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ABANDONMENT - The voluntary relinquishment of rights of ownership or another interest (such as rights to an easement) by failure to use the property, coupled with intent to abandon (give up the interest).

ABATEMENT – A reduction or decrease. Usually applies to a decrease of assessed valuation of property for ad valorem taxes.

ABSTRACT – An abbreviation of the cardinal aspects of all recorded deeds, mortgages, leases, and other instruments affecting the title to a particular piece of land.

ADVERSE POSSESSION – A process of acquiring title to real property by possession for a certain (statutory) period, in addition to fulfilling other conditions.

AFFIDAVIT – A written statement or declaration, sworn to before an officer who has authority to administer an oath.

AGENCY – The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

ALTA - American Land Title Association, a national association of title insurance companies, abstractors and attorneys specializing in real property law. Its headquarters are in Washington, D.C.

AMENDMENT – A modification to an existing contract, mutually agreed to by all parties.

AMORTIZATION – This term has developed through French and Old English from the Latin Works “mort” or “mort” meaning death or dead. It is the killing off an existing debt by regular partial payments. The word “mortgage” is also derived from the same Latin root.

APR – Annual Percentage Rate. The yearly interest percentage of a loan as expressed by the actual rate of interest paid.

Appraisal – An estimate of value of property from analysis of facts about the property; an opinion of value.

BROKER – One who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.

BUYER REPRESENTATION AGREEMENT – A contract that establishes a broker-buyer agency relationship.

CERTIFICATE OF TITLE – In areas where attorneys examine abstracts or chains of tile, a written opinion, executed by the examining attorney stating that title is vested as stated in the abstract.

CHAIN OF TITLE – Beginning with a conveyance out of an original source of title such as a government, each succeeding deed, will or other medium which conveys and transfer the title to succeeding owners, constitutes a link in the chain of title. The chain of title is the composite of all such links.

CLOSING – In some areas called a “settlement.”  The conclusion of the sales transaction when the seller transfers title to the buyer in exchange for consideration. In Texas, these proceedings are usually held at a Title Company.

CLOSING COSTS – Costs the buyer must pay at the time of the closing in addition to the down payment, which may include points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, appraisals, prepayments for property taxes, deed recording fee, and homeowner’s insurance.

CLOSING DISCLOSURE – The five-page Closing Disclosure must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all the costs associated with their mortgage transaction.

CLOSING STATEMENT – A summation, in the form of a balance sheet, provided at closing, showing the amounts of debits and credits to which each party to a real estate transaction is entitled.

CLOUD ON TITLE – An irregularity, possible claim, or encumbrances which, if valid, would affect or impair the title.

COMMISSION – The amount due a real estate broker, mortgage loan broker or real estate professional for services performed in such capacity.

COMMON AREAS – Areas within an HOA/POA covered space which may include community pools, amenity centers, sidewalks, parks, picnic areas. It may also include hallways and lobby areas in condominium d

COMPARABLE SALES – Sales with similar characteristics to the subject property, uses for analysis in the appraisal. Commonly called “comps.”

COMPARATIVE MARKET ANALYSIS (CMA) – A report provided by a real estate agent that evaluates comparable homes taking into consideration location, condition, size, features, etc. to give value a subject property.

CONDOMINIUM – The absolute ownership of a unit (generally in a multi-unit building) based on a legal description of the airspace the unit occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.

CONSUMMATIONS – Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction.

CONTINGENCY – An act that must occur prior to making a contract binding. In real estate terms, these can include the sale of a current home, financing, and appraisal contingencies.

CONTRACT – Same as “agreement,” but usually more formal.

COVENANT – A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as covenants of warranty in a warranty deed.

DEED – A written document by which title to real estate is conveyed from one party to another.

DEED RESTRICTIONS – Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.

DEFAULT – Failure to perform a promised task or to pay an obligation due.

DEFECT – A blemish, imperfection, or deficiency. A defective title is one that is irregular or faulty.

DEPRECIATION – Loss in value occasioned by ordinary wear and tear, destructive action of the elements or functional or economic obsolescence.

EARNEST MONEY – Down payment or a small part of the purchase price made by a purchaser as evidence of good faith.

EASEMENT – A right held by a person to enjoy or make limited use of another’s real property. The most common type of easement is the right to travel over another person’s land, known as a right of way. In addition, property owners commonly grant easements for the placement of utility poles, utility trenches, water lines or sewer lines.

EMINENT DOMAIN – Refers to the power of the government to take private property and convert it into public use. The Fifth Amendment provides that the government may only exercise this power if they provide just compensation to the property owners.

ENCROACHMENT – The extension of a structure from the real estate to which it belongs across a boundary line and onto an adjoining property.

ENCUMBRANCE – A claim, right or lien upon the title to real estate, held by someone other than the real estate owner.

ENDORSEMENT – Addition to or modification of a title insurance policy that expands or changes coverage of the policy, fulfilling specific requirements of the insured.

ESCROW – Technically, this term strictly refers to a deed delivered to a third person to be held by him until the fulfillment or performance of some act or condition by the grantee. In the title industry, it means the depositing with an impartial third party (typically an escrow agent or title company) of anything pertaining to a real estate transaction including money and documents of all kinds. The money and documents are to be disbursed and delivered to the rightful parties by the escrow agent or title company when all conditions of the transaction have been met.

ESCROW AGREEMENT – A written agreement usually made between buyer, seller, and escrow agent, but sometimes only between one person and the escrow agent. It sets forth the conditions to be performed incident to the object deposited in escrow and gives the escrow agent instructions with respect to the disposition of the object so deposited.

EXAMINATION – In title industry terms, to peruse and study the instruments in a chain of title and to determine their effect and condition to reach a conclusion as to the statue of title.

EXAMINER – Usually referred to, in title industry terms, as title examiner. One who examines and determines the condition and status of real estate titles.

EXCEPTIONS – Insurance policies include a list of items excluded from coverage. Items excluded from coverage can be found in section two of Schedule B of the policy.

EXECUTION – The signing and delivery of an instrument.

EXTRATERRITORIAL JURISDICTION – A half-mile to five-mile area surrounding an incorporated area over which the municipality has the right of subdivision approval and the potential for annexation.

FIDUCIARY RELATIONSHIP – A relationship of trust and confidence, as between trustee and beneficiary, attorney, client, or principal and agent.

FIRST MORTAGE – A mortgage having priority as a lien over any other mortgage or lien on the same property.

FORECLOSURE – A legal proceeding for the collection of real estate mortgages and other types of liens on real estate, which results in cutting off the right to redeem the mortgages property and usually involves a judicial sale of the property to pay the mortgage debt.

FUNCTIONAL OBSOLESCENCE – Obsolescence deriving from a lack of adequate or appropriate equipment, space, or design.

GENERAL WARRANTY – A warranty provision in a deed or mortgage or other real estate instrument containing all the common law items of warranty. Also known as a full warranty.

HAZARD INSURANCE – Real estate insurance protecting against fire, some natural causes, vandalism, et., depending on the policy. The buyer often adds liability insurance and extended coverage for personal property.

HEIR – A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.

HOME/PROPERTY OWNERS ASSOCIATION – A self-governing organization in planned communities where homeowners/property owners collectively pay fees to maintain the units or neighborhood.

HOMESTEAD EXEMPTION – A residence homestead exemption removes a portion of or the total amount of a property’s value from taxation for property tax purposes. A homeowner can apply for the Homestead Exemption once they have lived in the home after January 1.

INFRASTRUCTURE – Roads, highways, sewage and drainage systems and utility facilities necessary to support a concentration of population.

INSPECTION REPORT – An evaluation from an inspector that covers a home’s condition including the electrical system, plumbing, roof, foundation along with additional structural items.

INTERMEDIARY BROKER – A broker who is employed to negotiate a transaction between both parties and who for that purpose may be an agent of both parties to the transaction, acting so as not to favor one party over the other.

INTESTATE – The condition of a property owner who dies without leaving a valid will. Title to the property will pass to his or her heirs as provided in the state law of decent.

JUDGMENT LIEN – A lien against the property of a judgment debtor. An involuntary lien.

LEASE – An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period (term) and for a specified consideration (rent).

LEGAL DESCRIPTION – A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land.

LIEN – The liability of real estate as security for payment of a debt. Such liability may be created by contract such as a mortgage, or by operation of law, such as a mechanics lien.

LOAN ESTIMATE – A three-page Loan Estimate must be provided to the consumer no later than three business days after they submit a loan application for most mortgages. The Loan Estimate provides information about key features, costs, and risks of the mortgage loan for which the consumer is applying.

LOAN POLICY – A policy of title insurance issued to the mortgage lender insuring against loss by defects in, liens against, or unmarketability of title.

MARKET VALUE – An average between the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing, but not compelled to sell, would accept.

– A land description in which boundaries are described by courses, directions, distances, and monuments.

MORTGAGE – A temporary conditional pledge of property to a creditor as security for the payment of a debt that may be cancelled by payment.

MUNICIPAL UTILITY DISTRICT (MUD) - A Municipal Utility District (MUD) is one of several types of special districts that function as independent, limited governments. The purpose of a MUD is to provide a developer an alternate way to finance infrastructure, such as water, sewer, drainage, and road facilities. Managed by a Board elected by property owners within the MUD, a MUD may issue bonds to reimburse a developer for authorized improvements and the MUD will utilize property tax revenues and user fees received from water and sewer services operated by the MUD to repay the debt.

NOTARY PUBLIC – One who is authorized by the state or federal government, to administer oaths, and to attest to the authenticity of signatures.

OPTION – The right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercises the right to purchase.

OWNER’S POLICY – This policy is purchased for a one-time fee and protects a homeowner’s investment in a property for as long as they or their heirs have an interest in the property. Only an owner’s policy protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include errors or omissions in deeds, mistakes in examining records, forgery, and undisclosed heirs.

PITI – A payment that combines Principal, Interest, Taxes, and Insurance.

PLAT – A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land and easements.

PMI – Private Mortgage Insurance is an insurance contract which ensures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.

POWER OF ATTORNEY – A legal instrument authorizing one to function as another’s agent or attorney.

PRELIMINARY TITLE REPORT – A report prepared prior to issuing a title insurance policy that shows the ownership of a specific parcel of land. It includes information about liens and incumbrances that will not be covered under a title policy.

PREMIUM – The amount payable for an insurance policy.

PROBATE – A legal procedure in which the validity and probity of a document, such as a will, is proven.

PROMISSORY NOTE – A written promise to pay or repay a specified sum of a money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.

PUBLIC IMPROVEMENT DISTRICT (PID) - A legal mechanism, described in Texas Local Government Code (LGC), Chapter 372, Subchapter A, for property owners in a defined geographic area to jointly plan and put in place a sustainable funding source that can pay for a set of services to improve their area.

QUIT CLAIM DEED – A deed that does not imply the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.

RECORD TITLE – The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interest.

REALTOR ® - A real estate broker or an associate who holds active membership in a local real estate board that is affiliated with the NATIONAL ASSOCIATION OF REALTORS ® and subscribes to its strict Code of Ethics.

RECORDING – Filing documents affecting real property with the County Recorder as a matter of public record.

REFINANCE RATE – When referring to title insurance, the refinance rate is the reduced rate for a loan policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.

SEARCH – A careful exploration and inspection of the public records to find all recorded instruments relating to a particular chain of title.

SECOND MORTGAGE – A mortgage ranking in priority immediately below a first mortgage.

SETTLEMENT – In some areas, called a “closing.” The process of completing a real estate transaction during which deeds, mortgages, leases, and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.

SMART HOME – A home equipped with lighting, heating, and electronic devices that can be controlled remotely by phone or computer.

SPECIAL WARRANTY DEED – A deed that warrants the title only with respect to acts of the seller and the interests of anyone claiming by, though, or under him.

SQUATTER – One who lives on another's land without legal claim or authority. (See Adverse Possession.)

SUBSURFACE RIGHTS – The rights of ownership to things lying beneath the physical surface of the property.

SURVEY – (1) To determine the location, boundaries, area, or the elevations of land and structures upon the earth’s surface by means of courses in relation to the North Star, and the measuring of angles and distances by using the techniques of geometry and trigonometry. (2) The map or plat drawn by a surveyor that represents the property surveyed land shows the results of a survey.

T-47 – The T-47 Residential Real Property Affidavit (also known simply as the T-47) is a notarized form that complements a survey in a real estate transaction. It is used when both parties to the transaction want to use an older survey from when the seller bought the home and is used to attest the correctness of the survey from the seller’s point of view.

TAX LIEN – The lien that is imposed upon real estate by operation of law that secures the payment of real estate taxes.

TERMINATION OPTION – A buyer pays a fee (known as the option fee) to purchase the unrestricted right to cancel the contract in the time (option period) provided for in the contract.

TITLE – (1) A combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy and dispose of real estate or an inheritable right or interest therein. (2) The rights of ownership recognized and protected by the law.

TITLE COMMITMENT – An offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions and exceptions that will apply to that policy.

TITLE COVENANTS – Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as “common law covenants” includes: (A) covenants against encumbrances; (B) covenant for further assurances (in other words, to do whatever is necessary to rectify title deficiencies); (C) covenant of good right and authority to convey; (D) covenant of quiet enjoyment; (E) covenant of seisin; (F) covenant of warranty.

TITLE DEFECT – (1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.

TITLE INSURANCE – Insurance that protects purchasers of real estate and mortgages against loss from defective titles, liens and incumbrances.

TITLE PLANT – (1) In many areas, synonymous with abstract plant. (2) A geographically filed assemblage of title information which is to help in expediting title examinations, such as copies of previous attorneys’ opinions, abstracts, tax searches, and copies or take-offs of the public records.

TITLE SEARCH – A search and perusal of the public records for recorded instruments that affect the title to a particular piece of land. (See also Abstract and Examination.)

UNDERWRITER – (1) An insurance company that issues insurance policies either to the public or to another insurer. (2) A representative of the mortgage company that evaluates and assesses the financial risk of the person applying for the mortgage.

WATER CONTROL AND IMPROVEMENT DISTRICT (WCID) – a political subdivision of the State of Texas, and is empowered to purchase, construct, operate, and maintain everything necessary to provide water, wastewater, and drainage services.

WARRANTY DEED – A deed containing one or mor title covenants. (See Title Covenants.)