Now you’re happy that your finally in escrow. Smooth sailing ahead but suddenly you find out that there is a lot of paperwork to sign and the escrow officer and title company are using words you’ve never heard of. When you look at the paperwork to sign, there’s a lot of words you’re not sure what they mean. You are not alone.
I want to make it easy on you and give you the main terms that are used in a real estate transaction. I put them in a list below. If you have any other terms that are not on the list, just let me know and I’ll define and explain it to you.
Amendment – A change—either to alter, add to, or correct—part of an agreement without changing the principal idea or essence.
Appraisal – An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
Assumption – Taking over another person’s financial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real property.
Beneficiary – The recipient of benefits, often from a deed of trust; usually the lender.
Close of Escrow – Generally the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer becomes the legal owner, and title insurance becomes effective.
Comparable Sales – Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”
Deed of Trust – An instrument used in many states in place of a mortgage.
Deed Restrictions – Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.
Earnest Money Deposit – Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.
Easement – A right, privilege or interest limited to a specific purpose that one party has in the land of another.
Hazard Insurance – Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.
Impounds – A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.
Legal Description – A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
Lien – A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.
Mortgage – The instrument by which real property is pledged as security for repayment of a loan.
PITI – A payment that combines Principal, Interest, Taxes, and Insurance.
Power of Attorney – A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”
Purchase Agreement – The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.
Quitclaim Deed – A deed operating as a release, intending 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 by the grantor.
Recording – Filing documents affecting real property with the County Recorder as a matter of public record.
Wishing you a smooth real estate sale!!