Cutting and Closing the Deal

Here is a listing of terms commonly used when closing real estate transactions:

Abstract of title--A summary of a property’s title including all conveyances, grants, records, wills and judicial proceedings, and a statement of all recorded liens and encumbrances on the property and their current status. Prepared by an abstractor from a search of the title as recorded with the county recorder or other official source.

Act of God--Acts of nature that are beyond human control, such as tidal waves, earthquakes or floods.

Ad valorem--Taxes based on value. The property tax is an ad valorem tax.

Adverse possession--Acquiring title to real estate by open, generally acknowledged, exclusive and continuous possession for a statutory period of time.

Affidavit of title--Sworn written statement by the seller that there are no known defects in the title and he is in rightful possession of the property.

Assignment--Transfer of title, interest or right in a property from one person to another.

Buyer’s closing costs--Escrow costs to the buyer that include his prorated share of interest, property taxes and other items.

Certificate of insurance--Document issued by an insurance company to verify that the insured held a policy as of a given date.

Certificate of title--Statement by a title company as to the status of the title to a property based upon a review of public records.

Chain of title--Recorded history of conveyances of a property’s title and encumbrances affecting title.

Clear title--Marketable title; one free of clouds, liens, encumbrances, defects or disputed interests.

Closing--Legal transfer of title from the seller to the buyer.

Closing costs--Costs to buyer and seller to close sale of a property. Such costs may include title insurance, credit reports, recording fees and escrow fees.

Closing statement--Also called a settlement statement. Detailed cash accounting of a real estate transaction, usually prepared by an escrow officer, broker or attorney.

Conveyance--Transfer of title to real property through a written instrument such as a deed of trust.

Deed--Instrument that conveys or transfers title to land or other real property.

Escrow--(1) Deposit by a party to a transaction of documents, money or other things of value with a third party, known as the escrow agent. When specified conditions are met, escrow agent will deliver the deposited funds to another party to the transaction. The escrow agent’s duties are set forth in an agreement between the agent and the parties to the transaction.

(2) Period between an agreement of terms and final settlement of conditions.

Grant deed--Type of deed used to convey real property. Contains warranties against prior encumbrances or conveyances.

Hazard insurance--Property insurance that covers hazards such as floods, fires or windstorms.

Impound account--Money held by a lender for payment of taxes, insurance or other debts against real property.

Joint tenancy--Interest in real estate owned by two or more persons with rights of survivorship. Title is held as if all the owners collectively are one person. On the death of one of the joint tenants, the surviving tenants receive the deceased tenant’s interest by the right of survivorship. Consequently, the decedent’s interest cannot be transferred by will or descent.

Quit-claim deed--Deed of conveyance in which the grantor transfers all his interests in the property without making any guarantees. Used to release property from claims to facilitate the transfer of title.

Title--Right to ownership of land.

Title company--Company that provides title insurance for real property.

Title insurance--Comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any encumbrances or liens thereon.

Uniform settlement statement--Statement required in a transaction covered by the Real Estate Settlement Procedures Act (RESPA). Requires disclosure to borrowers,lenders and sellers of settlement costs and disbursement of closing and selling costs.

Warranty deed--Deed in which the grantor warrants clean title to the property.

Reprinted from “Real Estate Glossary” by Kenneth Leventhal & Co.