Janis Peterson, GRI, ABR, CSP Realtor®
Philadelphia Main Line Homes and Real Estate
Montgomery, Delaware, and Chester Counties
Relocation Specialist
prudential fox & roach realtors philadelphia real estate main line mainline agents homes for sale listings properties

Telephone: (610) 642-3744 Pure Gold Award Real Estate Web Page e-certified Prudential Fox & Roach Realtors Real Estate
Fax: (610) 658-0267
E-mail: jp4re@pahomes.com
Home page: www.pahomes.com

Personalized Service...Exceptional Results!

Real Estate Information Relocation Questionnaire
MLS Listings of Philadelphia Main Line Homes For Sale
For Philadelphia Regional, Main Line, and Relocation Information,
Please Visit www.pahomes.com

Subject: Defining Title

Like any industry, real estate has developed its share of jargon over time. While the use of legal terms and jargon tends to provide specific and well understood meaning to those who are familiar with the terminology, specialized language may only serve to confuse the average consumer who may only buy or sell a home every 7-10 years.

These meanings can be particularly important when it comes to the question of title to your property. Depending on where your property is located, the laws and definitions of these terms in the law may vary. While you will always want to receive competent professional advice from a real estate practitioner or attorney, the definitions that follow may be helpful in guiding you through the sometimes arcane world of real estate title.

Abstract of title
A chronological summary of the recorded documents and proceedings concerning the title to a specific property. An abstract of title is usually prepared by an attorney or title insurance company. It usually lists all the prior transactions and related documents for a property.

An abbreviation for Covenants, Conditions and Restrictions. CC&Rs normally contain community or condominium association limitations or obligations pertaining to a property. Typically, CC&Rs may be modified by a vote of association members or representatives.

An event or condition that must occur before a contract or contractual provision becomes binding. Home inspections are an example of a contingency. A contingency clause may specify, for example, that a home must pass a particular inspection before a sale is finalized.

A deed is a legal document or sealed instrument often used to convey title to real property. The recording of a deed creates a public record of property ownership. Deeds are among the important documents chronicled in an abstract of title.

Failure to fulfill contractual requirements, make payments or perform other legal obligations. When a party fails to make payments as required under the terms of a contract, for example, they may be said to be in default.

An easement is the right, privilege or interest of one party to that of another party. One common type of easement is a utility easement which gives third parties such as a utility company access to utility lines that pass through your property for purposes of maintenance, upgrade and related needs. Another common type of easement is a parking easement in which one party grants another party right to park in designated areas on its property.

An encumbrance can be anything that limits title to real property such as liens, easements or other restrictions of any kind. An encumbrance represents a claim on the property of some kind.

The equity in any particular property is the value of the property less the value of any mortgage and liens secured against it. For example, a property valued at $200,000 with a $100,000 mortgage and a $10,000 lien would have an equity of $90,000.

Equity of redemption
The right of someone with mortgaged property to redeem that property within a reasonable time after the mortgage has been paid in full.

Fee simple
Absolute ownership of a particular piece of property. Fee simple gives one the right to sell the property.

First deed of trust, or first mortgage
The mortgage or trust deed that has priority claim over all of the other voluntary liens secured by the same property. In the event of foreclosure, the holder of the first deed of trust would receive moneys owed before any of the other voluntary liens or mortgages are satisfied.

Junior loan
A junior loan is a name sometimes applied to a mortgage, deed of trust or lien that has a lesser priority than the first deed of trust.

A type of encumbrance that holds a property as the security for a debt or obligation. A lien gives one party the right to take and hold the real property of another as payment for a debt or obligation.

Mechanic's lien
A statutory lien applied against real property to secure payment for persons who have performed work improving that property. If someone fails to pay for a remodeling job, for example, in some jursdictions a mechanic's lien may be filed against the property.

A mortgage is a legal document that creates a lien against a particular real property to secure repayment of a loan or other obligation. In common usage, mortgage is often taken to mean "home loan." Despite the legal meaning, mortgage is often used interchangeably with deed of trust even though they are technically different legal instruments.

Preliminary title report
A report issued by a title company before the sale of real property indicating the condition of the title. Sometimes called a "prelim" for short.

Quitclaim deed
A quitclaim deed is a legal document that renounces all claims to a specific real property specified by the grantor of the deed. It does not provide a warranty, however.

A legal document commonly used to convey title back to the equity owner of a property once a debt is satisfied or paid in full.

A recording of a real property transaction occurs when a document is placed on file with a public official. A County Recorder, for example, may accept such documents, keep a permanent record of them, and make the documents available for public inspection.

Statement of identity
A statement of identity or statement of identification is a confidential form used by the title company to insure that liens and judgments are not outstanding against an individual.

The title to real property is the evidence of the fullest legal right to its ownership.

Title cloud or defect
A title cloud or title defect is an outstanding encumbrance or claim against a property that prevents a seller from delivering marketable title to a buyer.

Title insurance
A title insurance policy protects an owner from loss due to an imperfect title.

What's in a definition?
When real estate transactions proceed smoothly, most buyers and sellers pay little attention to questions of title. Such matters are important however, as the courts have been filled with cases involving disputed titles where parties were careless or paid little attention to these matters. Title insurance is always recommended to avoid the pitfalls of a clouded title.

By working with competent and reputable real estate and legal professionals many problems can be avoided. The purchase of a new home should be a wonderful experience for any individual or family. By taking a few precautions, you can define title to your property and enjoy your home with peace of mind.

"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, ABR, CSP Realtor® can be reached at (610) 642-3744, e-mail: jp4re@pahomes.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.

Return to Janis Peterson, GRI, ARB, CSP Home Page