10 Title Terms You Need to Know
Buying a new house is such an exciting time, but it can also be confusing if you are unfamiliar with certain terms used in the title and real estate industries. We’ve compiled a list of 10 title terms that are helpful for everyone to know!
1. Cloud on Title
A Cloud on Title is a phrase used to describe when any encumbrance that puts a title to real property into question.
2. Bill of Sale
A bill of sale is a document that transfers ownership of a property from one person to another. This document gives the buyer proof of their purchase.
3. Lien
A lien is a claim or legal right against assets that are usually used as collateral to satisfy a debt. The creditor may be able to seize a property or asset that is the subject of the lien.
4. Encroachment
An encroachment is when a building or new structure extends onto somebody else’s property without their consent.
5. Encumbrance
An encumbrance is a claim made against a property by someone other than the current titleholder. Examples may include leases, liens, easements, or mortgages.
6. Earnest Money
Essentially, earnest money is a deposit a buyer makes on a home they want to purchase. Once earnest money is exchanged, a contact is written up to outline the conditions for refunding the amount.
7. ALTA
ALTA stands for American Land Title Association. It is the national trade association and voice of the abstract and title insurance industry. ALTA members search, review, and insure land titles to protect home buyers and mortgage lenders who invest in real estate.
8. Closing Disclosure
A closing disclosure is a document given to the buyer by the lender that shows the final closing costs for the mortgage along with other terms ad conditions previously established among both parties for the transaction.
9. CFPB
CFPB stands for the Consumer Financial Protection Bureau. This is a federal agency that is responsible for consumer protection in the financial sector.
10. Quitclaim Deed
With a quitclaim deed, the property owner can use this type of deed to transfer the entire interest in the property over to the recipient.