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ESCROW TERMS
K
O
Q
U
W
X
Y
Z
A
ACCELLERATION CLAUSE:
A clause in an installment note or trust deed permitting the payee or beneficiary to declare the entire unpaid balance immediately due and payable upon the occurrence of a stated event, such as the failure to pay an installment when due.
AGENT:
The contractual relationship between a principal and an agent in which the agent is employed to act on behalf of the principal in dealings with third parties.
ASSESSMENT:
Special taxes imposed to pay for public improvements beneficial to a limited area.
ATTORNEY-IN-FACT:
An agent authorized to act for another as granted in a Power of Attorney document.
B
BENEFICIARY:
As used in a trust deed loan, the Beneficiary is the lender. The Beneficiary is the party who obtains the benefit of the security.
C
CHAIN OF TITLE:
The sequence of ownership or title on the property as evidenced by a chronological list of recorded instruments affecting the title to land.
CLOSE OF ESCROW:
Includes the completion of final settlement calculations and the distribution of payments called for in the escrow instructions – loan payoffs, broker commissions, insurance premiums, and the like.
COLLATERAL:
The item used to secure a loan to assure the lender of repayment or provide a source of repayment in the event of default.
COMMUNITY PROPERTY:
Property acquired by husband or wife or both during marriage when not acquired as separate property.
CONSERVATOR:
A person appointed by the court to take care of the person or property of an adult person needing such care.
CONSIDERATION:
The inducement for entering into a contract sometimes known as the sales price.
CONTINGENCY:
A condition of closing which is dependent upon an uncertain future event. Such conditions may prevent close of escrow by one of the principals in the event the contingency cannot be removed, such as Buyer obtaining a new loan, a Seller being able to purchase a new house, or a Buyer being able to sell an existing house.
CONVEYANCE:
A written instrument transferring the title to or interest in real estate from one person or entity to another.
D
DEED:
Written instrument by which the ownership of land is transferred from one person to another.
DUE-ON-SALE CLAUSE:
A provision in a real estate loan calling for automatic maturity at the lender’s option upon the sale or transfer of the real property to a third party. Also called an alienation clause or acceleration clause.
E
EARNEST MONEY:
Funds given as a part of the purchase price to bind a bargain, usually the initial good faith deposit of the Buyer.
EASEMENT:
A right or interest in the land of another which exists apart from the ownership of the land, such as a right to cross over another person’s property. Examples include utilities easements and ingress and egress easements.
ENCUMBRANCE:
A lien or charge on a property encumbering the subject parcel.
ESCROW:
A transaction in which an impartial third party (escrow holder) acts upon written instructions for both seller and buyer (or for borrower and lender) by holding and delivering documents and disbursing funds when certain conditions have been fulfilled.
F
FORECLOSURE:
A proceeding to enforce a lien by a sale of the property in order to satisfy the debt.
G
GRANT DEED:
A written instrument transferring title to real property.
H
HOME WARRANTY PLAN:
A home warranty plan, or home protection plan, is a private insurance plan which insures a property owner against defects which are not covered under a standard homeowner’s insurance policy.
HOMEOWNERS INSURANCE POLICY:
A homeowners insurance policy insures a property against such hazards as fire and other damage or loss.
I
IMPOUND ACCOUNT:
Funds retained by a lender to cover such items as taxes and hazard insurance premiums. Also known as Escrow Account.
INTERSPOUSAL TRANSFER GRANT DEED:
Usually referred to as an “Interspousal Deed”, it is a document that was developed specifically for the purpose of transferring the Community Property interest of a spouse in real property, whether or not the spouse previously held a recorded interest.
J
JOINT TENANCY:
Title held by two or more persons in equal shares with right of survivorship.
L
LIEN:
A charge, claim, or liability upon property for the payment of a debt or performance of an obligation. Examples include taxes, special assessments, judgments, mortgages, and mechanic’s liens.
LOST NOTE BOND:
When a Note is paid, the procedure for eliminating the associated lien from real property is for the paid Note and Deed of Trust to be surrendered to the Trustee, along with a signed Request for Full Reconveyance.
M
MECHANIC'S LIEN:
A statutory lien in favor of laborers and suppliers who have contributed to a work of improvement.
MORTGAGE:
A written document executed by the owner of land by which the land is given as security for the payment of a debt or performance of an obligation.
N
NOTE:
A written acknowledgment of a debt by a borrower including a promise of payment in accordance with specified terms. Also known as Promissory Note.
NOTICE OF COMPLETION:
Following the completion of new construction, this document is executed by the builder/owner to certify that construction has been completed according to plan, following final inspection. No sale transaction may close until the Notice of Completion has been filed.
P
POWER OF ATTORNEY:
A document authorizing another to act on one’s behalf as his agent.
PRELIMINARY TITLE REPORT:
The initial report issued by a title insurer reflecting results of the search of title. This report sets out the terms upon which a title insurer is willing to insure the title, provides a description of the property, the vesting of the title, and any liens and encumbrances against which the company is not willing to insure.
PREPAYMENT PENALTY:
A provision in a note providing for the payment of a penalty in the event the note is paid off prior to its due date
PRINCIPAL:
One who employs an agent to act on his behalf, such as the seller and buyer in an escrow transaction. Also, an amount of debt or the face value of a note or mortgage.
PRORATE:
To divide equally or proportionately as to the time of use. In a sales escrow, it is the custom to prorate taxes, interest, rents, and hazard insurance premiums between buyer and seller in accordance with the respective periods of ownership.
R
REAL PROPERTY:
Land and buildings affixed to the land, including the air space above and mineral rights below, as opposed to personal property or chattels.
RECORDATION:
Filing a document for record in the office of the county recorder, thereby making the document part of the public record.
S
SECURITY INTEREST:
An interest in real property given or pledged to a creditor to secure payment of a debt or performance of an obligation.
STATEMENT OF INFORMATION:
A brief statement of facts relied upon by title insurers to assist in the proper identification of persons.
SUB-ESCROW AGENT:
An approved agent to receive and disburse funds on behalf of the escrow holder or a lender, usually the title company named in the escrow.
T
TITLE:
Evidence of a person’s right, or the extent of his interest, in a property.
TITLE INSURANCE:
An 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 coverage. In the event of a claim, the title company provides legal defense for the policyholder and pays any covered losses incurred as a result of such claim.
TRUST:
A fiduciary relationship in which one party (trustee) holds the title to property for the benefit of another party (beneficiary).
V
VEST:
To give title to or to pass ownership to property.
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