, at which the property is officially purchased, paid for, and signed over. A closing may take place at a lawyer's office, a bank or at the title insurer's office.

Commitment: A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.

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

Easement: 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.

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

Fee Simple Deed: The absolute ownership of a parcel of land. The highest degree of ownership that a person can have in real estate, which gives the owner unqualified ownership and full power of disposition.

Lien: A financial claim on the property. A lien gives a third party the right to a portion of the money from the property's sale. The most common type of a lien is a mortgage, because the bank has a right to a refund of their money from the property's value. However, liens can also be filed by unpaid contractors ("mechanic's liens"), or courts ("judgements").

Loan Policy: Also called "mortgagee policy." A title insurance policy insuring a mortgagee, 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.

Mortgage: A type of lien, in which a bank or a person lends the money to buy a property. The property itself is the collateral in a mortgage, so that the lender can take the property if the owner doesn't comply with the mortgage's terms.

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

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.

Recording: 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.

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

Tax Deferred Exchange: A method by which a property owner trades one property for another without having to pay any federal income taxes on the transaction.

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