Commonly Used Terms

Attorney Opinion of Title

An examination of title by an Attorney, that is certified to be an true account of the facts about ownership of the property in the transaction

Clear Title

Clear title is when the title company makes sure that the property is free and clear of any liens or judgments.

Closing Cost

The lender/broker estimates the amount of closing costs that the borrower/buyer will pay for the transaction there are two types of closing costs. “Non-recurring closing costs” these are cost that are paid once at the time of purchasing. The other type of closing costs are “Pre-Paid’s” which can recur, things such as taxes and homeowners insurance.

Closing Statement

Also know as a HUD-1, a detailed account of the transaction showing charges, taxes, insurance and any cash that is received from buyer or seller.


A payment made to real estate agents for services provided. Usually it is derived from a percentage of the purchase price.

Deed of Trust

The Deed of Trust is a legal document that borrowers must sign at closing that establishes the lender’s security interest (lien) in the property. After closing the the deed of trust is recorded at the court house in land records. It is evidence of the lender’s lien on the property, and acts as a foreclosure document in the event of default.

Earnest Money Deposit

An earnest money deposit is made by a buyer as a good faith down-payment on a purchase transaction and as security against their performance of the contract. In most cases when the closing occurs the earnest money deposit is then applied towards the total purchase price.


An interest in real property whereby a third party may have rights in the real property of another. An example is an easement granted for an electric utility to run underground cables under land owned by another.


The placement of funds belonging to a third party (lender, borrower, or seller) in the account of an intermediary title company who holds those funds until closing and then disburses them as instructed.

Examination of Title

A review of the information obtained from a title search. Often this review is conducted by an attorney who conducts the closing or works for the title company. The examination is intended to verify ownership (title) to the property, and resolve any issues pertaining to liens, covenants, easements, or other encumbrances.


A ruling by a court of law that affects parties to a civil or criminal action. A judgment may include a requirement that a party pay money damages. A judgment may be recorded with the county land records, and can become a lien on real property if not satisfied.

Legal Description

A written description of the boundaries of the property that is specific enough for a surveyor to find and identify the location of the property.


An encumbrance on property that secures debt owed by the owner of the property to a third-party who is referred to as the creditor or lien-holder. Many times a property cannot be refinanced without paying the lien.

Power of Attorney

A legal document signed by the grantor that gives the named person the right to act on their behalf and in their place as their attorney-in-fact.


The act of placing a deed, deed of trust, or mortgage among the public land records of the county in which the property is located. As part of this process, recording and transfer taxes, as well as recording fees, that are collected at settlement, are remitted to the appropriate county authorities.


A visual inspection of the land and boundaries of a plot of real property that locates the legal borders of the plot as well as the location of any structures on the land.


The manner in which legal ownership of real property is shown the deed.

Title Insurance

A type of insurance unique to real property that protects the lender and the buyer(s) from any defects in title that are not revealed by a title search or title examination. Title defects that are not insured can cause property owners to lose some or all of the value of their property.

Title Search

A comprehensive search of the land records in the county where the property is located. The purpose of a title search is to obtain all publicly recorded information about the property including deeds and the historical chain of ownership, mortgages and release documents, covenants, easements, and liens.