Closing

The delivery of a deed, signing notes and security instruments (if necessary), payment of liens, disbursing funds for the sale or loan transaction, and preparing settlement (HUD) statements. Also referred to as “settlement.”


Construction Loan Draw

Partially disbursing funds from a construction loan based on construction progress on the property.


Deed

A written instrument through which some degree of real estate ownership is transferred from the grantor to the grantee. Deeds must meet certain legal requirements to be effective and should be recorded so that third parties are alerted. Several varieties of deeds exist.


Escrow

Delivery of instruments for a sale to a neutral third party with written instructions for their use.


Grantee

Generally the buyer.


Grantor

Generally the seller.


Insured Closing Letter

A document issued by a title insurance company to protect a mortgagee who is forwarding loan funds to the company’s agent or attorney against embezzlement or failure to follow closing instructions.


Lien

A legal charge or claim against the property of debtors to receive payment of their obligations, either voluntarily or involuntarily. Liens are enforced by the sale of property at the order of a court. Examples of liens — real estate taxes, mortgages, and trust deeds. A lien’s effective date is important because proceeds from a property sale to enforce a lien follow the liens’ order of priority. First liens are paid first, second liens second, etc.


Loan Policy

A title insurance policy insuring a mortgagee against loss caused by an invalid title or loss of priority of the mortgage.


Mechanic’s Lien

Liens to contractors, laborers, and other material handlers on structures where work has been performed but payment has not been received. Rights begin when a contract is signed. A contractor may record a lien up to four months after work is completed. Before a title insurer provides a clear title policy for property, lien waivers will be required from anyone performing work on the site.


Mortgage

Pledge of property as collateral for debt payment. Also describes the security instrument and promissory note reflecting the debt and the terms of the debt repayment.


Owner’s Title Policy

Policy insuring the real estate owner instead of the lien holder.


Power of Attorney

A written instrument through which one person authorizes another to act for him or her to the limits stated in the instrument. If used to execute a transaction that will be recorded, power of attorney must be established before the transaction.


Settlement

Delivery of a deed, signing notes and security instruments, and disbursing funds for the sale or loan transaction. Also referred to as “closing.”


Settlement Statement

An itemized list of services and fees associated with a real estate purchase or financing. The format is a HUD-1 Uniform Settlement Statement.


Title Insurance

A type of insurance that insures against defects in title not listed in the title commitment or policy.


Truth in Lending Act

Requires lenders to make credit disclosures to borrowers. Interest must be shown as the annual percentage rate (APR) to the nearest 1/8%. APR must include charges for loan fees, discount points, servicing fees, etc., as well as interest.