Title Insurance Terms that Home Buyers Need to Know

Buying a Home? Here are Some Common Title Insurance Terms

Are you still confused about title insurance? Then before you begin closing on the home, get acquainted with some of the most common title insurance terms you’re likely to hear throughout the process.

While you’re waiting to move forward with the estimate, familiarize yourself with the meaning behind your title agency’s lingo.

Glossary of Title Insurance Terms:

Bundle of Rights – a framework designed to explain the complexities of property ownership such as encumbrances, liens, and rights to real estate specified within a title.

•        right of possession (the property is owned by the title holder)
•        the right of control (the owner controls the property’s use)
•        the right of exclusion (the holder can deny people access to the property)
•        the right of enjoyment (the holder can use the property in any legal manner)
•        the right of disposition (the holder can buy or sell the property)

Certificate of Title – Proof of ownership often written by an attorney and issued by the state that a particular property is as stated (may also contain a list of encumbrances on property).

Chain of Title – A sequence of recorded transactions and transfers that write the history of ownership on a property. Every deed or transferring instrument listed on the title is specified as a link and together these links make up the “Chain of Title”.

Clear Title – title that is free of encumbrances such as liens or hidden owners/heirs that constitute legal questions as to who is the true owner of the property.

Closing – The final step in a real estate transaction during which time deeds, mortgages, leases and other items required to are signed and delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all outstanding liens and transfer of hazard insurance policies have been completed. Sometimes referred to as “settlement” or “escrow.”

Deed Restriction – any restriction contained within a deed which limits the use or occupancy of a property or the purpose, size, type, and location of improvements to be constructed upon it.

Encroachment – extension of an improvement into the lane of another property line or intrusion on real estate.

Endorsement – addition or modification to a title insurance policy based on specific needs or conditions on a property, which expands or changes the coverage of the policy and fulfills the particular requirements of the insured.

Lien – A legal claim to property in place of payment owed for a debt; also known as a money encumbrance. Types of liens include: a mortgage lien, a judgment lien, or a mechanic’s lien.

RESPA – Real Estate Settlement Procedures Act

TILA – Truth in Lending Act

Title Commitment – A document supplied before closing that reflects the title research done on the property. It’s used to inform all parties of any encumbrances against the property and outlines the commitment terms to insure the property (subject to the stated requirements).

TRID – TILA-RESPA Integrated Disclosure

Feel more confident in moving forward with the estimate?

Contact Bay National Title Company to work with a title agency you can trust. We help walk you through the process to make for a quick and easy closing experience for all parties involved.

SOURCES:

Title Insurance Glossary

Bundle of Rights