Title FAQ’s

  • Binder — A report issued by a title insurance company setting forth the condition of title to certain property as of certain date, and also setting forth conditions which, if satisfied, will cause a policy of title insurance to be issued. Also called a commitment. A policy of title insurance (used primarily by investors) calling for a reduced rated for a future policy if the property is sold within a specified period.
  • Chain of Title — The chronological order of conveyance of a parcel of land, from the original owner (usually the government to the present owner)
  • Cloud on Title — An invalid encumbrance on real property, which, if valid, would affect the rights of the owner. For example: A sells lot 1, tract 1, to B. The deed is mistakenly drawn to read lot 2, tract 1. A cloud is created on lot 2 by the recording of the erroneous deed. The cloud may be removed by quitclaim deed, or, if necessary, by court action.
  • Commitment —(1) Title insurance term for the preliminary report issued before the actual policy. Said report shows the condition of title and the steps necessary to complete the transfer of title as contemplated by buyer and seller.
    (2) A written promise to make or insure a loan for a specified amount and on specified terms.
  • Deed — Actually, any one of many conveyance or financing instruments, but generally a conveyance instrument, given to pass fee title to property upon sale.
  • Deed in Lieu — A deed from the owner (debtor) to a lender to prevent foreclosure. There are usually statutory provisions as to fairness of value and absence of coercion, which must be recited on the deed
  • Deed in Lieu of Foreclosure — A deed given by an owner/borrower to a lender to prevent the lender from beginning foreclosure proceedings. The validity of the deed depends to some degree on “fairness” under the circumstances, and adequacy of consideration, which will be considered.
  • Egress — A term concerning a right to come and go across the land (public or private) of another. Usually part of the term ingress and egress.
  • Fee Simple — An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.
  • Homestead — The dwelling (house and contiguous land) of the head of a family. Some states grant statutory exemptions, protecting homestead property (usually to set a maximum amount) against the rights of creditors. Property tax exemptions (usually to set a maximum amount) are also available in some states. Statutory requirements to establish a homestead may include a formal declaration to be r
  • Indemnity Agreement — An agreement by which one party agrees to repay another for any loss or damage the latter may suffer.
  • Ingress and Egress — A right to enter upon and pass through land
  • Judgment — The decision of a court of law. Money judgments, when recorded, become a lien on real property of the defendant.
  • Legal Description — A method of geographically identifying a parcel of land, which is acceptable in a court of law
  • Lis Pendens — A legal notice recorded to show pending litigation relating to real property, and giving notice that anyone acquiring an interest in said property subsequent to the date of the notice may be bound by the outcome of the litigation
  • Loan Policy — A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalid title in the borrower, or loss of priority of the mortgage or deed of trust
  • Mechanic’s Lien — A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.
  • Notice of Completion — A notice, recorded to show that construction job is finished. The length of time in which a mechanic’s liens may be filed depends upon when and if a notice of completion is recorded.
  • Owner’s Policy — Title insurance for the owner of the property, rather than a lien holder.
  • Planned (Unit) Development — A subdivision of five or more individually owned lots with one or more other parcels owned in common or with reciprocal rights in one or more other parcels. The lots are generally small, being the exact size of the improvements, or slightly larger
  • Quitclaim Deed — A deed operating as a release; intended to pass any title, interest, or claim, which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor
  • Title Insurance — Insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrance. Protects the Lien holder.
  • Underwriter — One who insures another. A small title insurance company may buy insurance from a larger one (the underwriter) for all or part of the liability of its policies. A larger title company may buy part of the insurance from another company on high liability policies
  • Warranty Deed — A deed used in many states to convey fee title to real property. Until the widespread use of title insurance, the warranties by the grantor were very important to the grantee. When title insurance is purchased, the warranties become less important as practical means of recovery by the grantee for defective title.