Title Insurance and Closing Services Since 1954
Terms Defined
The Real Estate Industry has its own unique language and, without some knowledge of this language, you may find yourself a bit confused if you become involved in a real estate transaction. Wayne County Title Agency, Inc. has compiled the following Definition of Terms commonly used in the real estate industry. Whether you are entering the real estate market for the first time or have invested in it before, this handy reference will provide an understanding of basic real estate words and phrases.
Abstract (of title)
A summary of public records relating to the title to a particular parcel of land.
Acceleration Clause (in a mortgage)
Specifies conditions under which the lender may advance the time when the entire debt which is secured by the mortgage becomes due. For example, most mortgages contain provisions that the note shall become due immediately upon the sale of the securing land without the lender's consent or upon failure of the landowner to pay an installment when due.
Access
The right to enter and leave a tract of land from a public way. Can include the right to enter and leave over the lands of another.
Acknowledgment
A formal declaration, before a notary public, by a person signing a document that his or her signature on a document is their own and was voluntarily given. Notarized documents may be introduced as evidence in court without further proof to the genuineness of the signature.
Acre
A measure, usually of land, containing 43,560 square feet in any shape.
Adjustable-Rate Mortgage (ARM)
A loan with an interest rate that changes periodically in keeping with a current index, like one-year treasury bills. Typically, however, ARMs usually can’t jump more than two percentage points per year or six points above the starting rate.
Administrator
Person appointed by a court to take possession of property of a person who died without leaving a will, to pay debts and to distribute the property to those entitled to it according to law. Must have a court order to sell the property.
Adverse Possession
The open physical, hostile, notorious, exclusive and must be in continuous possession of another’s real estate. Physical possession of land inconsistent with the right of the owner. In Ohio, a party in adverse possession, must prove in a court action that all requirements are met before title to the property can be changed.
Affiant
Person who makes a voluntary declaration of facts in a written statement and signs it under oath. One who swears to or affirms the statement in an affidavit.
Affidavit
A statement in writing sworn or affirmed to before an official (usually a notary public) who has the authority to administer an oath or affirmation.
Affirmative Coverage
Provisions in title insurance policies by which the insurer affirmatively insures against loss due to specific risks generally not covered by policies; for example, insurance against loss due to violation of usury or truth-in-lending statutes or restrictive covenants.
Agent
One who has authorization, either expressed or implied, to act for or represent another party, usually in business matters.
Agreement of Sale
Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.
All Inclusive Rate
The system of quoting rates for insurance where the stated rate includes the cost of title search, title examination, and the policy. This system is in contrast with the system which quotes the rate charged for the policy only. The cost of search and examination in this latter system is extra.
ALTA
American Land Title Association, a national association of title insurance companies and title abstract organizations. This term is used most frequently as part of the identification of standard policy forms adopted by that association.
Amortize
To reduce debt by means of regular periodic payments which include amounts applicable to both principal and interest.
Annual Percentage Rate (A.P.R.)
The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. The A.P.R. is disclosed as a requirement of federal truth in lending statutes.
Appraisal
An expert judgment or estimate of the quality or value of real estate as of a given date.
Approved Attorney
An attorney approved by a title insurance company as one whose opinions of title will be accepted by the company and relied upon for the issuance of title insurance policies.
Appurtenances
Rights which pass with the title to the land itself. These rights may affect other lands; e.g., an appropriate access easement over adjoining land.
Assessed Valuation
The valuation placed upon land for purposes of taxation. This valuation does not necessarily correspond to the market valuation.
Assessment
A special tax imposed on owners of land by governing bodies for the purpose of paying for improvements (sewer lines, sidewalks, street paving, etc.) which benefit the land of such owners.
Assignment
A transfer of (or the document transferring) a right and/or interest in land. Used often in transferring interests of a mortgagee or of a lessee. Assignor is the person who transfers the interest; assignee is the person to whom the interest is transferred.
Assumption of Mortgage
An obligation undertaken by the purchaser of land to be personally liable for payment of an existing note secured by a mortgage. As between the lender and the original borrower, the original borrower remains liable on the mortgage note.
Attorney in Fact
A person who holds a power of attorney from another to execute specified documents on behalf of the grantor of the power.