Glossary

Abstract - A title abstract is the notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property. The title agency produces a Binder from the information in the abstract.
Accretion - The buildup of land from natural forces such as wind or water.

Acknowledgment - As a verb, the confirmation by a party executing a legal document that this is his signature and voluntary act. This confirmation is made to an authorized officer of the Court or notary public who signs a statement also called an acknowledgment.

Acre - 43,560 square feet of land.

Administrator - A person appointed by the Court to settle the estate of a person who dies without a will. The feminine form is Administratrix.  Compare, Executor.

Adverse Possession - A claim made against land titled in another person based on open, notorious and hostile possession and use of the land to the exclusion of the titled owner.

Amortization - The periodic principal paydown of a loan.
Approved Attorney - An attorney authorized by a title insurance company to handle closings and render opinions on their behalf.

Appurtenance - Anything attached to the land or used with it that will pass to the new owner on conveyance of the land.

Assignee - One who receives an assignment or transfer of rights. An
assignment of a contract transfers the right to buy property.
Assignor - The one who assigns to another person.

Assumption - Taking over a loan and becoming personally liable for the repayment. Compare, Subject To.

Attachment - Seizure of property through Court process to repay a debt.

Attorney in Fact - A type of agency relationship where one person holds a Power of Attorney allowing him to execute legal documents on behalf of another. Decisions made by the attorney in fact are binding on the principal.

Augmented Estate - To prevent a party from purposely disinheriting a spouse, the surviving spouse can claim a portion of the decedent's augmented estate. The augmented estate includes property given away during life and property sold under terms that were not bone fide and supported by consideration.

Bankruptcy - A provision of Federal Law whereby a debtor surrenders his assets to the Bankruptcy Court and is relieved of the future obligation to repay his unsecured debts. A Trustee in Bankruptcy administers the assets, selling them to pay as much of the debt as possible. If your seller is in bankruptcy, the Trustee in Bankruptcy owns the property and is the party to sign the contract and make decisions.   After bankruptcy, the debtor is discharged and his unsecured creditors may not pursue further collection efforts against him. Secured creditors, those holding deeds of trust or judgment liens, continue to be secured by the property but they may not take other action to collect from the debtor.

Beneficiary - A person named to receive a benefit from a Trust. A
contingent beneficiary has conditions attached to this rights, usually that someone else must die first. 

Binder - A title insurance binder is the written commitment of a title insurance company to insure title to the property subject to the
conditions and exclusions shown on the binder. The binder is delivered to the lender and the settlement attorney.

Bond - An amount of money, often posted with the Court, to guarantee against loss as a result of a possible claim. For example, if there is a Mechanic's Lien against the property, the owner may post a bond and the lien is removed from the property and the parties argue over the money rather than the property.

Building Restriction Line - A required set-back within which no building may take place. This restriction may appear in the original plat of subdivision, restrictive covenants or by building codes and zoning ordinances.

Caveat Emptor - Buyer beware. The buyer must inspect the property and satisfy himself it is adequate for his needs. The seller is under no obligation to disclose defects but may not actively conceal a known defect or lie if asked.

Certificate of Satisfaction - A document signed by the Noteholder and recorded in the land records evidencing release of a Deed of Trust or other lien on the property.

Certificate of Title - A written opinion by an attorney setting forth the status of title to the property. Certificates of title are no longer in common use.

Chain of Title - The series of transactions from Grantor to Grantee as evidenced in the land records.

Coinsurance - When more than one insurance company shares the risk of a particular transaction or series of transactions. Lenders may require co-insurance on large commercial projects. 

Collateral - Property pledged to secure a loan. 

Condemnation - Taking of private property for a public use through exercise of the power of Eminent Domain. The Constitution protects against taking without fair compensation.

Condominium - A system of individual Fee Simple ownership of portions (units) in a multi-unit structure, combined with joint ownership of common areas. Each individual may sell or encumber his own unit. Compare, Cooperative.

Conservator - Also called a Commitee or Guardian, a person designated by the Court to protect and preserve the property of someone who is not able to manage their own affairs. Examples include the mentally incompetent, minors and incarcerated persons.

Contract for Deed - A method of financing where title remains in the Seller's name until the Buyer has paid the full purchase price. A Contract for Deed will normally trigger the Due on Sale Clause in a Deed of Trust but Veterans Administration regulations specifically allow Contracts for Deed without invoking the Due on Sale Clause.
Cooperative - A system of individual ownership of stock in a corporation that in turn, owns the structure. Each owner has an exclusive right to use his individual unit and must pay his portion of the debt encumbering the entire building. Compare, Condominium.

Cotenancy - Ownership in the same land by more than one person. See, Tenancy in Common, Joint Tenants, Tenancy by the Entireties.
Covenant - A written agreement or restriction on the use of land or
promising certain acts. Homeowner Associations often enforce restrictive covenants governing architectural controls and maintenance responsibilities. However, land could be subject to restrictive covenants even if there is no homeowner's association.

Deed - The written document conveying real property. The Deed must be executed (signed), acknowledged, and delivered to the Grantee. Once recorded at the Courthouse, the original piece of paper is not needed to convey title in the future.
Deed of Trust - A voluntary lien to secure a debt deeding the property to Trustees who foreclose, sell the property at public auction, in the event of default on the Note the Deed of Trust secures. Compare, Mortgage.

Deficiency Judgment - If the foreclosure sale does not bring sufficient proceeds to pay the costs of sale and pay the note in full, the holder of the note may obtain a judgment against the maker for the difference.

Delivery - Final, irrevocable, unconditional and absolute transfer. The Grantor must deliver a Deed to the Grantee. A Deed, signed but held by the Grantor, does not pass title.

Dower - A spouse's interest in the property of a deceased spouse.
Abolished in Virginia and replaced by the Augmented Estate concept.  

Due on Sale Clause - A clause in the Deed of Trust that makes the loan non-assumable by providing the note holder may call the loan immediately  due and payable upon a sale or conveyance of the property. The FNMA/FHLMC.  Deed of Trust also prohibits a long term lease or a lease with an option to buy.

Easement - The right to use the land of another for a specific limited purpose. Examples include utility lines, driveways, and Ingress and Egress. Easements can be temporary or permanent.

Eminent Domain - The power of the state to take private property for public use upon payment of just compensation.

Encroachment - The physical intrusion of a structure or improvement on the land of another. Examples include a fence or driveway over the property line.

Encumbrance - Any lien, liability or charge against a property.
Equity Sharing - A form of joint ownership between an owner/occupant and an owner/investor. The investor takes depreciation deductions for his share of the ownership. The occupant receives a portion of the tax write-offs for interest and taxes and a part of his monthly payment is treated as rent. The co-owners divide the profit upon sale of the property. Compare, Joint Ownership.

Escheat - Property that reverts to the state when an individual dies with heirs and without a will.

Escrow - A disinterested third party holds funds or documents on behalf of others and subject to their instructions.

Executor - A person named in a will to carry out its terms and administer the estate. Depending upon the terms of the Will, the Executor may not have power to sell the real estate; that power may rest in the individual heirs. The feminine form is Executrix. Compare, Administrator.

Fee Simple - The absolute total interest in real property. Compare, Life Estate, Reversion.

Financing Statement - Lenders record financing statements to evidence personal property is subject to a lien. The company who finances a new furnace, siding or windows may record the financing statement to evidence they have not been fully paid for.

Fixtures - An item of personal property attached to real property so that it can not be removed without damage to the real property. It then becomes a part of the real property.

Foreclosure - The process by which a lender sells property securing a loan in order to repay the loan. Under a Deed of Trust, foreclosure is by public auction after appropriate advertisement. A Mortgage may require the lender obtain Court approval prior to sale.

General Warranty Deed - The Grantor warrants title against all claims. In Virginia, this warranty includes claims all the way back in time to the King of England. Compare, Quit Claim Deed, Special Warranty Deed.

Ground Lease - The owner grants a long term lease of the land (usually 99 years) and allows the lessee to build and use the land as agreed. At the end of the term, the land and all improvements revert to the owner.

Guardian - One appointed by the Court to administer the affairs of a minor. A guardian ad litem is appointed to protect one's interest in a particular legal action. See, Conservator.

Hiatus - A gap or space left between two parcels of land and not included in the legal description of either parcel. Similar terms are Gaps and Gores.

Homestead Deed - A declaration filed in the land records that an
individual is asserting his homestead exemption. That exemption allows one to protect up to $5,000 in assets (plus $500 per dependent) against the claims of creditors.

Ingress and Egress - Applied to Easements, meaning the right to go in and out over a piece of property but not the right to park on it.
Insurable Title - Title subject to a defect or claim which a title
insurance company is willing to insure against. Compare, Marketable Title.

Insured Closing Letter - An indemnity given to a lender from a title insurance company, agreeing to be responsible if the closing agent does not follow the lender's instructions or misappropriates the loan proceeds.  Lender's usually require an insured closing letter be on file for each settlement.

Intestate - An estate without a Will. Compare, Testate

Joint Ownership Agreement - An agreement between owners defining their rights and responsibilities. The agreement could be between an investor and an occupant or among occupants. If an investor is involved, the investor does not take depreciation deductions and none of the occupant's payment is deemed rent for tax purposes. Compare, Equity Sharing. We always recommend a written joint ownership agreement when unmarried parties acquire property.

Joint Tenancy - Two or more persons own a property. Joint tenants with the common law right of survivorship means the survivor inherits the property without reference to the decedent's will. Creditors may sue to have the property divided to settle claims against one of the owners. Compare, Tenants in Common, Tenants by the Entirety.

Judgment Lien - A judgment automatically becomes a lien against all real property owned by the judgment debtor in the county where the judgment is docketed (recorded). The Statute of Limitations (in Virginia) for a judgment is ten years after conveyance of a property or twenty years after entry of the judgment whichever first occurs.

Land Contract - See, Contract for Deed.

Lender's Title Insurance - A Title Insurance policy covering the lender for the loan amount. The coverage declines as the loan is paid down and when the loan is paid off, there is no further coverage.
Lien - A claim or charge against property. Property is said to be
encumbered by a lien and the lien must be removed to clear title.
Life Estate - The right to use, occupy and own for the life of an
individual. Compare, Fee Simple.

Majority - The age at which a person is entitled to handle his own
affairs. In Virginia, the age is 18.

Marketable Title - Title without defects or claims so as to be readily accepted without fair or reasonable doubt. Compare, Insurable Title.

Mechanic's Liens - The right of an unpaid contractor, laborer or supplier to file a lien against property to recover the value of his work. Virginia allows the claimant to file the lien after title has passed to the new owner and gives the lien priority over the new owner's interest.

Metes and Bounds - A means of describing land by directions and distances rather than reference to a lot number. Generally used when land has not been subdivided into lots.

Mortgage - A voluntary lien filed against property to secure a debt,
usually a loan. To foreclose, the lender must often institute a court
action and the borrower may have the right to reclaim the property after foreclosure. Lenders in Virginia use Deeds of Trust rather than mortgages.   Compare, Deed of Trust.

Note - A written promise to pay a certain sum of money at a certain time.  A negotiable note starts "Pay to the order of" and is transferable by endorsement similar to a check.

Notary Public - One authorized by law to acknowledge and certify documents and signatures. Virginia does not require an applicant pass a test to become a notary.

Owner's Title Insurance - A policy of Title Insurance for the buyer insuring the full purchase price of the property. The owner's policy usually contains an inflation endorsement automatically increasing the coverage each year to keep up with inflation, up to a maximum of 150% of the original policy amount. The insurance premium is paid at settlement, and the coverage continues forever.

Partition - The forced division of land among parties who were formerly co-owners. A partition suit may ask to divide the land or if that is not practical, sell the land and divide the proceeds.

Plat - A map showing the division of a piece of land with lots, streets
and, if applicable, common area.

Pipestem Lot - A lot connected to a public street by a narrow strip of land. Usually several adjacent pipestems are combined to form one driveway with each owner having a mutual-reciprocal easement to use and maintain the driveway to the street.

Power of Attorney - A written document authorizing another to act on his behalf as an Attorney in Fact. One does not need to be a licensed attorney to act as an attorney in fact but, power of attorney forms are legal documents and should only be prepared by a licensed attorney.

Prepayment Penalty - An additional charge imposed by the lender for paying off a loan before the due date.

Quiet Title Action - A suit brought to remove a claim or objection on title.

Quitclaim Deed - A deed releasing whatever interest you may hold in a property but making no warranty whatsoever. Compare, Special Warranty Deed and General Warranty Deed.

Re-issue Rate - A discounted rate for title insurance when the title was previously insured with an owner's title insurance policy issued within the last ten years.

Remainder - An interest in land that is postponed until the termination of some other interest such as a Life Estate. Compare, Fee Simple.

Reversion - A provision in a conveyance that the land will return to the grantor, or his heirs, upon the happening of an event or contingency.  Compare, Fee Simple.

Riparian Rights - The rights of an owner of land adjacent to water.

Special Warranty Deed - The seller warrants he has done nothing to impair title but makes no warranty before his ownership. Builders, trustees and estates often grant by special warranty deed. This is not a concern so long as the buyer gets an Owner's Title Insurance Policy. Compare, General Warranty Deed and Quitclaim Deed.

Statute of Limitations - The time period to file a law suit to enforce a claim or it is barred by law.

Subdivision - Dividing land into lots and streets. The owner signs a Plat and Deed of Resubdivision which is recorded among the land records. The state and county have strict requirements for subdivision of land.

Subject To - Taking title to property with a lien but not agreeing to be personally responsible for the lien. If the holder who forecloses the lien can take the property but may not collect any money from the owner who took "subject to." Compare, Assumption.

Tenants by the Entirety - A husband and wife own the property with the common law right of survivorship so, if one dies, the other automatically inherits. One may not sue the other to Partition the property. A creditor of one may not claim the property or the proceeds of sale. Compare, Tenant in Common, Joint Tenants.

Tenant in Common - Two or more persons own the property with no right of survivorship. If one dies, his interest passes to his heirs, not necessarily the co-owner. Either party, or a creditor of one, may sue to Partition the property. Compare, Tenants by the Entirety, Joint Tenants.

Testate - To die with a Will. Compare, Intestate.

Testator - One who makes out a last will and testament. The feminine form is Testatrix.

Title Insurance - Insurance against loss or damage as a result of defect in title ownership to a particular piece of property. Title insurance covers mistakes made during a Title Search as well as matters which could not be found or discovered in the public records such as missing heirs, mistakes, fraud and forgery.

Title Search - An examination of the public records, including court decisions, to disclose facts concerning the ownership of real estate. The title examiner prepares an Abstract and the title agent prepares a Binder but decisions regarding the legal sufficiency of title or questions requiring legal interpretation must be resolved by a licensed attorney at law.

Trust - A right to or in property held for the benefit of another. A trust may be written or implied. An implied trust is called a Constructive Trust.

Trustee - One who holds property in Trust for another. In Virginia, you may hold title to real property as Trustee without revealing the
Beneficiary's identity provided, the Deed you receive grants you full
trust powers to deal with the property.

Usury - Charging more than the maximum legally permitted rate of interest.  There is no usury limit for loans secured by a first trust.

Wraparound - The debt secured includes an existing debt already on the property.   The payments made to the holder of the wraparound include payments due on the existing loan and the holder must forward the appropriate portion of each payment to the existing noteholder.   Often used to avoid a Prepayment Penalty or a Due on Sale Clause. Can be used to refer to a wraparound Deed of Trust or Contract for Deed.

Zoning - Regulation of private land use and development by local government.

 

     

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