Common Title Terms, Defined

common title terms

Learn the definitions of common title terms before purchasing your home.

When navigating a real estate transaction, you will encounter many terms that you may not be familiar with. However, understanding what these terms mean is essential for a smooth transaction. When you work with a title company to clear your title and secure title insurance, a whole new set of terms will appear. Below, we define the most common title terms and the ones you need to know. 

Closing Disclosure

This form is a five-page document that must be provided to the homebuyer three days before closing. The Closing Disclosure outlines every cost associated with the mortgage, loan terms, your projected monthly payments, and how much you will pay in fees and other closing costs. 

Cloud on Title

A cloud on title refers to an outstanding claim on your property. These claims can include an old mortgage or deed of trust, a failure to transfer all interests in a property, a former deed improperly signed, or an unresolved legal debt. 

Escrow Agreement

This common title term refers to the legal agreement between the buyer, seller, and escrow agent. This form defines the arrangement by which one party will deposit an asset with an escrow agent, who makes a delivery to the beneficiary when the conditions are met. 

Examination

Also known as a title search, a title examination refers to the investigation made into the title on behalf of the buyer. This search ensures a clear title can be obtained. During the examination, the title examiner reviews past deeds, wills, and trusts and confirms that prior mortgages, liens, and more have been paid. 

Judgment

A judgment is an official decision rendered by a court regarding a civil matter. The creditor can use this judgment to place a lien on the seller’s property. The seller must then repay the debt before they can sell or transfer the property. 

Judgment Liens

One of the more important common title terms to remember, a judgment lien can be attached to a property and hold up property transfer. A lien is the creditor’s first step in seizing a property. To clear a title, all liens must be paid off. 

Lenders or Loan Policy

Most lenders will require a loan policy when they issue you a loan. This policy is based on your loan amount and protects the lender’s interests in the property. 

Owner’s Policy

The owner’s policy is optional but always recommended. The policy is purchased for a one-time fee and protects the homeowners’ investment in a property as long as they live there. If an issue arises, the homeowner is financially protected. 

Survey 

Surveys are required by the lender to ensure the property is worth the amount they are insuring it for. A survey will reveal the exact property dimensions and location. 

Title Insurance

Finally, potentially the most important of the common title terms you will want to remember. Title insurance protects your title or ownership of the property for as long as you own your home.

A Title Company You Can Trust: Colony Title

At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, and LinkedIn.

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