Glossary of Terms
The delivery of a deed, signing notes and security
instruments (if necessary), payment of liens, disbursing funds
for the sale or loan transaction, and preparing settlement (HUD)
statements. Also referred to as “settlement.”
Construction Loan Draw
Partially disbursing funds from
a construction loan based on construction progress on the property.
A written instrument through which some degree of
real estate ownership is transferred from the grantor to the grantee.
Deeds must meet certain legal requirements to be effective and
should be recorded so that third parties are alerted. Several varieties
of deeds exist.
Delivery of instruments for a sale to
a neutral third party with written instructions for their use.
Generally the buyer.
Generally the seller.
Insured Closing Letter
A document issued by a title insurance
company to protect a mortgagee who is forwarding loan funds to
the company’s agent or attorney against embezzlement or failure
to follow closing instructions.
A legal charge or claim against the property of debtors
to receive payment of their obligations, either voluntarily or
involuntarily. Liens are enforced by the sale of property at the
order of a court. Examples of liens — real estate taxes,
mortgages, and trust deeds. A lien’s effective date is important
because proceeds from a property sale to enforce a lien follow
the liens’ order of priority. First liens are paid first,
second liens second, etc.
A title insurance policy insuring a mortgagee
against loss caused by an invalid title or loss of priority of
Liens to contractors, laborers,
and other material handlers on structures where work has been
performed but payment has not been received. Rights begin when
a contract is signed. A contractor may record a lien up to four
months after work is completed. Before a title insurer provides
a clear title policy for property, lien waivers will be required
from anyone performing work on the site.
Pledge of property as collateral for debt payment.
Also describes the security instrument and promissory note reflecting
the debt and the terms of the debt repayment.
Owner’s Title Policy
Policy insuring the real estate
owner instead of the lien holder.
Power of Attorney
A written instrument through which one
person authorizes another to act for him or her to the limits stated
in the instrument. If used to execute a transaction that will be
recorded, power of attorney must be established before the transaction.
Delivery of a deed, signing notes and security
instruments, and disbursing funds for the sale or loan transaction.
Also referred to as “closing.”
An itemized list of services and
fees associated with a real estate purchase or financing. The
format is a HUD-1 Uniform Settlement Statement.
A type of insurance that insures against defects in title not listed in the title commitment or policy.
Truth in Lending Act
Requires lenders to make credit disclosures to borrowers. Interest
must be shown as the annual percentage rate (APR) to the nearest
1/8%. APR must include charges for loan fees, discount points,
servicing fees, etc., as well as interest.
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