Education Overview

This Glossary is an alphabetical collection of terms and their definitions that are commonly used by real estate and title insurance professionals.

Scroll through the list or click on a letter to advance rapidly to words beginning with that letter.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

ABSTRACT OF TITLE
A condensed history or summary of all transactions affecting a particular parcel of real property.

ACKNOWLEDGMENT
A formal declaration, made by a person signing a document, that he or she is in fact signing the document and that the signature is his or her free act and deed. The declaration is made before a duly authorized official - usually a notary public.

ACRE
A unit of land measurement equal to 43,560 square feet.

AD VALOREM
According to value. Ad Valorem taxes on a parcel of real property are based on the assessed value of the parcel.

ADVERSE POSSESSION
A method of acquiring title to a parcel of real property, which title is superior to that of all others including the record owner, by means of performing certain acts over a period of time, as prescribed by statute. In Colorado, the period of time is 18 years and the adverse claimant must demonstrate actual, notorious, hostile, visible and continuous possession of the claimed property.

ADJUSTABLE RATE MORTGAGE (ARM)
A loan characterized by an interest rate that may rise or fall periodically in accordance with a pre-selected index. Indexes may vary from lender to lender.

AFTER-ACQUIRED TITLE
Rights to property that inure to a seller after he or she has sold the property. With regard to the sale of a parcel of real property certain deed forms (bargain and sale and warranty deeds) convey after-acquired title automatically such that the interest of a grantee is perfected when rights inure to a remote grantor.

AGENCY
A relationship that is created when one person (the principal) delegates to another (the agent) the right to act on the principal's behalf.

AIR RIGHTS
The right to use and occupy the air space above the surface of a parcel of real property.

A/K/A
Also known as.

ALL-INCLUSIVE DEED OF TRUST
See wrap-around financing.

AMERICAN LAND TITLE ASSOCIATION (ALTA)
A national association of title insurance companies, agents, abstractors and attorneys. The association establishes standardized title insurance policy forms and procedures.

AMORTIZED LOAN
A loan characterized by (1) uniform periodic payments (usually monthly) and (2) a payment amount sufficient to cause the entire debt (principal and interest) to be retired at the end of the loan term. During the life of the loan the principal and interest components of each payment will vary (initially the interest component makes up most of the payment), but the total remains constant. Most residential mortgages are amortized loans. A table showing the principal and interest components of each payment and the remaining balance after each payment is called an amortization schedule. Compare balloon loan.

ANNUAL PERCENTAGE RATE (APR)
A uniform measure of the cost of credit that includes interest, discount points and loan fees. Lenders are required by the Truth-in-Lending Act to disclose the APR of a loan to the borrower.

APPRAISAL
An independently and impartially prepared written statement expressing an opinion of the value of a parcel of real property as of a specific date that is supported by the presentation and analysis of relevant market information.

APPURTENANCE
A right, privilege or improvement that belongs to and passes with a parcel of real property, but is not necessarily a part of the property. For example, a back lot owner may have the right to travel over a designated portion of the land of the front lot owner to access the back lot. This right-of-way is an appurtenance of ownership of the back lot.

ARREARS
That which is unpaid although due to be paid. In Colorado, real property taxes are paid in arrears - that is, taxes accruing in a given year are not paid until the following year.

ASSESSED VALUE
The value that a taxing authority places upon property for the purpose of taxation.

ASSIGNMENT
The transfer of an interest in a right or property from one person to another. For example, a tenant may transfer his or her rights under a lease by an assignment of lease. Or, a lender may transfer its interest in a loan by an assignment of mortgage.

BALLOON LOAN
A loan characterized by (1) periodic payments (usually monthly) that, excepting the final payment, are uniform and (2) a payment amount that leaves a substantial outstanding balance at the end of the loan term, which amount comprises the final payment. A typical balloon loan scenario is monthly interest-only payments and repayment of the entire principal at maturity. Compare amortized loan.

BARGAIN & SALE DEED
A written instrument used to transfer the right, title and interest of a grantor in and to a parcel of real property to a grantee. A bargain and sale deed does not include any covenants, but ownership of the property by the grantor is implied by particular granting clause language. A bargain and sale deed will convey after-acquired title. Compare quitclaim deed and warranty deed.

BASIS
The original amount paid for property, plus capital expenditures for improvements, minus depreciation. Basis is the means by which the Internal Revenue Service determines taxable gains, losses and annual depreciation.

BEQUEST
A gift of personal property made by will. Compare devise.

BILL OF SALE
A written instrument by which one person conveys or transfers all of their right, title and interest in personal property to another.

BINDER
A temporary insurance contract that provides coverage until the policy is issued.

BONA FIDE PURCHASER
One who purchases property in good faith for fair value and without notice of any adverse claim or right to the property by a third party.

BUREAU OF LAND MANAGEMENT (BLM)
The government agency in charge of surveying and administering public lands.

CHAIN OF TITLE
The successive conveyances of a parcel of real property, beginning with the patent from the state or sovereign and running through the conveyance to the current owner.

CHATTEL
An item of tangible or intangible personal property.

CHATTEL MORTGAGE
A mortgage against personal property. Since the adoption of the Uniform Commercial Code, transactions intended to create a security interest in personal property are now generally governed by Article 9 of the U.C.C.

CLEAR TITLE
A title to property that is free from liens, defects or other encumbrances. Also marketable title. Compare cloud on title.

CLOUD ON TITLE
Any encumbrance, unreleased lien or outstanding claim on or against property which, if valid, would affect or impair a title to the property. Also title defect. Compare clear title.

COMMON LAW
A system of jurisprudence, originated in England and later applied in the United States that is based on judicial precedent rather than statutory laws (legislative enactments). Common law is distinguished from civil law, based on the Justinian Code, which prevails in most Western European countries.

COMPARABLE SALES (COMPS)
Parcels of real property, similar in size, location and configuration to a subject property, that have sold within a given time period and are used during the appraisal process to derive a value for the subject property.

CONDEMN
To declare as legally useless or unfit for habitation. A state or sovereign condemns a parcel of real property under its power of eminent domain.

CONDOMINIUM
A system of separate ownership of individual units in a multi-unit development. In addition to the ownership interest that one acquires in a particular unit, he or she is also a tenant in common with all of the other unit owners as to the common areas of the development and the land on which it is located. Compare cooperative.

CONDOMINIUM DECLARATION
A document describing the terms of condominium ownership. It defines the complex and the air spaces, the general common elements and the limited common elements and it establishes the basic rights and obligations of the unit owners. In addition, it provides for the creation of a management association with the authority to collect common expenses and otherwise act for the benefit of all unit owners.

CONSERVATOR
A court-appointed custodian of property belonging to a person determined to be unable to properly manage such property. Also guardian.

CONSIDERATION
Something of value given in return for performance or a promise of performance by another, for the purpose of forming a contract. Without consideration, a contract may not be binding or enforceable.

CONSTRUCTIVE NOTICE
Notice that one exercising ordinary care and diligence as a matter of duty would possess. Constructive notice is imputed by law and is distinguished from actual notice. Also legal notice.

CONTRACT
An agreement between two or more parties that creates in each party a duty to do or not do something and a right to performance of the other's duty or a remedy for the breach of the other's duty. A valid contract requires (1) competent parties, (2) a proper subject-matter, (3) mutuality of agreement, (4) consideration, and (5) mutuality of obligation.

CONTRACT FOR DEED
See installment land contract.

CONVEY
To transfer property from one to another. As used with regard to real estate transactions, it is generally understood to mean the transfer of title to property from one person to another by means of a written instrument such as a deed or bill of sale.

COOPERATIVE
A multi-unit development owned by a corporate or business trust, which trust grants rights of occupancy to individual units by means of proprietary leases or other arrangements. Compare condominium.

COVENANT
An agreement or a promise to do or not do a particular thing. See also restrictive covenants.

COVENANTS, CONDITIONS AND RESTRICTIONS (CCR'S)
Limitations placed on the use and enjoyment of a parcel of real property. Generally, CCR's are associated with condominiums and planned unit developments.

CURTESY
A husband's right, at common law, upon the death of his wife, to a life estate in all of the parcels of real property that she owned or inherited during their marriage, provided that she bore him a child capable of inheriting the property. Abolished in Colorado. Compare dower.

D/B/A
Doing business as.

DEDICATION
A grant of a parcel of real property from a private owner to the public and an acceptance of the property by the proper public authorities on behalf of the public.

DEED OF TRUST
An instrument securing a debt against a parcel of real property in which the debtor (borrower) coveys legal ownership of the property to a trustee to be held in trust for the benefit of the creditor (lender). The trustee re-conveys legal ownership to the debtor when the debt is paid-in-full; or, if the debtor defaults, then the trustee sells the property on behalf of the creditor. In Colorado, the trustee is a public office. Compare mortgage.

DEFAULT
Failure to do something required by duty, which duty arises pursuant to a contract or by law. Two common examples of default with regard to real estate are non-performance of the terms of a purchase and sale agreement and non-compliance with the terms of a loan agreement (especially with regard to payment of the debt).

DEFICIENCY JUDGMENT
A judgment in favor or a secured creditor for the balance of a debt that is not satisfied in-full by the proffered security.

DEVISE
A gift of real property made by will. Compare bequest.

DOCUMENTARY TRANSFER FEE
A tax, based on sales price that is collected by the State of Colorado upon the transfer of a parcel of real property. The tax amount is $0.10/$1,000.00.

DOWER
A wife's right, at common law, upon the death of her husband, to a life estate in one-third (one-half in some states) of all of the parcels of real property that he owned or inherited during their marriage. Abolished in Colorado. Compare curtesy.

DUE ON SALE CLAUSE
A clause in a mortgage that gives the lender the right to demand payment-in-full (acceleration) when the parcel of real property encumbered by the mortgage changes ownership. Due on sale clauses are not a part of VA or FHA mortgages.

EARNEST MONEY
A cash deposit paid by a prospective buyer of property as evidence of good faith and to bind the sale of the property. Earnest money constitutes consideration under a contract.

EASEMENT
A right of an owner of a parcel of real property to make lawful and beneficial use of a parcel of real property belonging to another. The right may be created by an express or implied agreement. The "used" property is referred to as the servient estate, in contrast to the dominant estate. Among other types, easements may be of necessity, as when the owner of landlocked property needs to cross another's property to access his or her own, negative, as when the servient estate owner is restricted from doing certain acts, or public, as when the beneficial use is enjoyed not by a dominant estate owner, but rather, by everyone.

EGRESS
A place or means of going out or exiting. Also, the act of going or coming out. Compare ingress.

EMINENT DOMAIN
The right of a state or sovereign to take a parcel of real property for public use without the consent of the owner of the property. Under state and federal laws, just compensation must be paid to the owner. See condemn.

ENCROACHMENT
The intrusion of a structure, part of a building, or obstruction over or upon a highway, sidewalk, easement, or a parcel of real property belonging to another.

ENCUMBRANCE
Any impediment to clear title. For example, a lien, lease or easement.

ENDORSEMENT
A written change to, or modification of, a title insurance commitment or a title insurance policy.

EQUITY
The fair market value of property less the debt that encumbers it.

EQUITY OF REDEMPTION
The right of the "owner" of a parcel of real property to redeem (buy back) the property after its sale pursuant to foreclosure. In Colorado, following a foreclosure sale legal ownership of the property passes to the purchaser at sale. The owner retains an equitable interest in the property by virtue of a statutory right to redeem. The redemption period is 75 days for all property except agricultural, for which the period is 180 days.

ESCHEAT
A procedure whereby documents, money and/or other things of value are deposited with a neutral third party (the escrow agent) pursuant to a contract or other agreement. Upon completion of the mutual obligations arising under the agreement the escrow agent distributes each of the items held in escrow to the appropriate party as set forth in the agreement. The sale and purchase of a parcel of real property is typically handled through escrow.

ESTATE
In a narrow sense, the degree, quantity, nature and extent of a person's interest in or ownership of a parcel of real property. As used in this sense, an estate is either freehold or leasehold. In a broader sense, all of the property (real and personal) that a person owns.

EXCEPTIONS (B2'S)
On a title insurance commitment, a list of items that, absent removal by discharge, extinguishment or endorsement, will be limitations on coverage under the title insurance policy. The list includes standard exceptions related to unpaid taxes, parties in possession, easements, boundary line conflicts, encroachments and mechanic's liens, as well as any additional defects or encumbrances discovered upon an examination of the record title of the subject parcel of real property.

FEDERAL HOUSING ADMINISTRATION (FHA)
A division of the Department of Housing and Urban Development (HUD). It insures residential mortgage loans made by private lenders.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
"Fannie Mae" is a tax paying corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages that are FHA-insured or guaranteed by the Veterans Administration (VA).

FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
"Freddie Mac" is a quasi-governmental agency that purchases conventional mortgages in the secondary mortgage market from depository institutions and HUD-approved mortgage lenders.

FEE SIMPLE ABSOLUTE
See freehold estate.

FIDUCIARY
A person in a position of trust, responsibility and authority (i.e. an agent) who obligates him or herself to act on behalf of another and who assumes a duty to act in good faith and with care, candor and loyalty in fulfilling the obligation.

FINANCING STATEMENT
A document that creates a security interest in fixtures or personal property. Akin to a chattel mortgage, financing statements are a product of the Uniform Commercial Code.

FIXTURE
An article of personal property that is permanently attached to a parcel of real property and, as such, becomes a part of the property.

F/K/A
Formerly known as.

FORECLOSURE
The procedure by which a person's property is sold to satisfy an unpaid debt. In Colorado, a foreclosure of a parcel of real property pursuant to a deed of trust is handled by the public trustee for the county in which the property is located. Foreclosures pursuant to encumbrances other than deeds of trust (i.e. mortgages, judgments, mechanics liens, etc.) are handled by the courts.

FORECLOSURE GUARANTEE
A title insurance company product in the form of a report listing all of the interests in a parcel of real property that are subordinate to a lien that is being foreclosed.

FREEHOLD ESTATE
An estate in fee or a life estate. A fee estate is characterized by complete ownership, that is, possession, enjoyment and the right of disposition (by sale or devise) of a parcel of real property. The "largest" fee estate (measured by the bundle of rights associated with it) is fee simple absolute - an estate of virtually limitless duration, free of any conditions or limitations. Other "lesser" fee estates include fee simple conditional, fee simple determinable and fee tail. A life estate is of limited duration, the duration being measured by the life of the owner or by another (pur autre vie). A proscription against waste is an important limitation on life estates. Compare leasehold estate.

GRANTEE
One that acquires property or a right in property by deed or other written instrument. The purchaser of a parcel of real property.

GRANTOR
One that conveys property or a right in property by deed or other written instrument. The seller of a parcel of real property.

HEREDITAMENT
Any property (real or personal, tangible or intangible) that can be inherited.

HIDDEN DEFECT
An encumbrance on a title to a parcel of real property that is not apparent in the public records; for example, an unknown heir, a secret marriage or a forged deed.

HOMESTEAD
The house, outbuildings and surrounding land owned and used as a dwelling (residence) by the head of a family. A declaration of homestead as to a qualifying parcel of real property effectuates a homestead exemption whereby creditors are prevented from levying against the property (up to an amount set by state statute). Colorado law protects up to $45,000.00 of equity in homestead property.

HYPOTHECATE
To use property to secure a debt without giving up possession of it.

IMPOUND ACCOUNT
An account maintained by a lender on behalf of an owner who has given the lender a security interest in a parcel of real property. The account is used to pay property taxes, mortgage insurance premiums and/or future insurance policy premiums required by the lender to protect the security interest. The impound account is funded with a portion of the monthly mortgage payment. Also reserve account or escrow account.

IMPROVEMENT
An addition to vacant land, such as a building, road, fence, pipeline, etc. Improvements tend to increase the value of vacant land.

IMPROVEMENT LOCATION CERTIFICATE (ILC)
A drawing of a parcel of real property prepared by a licensed surveyor that shows the location of improvements to, and easements across the property, as well as encroachments onto the property by improvements located on adjoining properties. An ILC is not a survey of the property.

INDEMNIFY
To secure against loss or damage that may occur in the future, or to provide compensation for loss or damage already suffered.

INGRESS
The power or liberty of access. Also, the act of entering. Compare egress.

INJUNCTION
An equitable remedy in the form of a court order compelling a party to do or refrain from doing a specified act.

INSTALLMENT LAND CONTRACT
A method of selling and financing a parcel of real property whereby the seller retains title to it but the buyer takes possession and makes periodic payments towards the purchase price. The seller delivers a deed to the property when the total periodic payments equal the full purchase price or as much of the purchase price as is agreed to between the parties. Also contract for deed.

INTESTATE
One who dies without leaving a valid will.

JOINT AND SEVERAL LIABILITY
A form of liability arising in situations involving two or more parties, wherein the entire amount of a liability or potential liability is or can be collected from any party. Most mortgages include a joint and several liability clause.

JOINT TENANCY
A form of co-ownership of property wherein each owner holds an undivided and equal interest in the property and there exists a right of survivorship - upon the death of a joint tenant his or her interest in the property passes to the surviving joint tenant(s). Joint tenancy must be specifically designated in an instrument of conveyance and is never presumed without such a designation. Compare tenancy in common.

JUDGMENT
A final determination of the rights of the parties to a lawsuit.

LEASEHOLD ESTATE
A possessory interest in a parcel of real property created by a lease agreement and generally of a fixed duration. As with life estates, a proscription against waste is an important limitation on leasehold estates. Notable leasehold estates include the tenancy at will (characterized by an uncertain lease term and a right of either party to the lease to terminate the lease upon proper notice) and the tenancy at sufferance or holdover tenancy (characterized by a tenant who remains in possession of the leased property after the expiration of the lease term). Compare freehold estate.

LEGAL DESCRIPTION
A "legal" is a description of a parcel of real property that is sufficient to locate and identify it. Unplatted land is described by relation to known monuments, baselines and meridians. Such a description proceeds by courses and distances (metes and bounds). Platted and subdivided land is generally described by lot and block.

LESSEE
The holder of a leasehold estate by virtue of a lease agreement. A tenant.

LESSOR
One who grants a lease to another, thereby transferring an exclusive right of possession of certain land, subject only to the rights expressly retained by the lessor in the lease agreement. A landlord.

LIEN
A hold or claim that one person has upon the property of another to secure payment of a debt or other obligation. A lien may be voluntary (consensual) as in the case of a mortgage or deed of trust, or involuntary, as in the case of a judgment, tax lien or mechanic's lien.

LIFE ESTATE
See freehold estate.

LINE OF CREDIT
A financing arrangement characterized by (1) the ability to draw funds periodically from an available loan balance and (2) the ability to repay the outstanding balance in-full without terminating the loan agreement or discharging the security instrument. A line of credit is essentially a secured credit card. Also home equity line of credit (HELOC) and open-end mortgage.

LIQUIDATED DAMAGES
A sum, stipulated in a contract and agreed to by the parties thereto, that is a reasonable estimation of damages owing to one party in the event of a breach by the other. Compare specific performance.

LIS PENDENS
Litigation pending. A doctrine under which one who acquires an interest in property involved in an pending lawsuit does so subject to the adjudication of the rights of the parties to the suit. Recordation of a notice of lis pendens effectuates the doctrine.

LLC
Limited liability company.

LOAN ASSUMPTION
A financing arrangement wherein the purchaser of a parcel of real property accepts the obligations of a seller towards the seller's lender. By assuming the mortgage rather than taking title subject to it, the purchaser becomes personally liable on the underlying debt. A necessary pre-condition of a formal loan assumption is an assumable loan. Most conventional loans are not assumable. See due-on-sale clause. Compare subject-to mortgage and wrap-around financing.

LOST INSTRUMENT BOND
A surety bond issued to a Colorado public trustee by an insurance company as a substitute for a lost original promissory note. Colorado law provides that the release form submitted to a public trustee to discharge the lien of a deed of trust must be accompanied by the original promissory note secured thereby. Certain qualifying entities (lending institutions) may indemnify the public trustee in lieu of presenting an original note.

LP
Limited partnership. Compare limited liability partnership (LLP) and limited liability limited partnership (LLLP).

MECHANIC'S LIEN
With regard to real estate, a lien against a parcel of real property for the benefit of someone who has supplied labor or materials for the improvement of the property.

METES AND BOUNDS
A method of describing a parcel of real property. Metes are measures of length and bounds are boundaries. A metes and bounds description begins from a known or established point of beginning and proceeds along courses and distances, eventually returning to the point of beginning. For example, from point A, North 100 feet, then East 90 degrees 100 feet, then South 90 degrees 100 feet, then West 90 degrees 100 feet to the point of beginning.

MINOR
A person under 18 years of age.

MONEY JUDGMENT
A type of judgment in which one party is ordered to pay a sum of money to another. Recordation of a transcript of (money) judgment will create a lien against any and all real property owned by the party so ordered that is located in the county in which the transcript of judgment is recorded.

MORTGAGE
An interest in property (created by written instrument) given by the property owner (mortgagor) to secure an obligation (usually a debt) due the mortgagee. Mortgages are treated as either (1) a conveyance of legal title to the property (title theory) in which case legal title is re-conveyed to the owner when the obligation is fully satisfied, or (2) a lien against the property (lien theory) in which case the lien is released when the obligation is satisfied. The distinction is important in the event of default - in a lien theory jurisdiction the mortgagee is not entitled to possession of the property until the mortgagee has pursued its remedy in foreclosure. Compare deed of trust.

NEGOTIABLE INSTRUMENT
A written instrument signed by a maker or drawer, containing an unconditional promise to pay a certain sum of money, which instrument can be assigned freely for one person to another.

N/K/A
Now known as.

NOTARY PUBLIC
A person authorized by law to attest and certify certain documents by his or her hand and official seal.

NOTICE OF ELECTION AND DEMAND
In Colorado, a document (1) indicating that a lender is the beneficiary of a deed of trust encumbering a parcel of real property, (2) stipulating that the borrower is in default on the underlying obligation, and (3) requesting that the public trustee commence foreclosure proceedings to satisfy the debt. The document is submitted to the public trustee (and recorded) and marks the beginning of the foreclosure process.

OPTION
A right, given for consideration, to purchase or lease a parcel of real property upon specified terms within a specified time

PARTY WALL
A dividing wall between adjoining parcels of real property with different owners.

PATENT OF LAND
An instrument by which the government conveys a fee simple interest in land to another.

PC
Professional corporation.

PERSONAL PROPERTY
Things that are temporary or moveable by nature. Also chattel or personalty. Compare real property.

PERSONAL REPRESENTATIVE
Someone appointed by a probate court to administer the estate of a deceased person.

POWER OF ATTORNEY
A written instrument by which one person (the principal) appoints another (the agent or attorney-in-fact) and confers upon the agent the authority to perform certain specified acts. A power of attorney may be general (authorizing the agent to carry on all of the business of the principal) or special (authorizing the agent to carry out a specific business transaction). A power of attorney that becomes effective upon the disability or incapacity of the principal is a durable power of attorney.

PROMISSORY NOTE
A written instrument acknowledging a debt and promising repayment.

PRORATE
To allocate the proportionate share of an obligation paid or due to be paid between a buyer and a seller.

PUBLIC TRUSTEE
In Colorado, a government office created by statute for the purpose of releasing deeds of trust and administering foreclosure proceedings related to deeds of trust. In some states the trustee named in a deed of trust is private (i.e. a title company). Colorado deeds of trust name the public trustee for the county in which the encumbered parcel of real property is located.

PURCHASE MONEY MORTGAGE
A mortgage given to a lender to secure a loan for all or some of the purchase price of a parcel of real property. The lien evidenced by a purchase money mortgage is superior to that of a judgment against the mortgagor, notwithstanding the fact that the transcript of judgment may have been recorded before the purchase money mortgage.

QUITCLAIM DEED
A written instrument used to release the right, title and interest of a grantor in and to a parcel of real property to a grantee. A quitclaim deed does not include any covenants and there is no implication that the grantor even has any right, title or interest in the property. A quitclaim deed does not convey after-acquired title. Compare bargain and sale deed and warranty deed.

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
A federal law enacted in 1974 to standardize real estate settlement procedures in the United States.

REAL PROPERTY
Land, together with the fixtures and improvements located thereon. Ownership of a parcel of real property generally includes rights to use and occupy the space above (air rights) and rights to the earth below the surface. However, air rights and mineral rights may be severed from the property and owned separately. Also realty. Compare personal property.

RECEIVER
A court-appointed custodian who administers property for the court, pending final disposition of a matter before the court.

RECORDATION (OF DOCUMENTS)
The filing of documents with a designated public office (county clerk and recorder) authorized to receive documents for the purpose of establishing a public record. For purposes of real property transactions, a given county clerk and recorder receives documents related to property located in the county. Documents are "stamped" with the date and time received. Recorded documents provide notice to the general public as to the matters set forth therein. The date and time stamps provide a method for assigning priority to liens against property.

REFINANCE
To repay existing debt with new debt funds. The owner of a parcel of real property will refinance his or her mortgage debt to take advantage of more favorable interest rates, to change the loan term and/or to increase the loan amount.

RELEASE OF DEED OF TRUST
An instrument executed by the beneficiary and trustee (in Colorado the Public Trustee) of a deed of trust indicating that the debt secured thereby has been fully-paid and satisfied and that the lien created thereby is to be released and discharged.

RELEASE OF LIEN
An instrument executed by the owner or holder of a lien that effects the discharge or release of the lien as to all of the property it encumbers or as to some specific (defined) portion.

REQUIREMENTS
With regard to a title insurance commitment, the conditions that must be satisfied before the title insurance company will issue an owner's policy insuring marketable title or a loan policy insuring the sufficiency and priority of a mortgage lien.

RESTRICTIVE COVENANT
A promise included in an agreement restricting the use of a parcel of real property. Often the promise relates to the kind of structures that may be erected on the property and generally it is expressed in the form of a deed reservation or deed exception. To enforce a covenant against remote grantees, it must "run with the land."

RIGHT OF FIRST REFUSAL
The right to have the first opportunity to lease or purchase property at terms equivalent to those offered by a third party or at predetermined terms, which right arises upon the owner's decision to lease or sell.

RIGHT OF WAY
An easement for passage or access upon or across a parcel of real property belonging to another.

SEAL
An impression made to attest the execution of an instrument; for example, a notary seal or a corporate seal.

SECURED PARTY
A party holding a security interest. With regard to real estate, a secured party is generally a mortgagee or the beneficiary of a deed of trust.

SECTION
A parcel of real property approximately one mile square in size (640 acres). Thirty-six contiguous sections defining a 6x6 square constitute a township.

SEISIN
In early English property law, seisin described the interest in land of one who held a freehold estate. One did not "own" real property - the sovereign (king) was the owner of all English lands. However, seisin was more than mere possession. Today the term is synonymous with ownership.

SETTLEMENT STATEMENT
With regard to a real estate sale transaction, a document, usually prepared by a title company and signed by the buyer(s) and seller(s), that sets forth charges against, credits to and adjustments between the parties. Settlement statements are prepared and signed as a part of refinance transactions as well. For some transactions (generally, those involving residential real estate), RESPA requires the use of a standardized form known as the HUD-1 Settlement Statement (HUD). Also closing statement.

SPECIAL ASSESSMENT
A charge against a parcel of real property imposed by a public authority to pay the cost of public improvements such as street lights, sidewalks, curbs and gutters, etc.

SPECIFIC PERFORMANCE
A remedy available to an aggrieved party to a contract compelling the defaulting party to fulfill the exact terms of his or her promise or obligation. Compare liquidated damages.

STATUTE OF FRAUDS
A state law (in Colorado and elsewhere), patterned after an old English law and providing that certain contracts must be in writing in order to be enforceable. Contracts for the sale and purchase of a parcel of real property and long term (more than one year) lease agreements are covered by the statute of frauds.

SUBJECT-TO MORTGAGE
A purchase arrangement wherein the buyer of a parcel of real property agrees that a mortgage against the property to be purchased shall be permitted to remain a lien upon sale. Unlike a loan assumption, the subject-to buyer does not become personally liable on the underlying debt. However, the buyer does assume the risk of the consequence of non-payment of the debt (foreclosure) by the seller. Compare loan assumption and wrap-around financing.

SUBORDINATE
To assign a lower priority. With regard to a parcel of real property, the holder of a lien accorded higher priority by virtue of time of recording may agree to a lower priority relative to another lien. Such an agreement (a subordination agreement) is made and entered into between the respective lien holders and is recorded so as to provide notice of the changed order of priority.

SUBROGATION
An equitable doctrine holding that when a third party pays a creditor on behalf of their debtor, the third party succeeds to the creditor's rights against the debtor.

SUB-SURFACE RIGHTS
Ownership of, or rights to use, the earth (generally the minerals) below the surface of a parcel of real property. Compare air rights. See also real property.

SURETY
One who agrees to pay money or perform other acts in the event that his or her principal fails to do so. Also guarantor.

TAX-DEFERRED EXCHANGE
A transaction, provided for under Section 1031 of the Internal Revenue Code, whereby the owner of business or investment property (real or personal) can defer recognition of capital gains taxes associated with the sale of such property by reinvesting the equity from the sale into other "like-kind" property of equal or greater value. Also 1031 exchange.

TAX LIEN
A statutory lien on property for taxes due, which lien gives the taxing authority a security interest in the property.

TAX SALE
The sale of a parcel of real property by the county treasurer for the county in which the property is located to satisfy a debt resulting from the nonpayment of general or special property taxes. Compare foreclosure.

TENANCY IN COMMON
A form of co-ownership of property wherein each owner holds an undivided interest in some percentage (not necessarily equal) of the property. A tenancy in common does not include a right of survivorship; - upon the death of a tenant in common his or her interest in the property descends to heirs or passes by will. Compare joint tenancy.

TITLE INSURANCE POLICY
A form of insurance issued by a title insurance provider that is applicable to a parcel or parcels of real property and insures (1) the property owner(s) or lessor(s) as to vesting, clear title and access, and/or (2) a lender with a lien secured against the property as to the sufficiency and priority of the lien instrument. Coverage provided by a title insurance owner's or loan policy is limited by exclusions (set forth on the policy jacket) and exceptions. Coverage under any policy may be expanded by endorsement.

TITLE INSURANCE COMMITMENT
A report issued by a title insurance company, or its agent, showing the current condition of title to a parcel of real property and setting forth the requirements that must be satisfied in order to issue a title insurance policy. Also commitment or binder. Compare title insurance policy.

USURY
An unconscionable or exorbitant rate of interest. A usurious loan carries an interest rate in excess of that permitted by law.

VEST
To create a present (non-contingent) right or title to a thing. With regard to real estate, vesting denotes ownership - "the property is vested in&" or the form of ownership - "vesting will be as joint tenants."

VOID
To have no legal force or effect.

WAIVE
To intentionally and voluntarily relinquish a right or privilege. To refrain from enforcing or requiring performance of a duty by another.

WARRANTY DEED
A written instrument used to transfer the right, title and interest of a grantor in and to a parcel of real property to a grantee. A warranty deed usually includes five covenants: (1) seisin - the grantor is the possessor and owner of the property conveyed and he or she has the right to convey it, (2) quiet enjoyment - the grantee will not be disturbed by someone claiming an interest in the property, (3) no encumbrances - the grantor is delivering clear title except as otherwise stated in the deed, (4) further assurance - if necessary the grantor will procure and deliver additional documents necessary to perfect the grantee's title and (5) forever defend - the grantor will bear the expense of defending the grantee's title against future ownership claims. Warranty deeds may be general or special (in which case the last covenant is limited to those claiming by, through or under the grantor). Compare bargain & sale deed and quitclaim deed.

WRAP-AROUND FINANCING
A financing arrangement wherein debt secured by an existing (senior) mortgage is incorporated into a new loan secured by a junior mortgage. A common "wrap" scenario is as follows: as part of a sale transaction, the purchaser takes over payment of the seller's existing loan and borrows an additional amount from the seller. The purchaser makes a single payment to the seller (junior lender) and from that payment the seller pays the original lender. The instrument securing the new loan from the seller is called a wrap-around mortgage or an all-inclusive deed of trust. There are risks associated with wrap-around financing (default on the senior loan or a senior loan with a due-on-sale clause), but if the senior loan carries a low interest rate and prevailing rates are high, the arrangement allows the purchaser to receive the benefit of the lower rate. Compare loan assumption and subject-to mortgage.

WRIT OF EXECUTION
A court order authorizing and directing an officer of the court, usually a sheriff, to carry into effect a judgment or decree of the court.