We have provided a list of our frequently asked questions and a glossary of terms used in the industry to help you understand these terms.

Frequently Asked Questions

Q: Why do I need title insurance?

A: When you buy a home, you expect to enjoy certain benefits from ownership such as being able to occupy and use the property as you wish, to be free from debts or obligations not created by you and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights. Without an owner’s title insurance policy, you may not be fully protected against errors in the public records, hidden defects not disclosed by public records, or mistakes made during the examination of the title of your new property. As a result, you may be held fully accountable for any liens, judgments or claims brought against your new property. However, your owner’s title policy insures that if such an occasion arises, you will be defended, free of charge against all covered claims and paid up to the amount of the policy to settle valid claims.

Q: What is title insurance?

A: It is an insurance policy that protects the insured against loss should the condition of title to the land be other than as insured. Unlike other types of insurance that offer protection against future possible occurrences, title insurance offers protection against past occurrences which would result in a claim at a future date. Title insurance provides the insured with “peace of mind” in knowing that you are receiving good and marketable title to the real estate you are purchasing.

Q: What issues can a title search reveal?

A: A title search can show any number of title defects, liens, and other encumbrance and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against buyers/sellers and any restrictions or conditions limiting the use of the land.

Q: What is a Closing Disclosure?

A: A Closing Disclosure is a five-page form that provides final critical details about the mortgage loan you have selected. It includes the loan terms, your projected monthly payments, and how much you will pay in fees and other costs to get your mortgage (also referred to as closing costs). Both Buyers and Sellers receive a separate Closing Disclosure with an itemization of their fees only as they pertain to the transaction. This form replaces the old HUD-1 Settlement Statement.

Q: Are there any issues a title search may not reveal?

A: Yes. There are some “hidden hazards” that even the most diligent title search may not reveal. For instance, a previous owner could have incorrectly stated his marital status resulting in a possible claim by his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion due to similar or identical names, and clerical errors in the City/County land records. These defects can arise after you’ve purchased your home and can jeopardize your right to ownership in part or full.

Glossary

Abandonment - The voluntary relinquishment of rights of ownership or another interest (such as easement) by failure to use the property, coupled with an intent to abandon (give up interest).

Abstract of Judgment - A summary of money judgment obtained in court. When this summary or abstract is recorded in the office of the county recorder, in some states the judgment becomes a lien on the debtor's property, both presently owned or after acquired.

Abstract of Title - A summary prepared by a licensed abstractor of all documents recorded in the public records of the political subdivision where the land is located. An abstract in some states or areas is reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document

Abatement - A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment and levy.

Acknowledgment - A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

Adjustable Mortgage Loans - (AML's) Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan. (Also called: Adjustable Rate Loans, Adjustable Rate Mortgages, Flexible Rate Loans, and Variable Rate Loans.)

Administrator/Administratrix - A person appointed by the probate court to carry out the administration or a descendent's estate when the descendent has left no will. If a woman is a appointed she is called an administratrix.

Adverse Possession - A process of acquiring title to real property by possession for a certain (statutory) period of time, in addition to fulfilling other conditions.

Affidavit - A written statement or declaration, sworn to before an officer who has authority to administer an oath.

Agent - One who has authorization, either expressed or implied, to act for or represent another party, usually in business matters, such as issuing title insurance policies on behalf of a title insurer for a portion of the premium.

Agreement of Sale - A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract

Alta - American Land Title Association. An organization composed of title insurance firms the sets standards for the industry, including title insurance policy forms used on a national basis.

Amendment - A change to either alter, add to, or correct part of an agreement without changing the principal idea or essence.

Annual Percentage Rate - (APR) The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. For example: 6% add-on interest would be much more than 6% simple interest, even though both would state 6%. The APR is disclosed as a requirement of federal truth in lending statutes.

Appraisal - An estimate of value of property resulting from analysis of facts about the property. An opinion of value.

Approved Attorney - An attorney whose opinion is acceptable to a title company as the basis for issuance of a title insurance policy by the insurer. The insurer, rather than the attorney, executes the policy.

Bankruptcy - A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor's creditors and the debtor.

Beneficiary - See "Deed of Trust"

Blanket Mortgage or Trust Deed - A mortgage or trust deed that covers more than more than one lot or parcel of real property, and an entire subdivision. As individual lots are sold, a partial reconveyance from the blanket mortgage is ordinarily obtained.

Buydown - A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first one to five years of the loan.

Closing – The final procedure in the real estate sales process, where the sale and pertinent loan are completed by the execution of documents for recording. In some areas, this procedure is known as the closing of escrow.

Cloud of Title – An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair title.

Conveyance – An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.

Commitment – A binding contract with a title company to issue a specific title policy, showing only those exceptions contained in the commitment and any intervening matters after the date of the commitment and prior to the effective date of the policy. The commitment contains all information included in the preliminary title report, plus a list of the title company’s requirements to insure the transaction. It also includes the standard exceptions from coverage that will appear in the policy.

Condemnation – The taking of private property by the government for public use (as for a street or a storm drain) upon making just compensation to the owner. The right or power of government to take property for a necessary public use is called eminent domain

Conveyance – An instrument in writing, such as a deed or trust deed, used to transfer (convey) title to property from one person to another.

Corporation – An entity authorized by law and established by a group of people, the stockholders, which is endowed with certain rights, privileges and duties similar to an individual.

Covenant – (1) A formal agreement or contract between two parties in which one party give the other certain promises and assurances, such as the covenant of warranty in a warranty deed; (2) Agreements or promises contained in deeds and other instruments for performance or nonperformance of certain acts, or use or non-use of property in a certain manner.

Covenants, Conditions and Restrictions – Commonly called CC&R’s, the term usually refers to a written recorded declaration which sets forth certain covenants, conditions, restrictions, rules or regulations established by a subdivider or other landowner to create uniformity of buildings and use within tracts of land or groups of lots. The restrictions also can be established by deed. CC&R’s are sometimes referred to as private zoning.

Decedent – A deceased person.

Decree of Distribution – A probate court decree which determines how the estate of a decedent shall be distributed.

Deed – Written document by which an estate or interest in real property is transferred from to one person to another. The person who transfers the interest is called the grantor. The one who acquires the interest is called the grantee. Examples of deeds are grant deeds, administrator’s deeds, executors’ deeds, quitclaim deeds, etc. The deed to use depends on the language of the deed, the legal capacity of the grantor and other circumstances.

Eminent Domain – The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value.

Deed of Trust or Trust Deed – A written document by which the title to land is conveyed as security for the repayment of a loan or other obligation. It is a form of mortgage. The landowner or debtor is called the trustor. The party to whom the legal title is conveyed (and who may be called on to conduct a sale thereof if the loan is not paid) is the trustee.  The lender is the beneficiary. When the loan is paid off, the trustee is asked by the beneficiary to issue a “recon” or reconveyance. This reconveyance corresponds to the release that the holder of a mortgage executes when the mortgage is paid off.

Deed Restrictions – Limitations in the deed to a property that dictate certain uses that may or may not be made of property.

Defect – A blemish, imperfection or deficiency. A defective title is one that is irregular and faulty.

Defective Title – (1) Title to a negotiable instrument obtained by fraud; (2) Title to real property which lacks some of the elements necessary to transfer good title.

Easement – A right or interest in the use of the land of another which entitled the holder to some use, privilege or benefit, such as to place pole lines, pipe lines or roads thereon.

Eminent Domain – The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value.

Encroachment – the presence of an improvement such as a building, wall, a fence or other fixture which overlaps onto the property of an adjoining owner.

Encumbrance – A right or claim upon real property (land) held by one other than the property owner. Encumbrances are divided into two classes as follows: (1) Liens (mortgages, deeds of trust, mechanics’ liens, local taxes, assessments, judgments, attachments, etc.) and (2) encumbrances other than liens which are limitations on the ownership of the land (such as conditions, restrictions, reservations, easements, etc.)

Endorsement – Addition to or modification of a title insurance policy which expands or changes coverage of the policy, fulfilling specific requirements of the insured.

Escheat – The reversion of property to the state when an owner dies leaving no heirs, devisees or claimants.

Escrow – An independent third party who acts as the agent for buyer and seller, or for the borrower and lender, carrying out instructions of both and disbursing documents and funds. Escrow closes and the transfer of property or document is completed upon fulfillment of certain conditions specified in the written instructions, whereupon the necessary deeds and other instruments are recorded.

Estate – (1) The interest or nature of the interest which one has in property, such as a life estate, the estate of a deceased, real estates, etc.; (2) A large house which with substantial grounds surrounding it, giving the connotation of belonging to a wealthy person.

Executor/Executrix – A person appointed in a will and affirmed by the probate court to cause a distribution of the property, and which can be left by will or inherited. Commonly a synonym for ownership.

Fee Simple – An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly a synonym for ownership.

Fixed Rate Mortgage – A mortgage having a rate of interest which remains the same for the life of the mortgage.

Foreclosure – The sale of property used as security for a debt after default in payment.

Full Disclosure – In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease.

Guardian – A person appointed by a court to manage the person and/or property of one who is legally incompetent to handle his/her own affairs.

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.

Indemnity – Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.

Judgment Lien – A lien against the property of a judgment debtor. An involuntary lien.

Land Contract – An installment contract for the sale of land whereby the seller (vendor) holds legal title and the buyer (vendee) has equitable title until the sales price is paid in full.

Mechanic’s Lien – A lien created by statute for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.

Mortgage – (1) To hypothecate as security, real property for the payment of a debt. The borrower (mortgagor) retains possession and use of the property; (2) the instrument by which real estate is hypothecated as security for the repayment of a loan.

Mortgagee – The party lending money and receiving the mortgage.

Mortgagor – The party who borrows the money and gives the mortgage.

Note – A unilateral agreement containing an express and absolute promise of the signer to pay to a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage or trust deed.

Obligee – One to whom an obligation (promise) is owned.

Obligor – One who legally binds (obligates) oneself, such as a maker of a promissory note.

Owner’s Policy – A policy of title insurance usually insuring the owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner’s title.

Partnership – An association of two or more persons who have contracted to join in business and share the profits.

Party Wall – A wall generally erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.

Personal Property (movable) – Any property that is not designated by law as real property (i.e., money, goods, evidences of debt, rights of action, furniture, automobiles).

Power of Attorney – A document by which one person (called the principal) authorizes another person (called the attorney-in-fact) to act for him/her in a specific manner in designated transactions.

Public Records – The transcriptions in a recorder’s office of instruments that have been recorded—including the indexes pertaining to them.

Quitclaim Deed – A deed operating as a release, intended 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 in the grantor.

Quiet Title – To free the title to a piece of land from the claims of other persons by means of a court action called a quiet title action. The court decree obtained is a quiet title decree.

Real Property (immovable) – Land, from the center of the earth and extending above the surface indefinitely, including all inherent natural attributes and any man-made improvements of a permanent nature placed thereon.  For example: minerals, trees, buildings, appurtenant rights.

Reconveyance – An instrument used to transfer title from a trustee to the equitable owner of real estate, when title is held as collateral security for a debt. Most commonly used upon payment in full of a trust deed. Also called a deed of reconveyance or release.

Recording – Filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors, or other interested parties. Recording is controlled by statute and usually required the witnessing and notarizing of an instrument of record.

Restrictions – Often called restrictive covenants. Provisions in a deed or other instrument whereby an owner of land prohibits or restricts certain use, occupation or improvement of the land.

Right of Way – (1) The right to pass over property owned by another, usually based upon an easement; (2) A path or throughfare over which passage is made; (3) A strip of land over which facilities such as highways, railroads or power lines are built.

Search – In title industry parlance, a careful exploration and examination of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Subdivision – An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks and easements for public utilities.

Subordination Agreement – An agreement by which one encumbrance (for example, a mortgage) is made subject to another encumbrance (for example, a mortgage) is made subject to another encumbrance (perhaps a lease). To subordinate is to make subject to, or to make of lower priority.

Survey – The measurement by a surveyor of real property which delineates the boundaries of a parcel of land. An ALTA survey additionally delineates the exact location of all improvements, encroachments, easements and other matters affecting title to the property in question. A survey may be required by a title insurance company whenever the company is requested to issue ALTA Extended Coverage Policy.

Testate – Leaving a legally valid will at death.

Testator – The person who makes a will.

Title Insurance – Insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens and encumbrances existing as of the date of the policy and not specifically excluded from it. In the event of a claim, the title company provides legal defense from the policyholder and pays any covered losses incurred as a result of such claim.

Title Search – A review of all recorded documents affecting a specific parcel of land to determine the present condition of title. An experienced title officer or attorney reviews and analyzes all material relating to the search and then determines the sufficiency and status of title for issuance of a title insurance policy.

Underwritten Company – A title firm which conducts title searches but is not qualified to insure, and therefore issues policies of a qualified title insurer (underwriter) in return for a portion of the premium.

Variable Interest Rate – An interest rate that fluctuates with the current cost of money, subject to adjustment if the prevailing rate moves up or down.

Vesting – The names, status and manner in which title of ownership is held with a fixed or determinable interest in a particular parcel of real property. Also that portion of a title report or policy setting forth the above.

Warranty Deed – A deed used in many states to convey fee title to real property.

37 Smith Lane, Wayne, NJ 07470

Phone: (973) 389 - 2292

Fax: (973) 389 - 2293

Email: Info@monumenttitleagency.com

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General Inquiries & Title Orders: info@monumenttitleagency.com

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