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Glossary

Absolute Auction:
Auction with no minimum bid amount.  The highest bidder wins.

Abstract (of title):
A history of all transactions shown in the public records affecting a particular tract of land.

Acceleration Clause:
A provision is a promissory note that specifies conditions under which the lender may advance the time when the entire debt which is secured by the mortgage becomes due.

Adjustable Rate Mortgage (ARM):
Mortgage loans under which the interest rate is periodically adjusted, in accordance with some market indicator, to more closely coincide with the current rates.

Affidavit:
A written statement made under oath before a notary public or other judicial officer.

Agreement:
A legally binding contract made between two or more persons.

Appraisal:
A report from an independent third party detailing the estimated value of real estate.

Balloon Note/Balloon Payment:
A promissory note with amortization payments scheduled for a long term, usually 30 years, but maturing in a shorter term, often five to seven years.  It requires a substantial final balloon payment for the remaining principal.

Bankruptcy:
A federal court proceeding under the United States Bankruptcy laws where an insolvent debtor either has its estate liquidated and debt discharged, or is allowed to reorganize its affairs under the protection of the bankruptcy court.

Beneficiary:
A person or entity that is legally entitled by a will, trust or insurance policy to receive money or property.

Chain of Title:
The history of successive ownership and transfer in the title to a tract of land.

Clear Title:
Real property ownership free of liens, defects and encumbrances or claims.

Closing (also called settlement):
The completion of a real estate transfer, where the title passes from seller to buyer or a mortgage lien is given to secure debt.

Closing Costs:
Expenses involved in closing a real estate transaction over and above the price of the land.

Clouded Title:
A land title having an irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair it.

Contract of Sale:
Agreement by one person to buy and another person to sell a specified parcel of land at a specified price.

Conveyance:
The transfer of title or property from one person to another.

Deed:
An instrument for conveying real estate Deed of Trust: A form of security instrument for mortgage loans.

Default:
A failure to meet legal or contractual obligation.

Deficiency Judgment:
When the proceeds from a foreclosure sale are less than  the amount due on the debt.

Encumbrance:
Any interest, right, lien or liability attached to a parcel of land (such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden upon the property.

Equity:
The market value of real property, less the amount of existing liens.

Escrow:
Closing a real estate transaction when all required documents and funds are in place with a third party for processing and distribution.

Execute:
To sign a legal instrument.  A deed is said to be executed when it is signed, sealed, witnessed and delivered.

Federally-Insured Loan:
A mortgage loan that originates in a federally- insured government program like the Federal Housing Authority (FHA).

Foreclosure:
A legal proceeding following a default by a borrower in which real estate secured by a mortgage of deed of trust is sold to satisfy the underlying debt.

Instrument:
A written document

Judgment:
The decision of a court regarding the rights of Parties in an action.

Junior Mortgage:
A mortgage lower in lien priority than another.  For Example, a second mortgage or home equity line.

Lawsuit:
A dispute between two or more parties that has been filed in the court system by one of them.

Lien:
A monetary charge imposed on a property, usually arising from some debt or obligation.

Lis Pendens:
A recorded legal notice that there is litigation pending relating to the land, and a warning that anyone obtaining an interest subsequent to the date of the notice be bound by the judgment.

Market Value:
The average of the highest price that a buyer would  pay and lowest price a seller would accept.

Mortgage:
A conditioned pledge of property to a creditor as  security for the payment of a debt.

Note: (Also called a Promissory Note)
A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee.

Power of Attorney:
A written instrument by which one person, the principal, authorizes another, the attorney-in-fact, to act on his or her behalf.

Principal:
A sum of money owed as a debt on which interest Is payable.

Public Records:
Records which by law disclose constructive notice of matters relating to the land.

Real Estate (also called Real Property)
Land and anything permanently affixed to the land such as buildings, fences, and those things attached to the buildings, such as plumbing and heating fixtures, or other such items that would be personal property if not attached.

Recording:
The noting in a public office of the details of a legal document, such as a deed or mortgage, affecting the title to real estate.

Redemption:
The right of the owner in some states to reclaim title to property if he or she pays the debt to the mortgagee within a stipulated time after foreclosure.

Release:
To relieve from debt or security or abandon a right, such as release of a mortgage lien from a part or all of the land mortgaged.

RESPA:
The Real Estate Settlement Procedures Act (12 U.S.C. 2601 et.seq.) that, together with Regulation X promulgated pursuant to the Act, regulates real estate transfers involving a “federally-related mortgage loan” by requiring, among other things, certain disclosures to borrowers.

Satisfaction:
An instrument releasing the lien of a mortgage.

Senior Lien or Mortgage:
If there is more than one lien on land, those liens are ranked by priority.  A senior lien or mortgage is entitled to be paid first in foreclosure or bankruptcy, before a junior lien.

Tenant:
One who has right of possession of land by any kind of title.

Title Defect:
Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership.

Title Insurance Policy:
A contract of title insurance under which the insurer, in keeping with the terms of the policy, agrees to indemnify the insured against loss arising from claims against the insured interest.

Trustee:
Person or entity who is given the legal authority to manage money or property on behalf of somebody else.  In a foreclosure action, this is often the title company.

Trustor:
A person who creates a trust by transferring property to a trustee.  When a borrower signs the Deed of Trust, the borrower becomes a trustor.

Sunburst Realty is the dba of Sunburst Mortgage Corp; a licensed corporation with the California Department of Real Estate.  License Number 00990963.  Sunburst has been licensed with the State of California since 1988.  To access real time licensing information online with the DRE Click Here.



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