Real Estate Final Escrow

1 month/1 year

30 days=1 month / for escrow and proration purposes 1 year = 12 months, 52 weeks.

chain of title

A chronological history of property's ownership.

alienation clause

A clause in a loan document allowing lender to call the balance of the loan due upon the sale of the property. Also called the due-on-sale clause

home warranty

A contract between a homeowner and a home warranty company that provides repairs and replacement services for such things as the plumbing, heating, and electrical systems.

executory contract

A contract in which obligation to perform exists on one or both sides.

insurance policy

A contract in which the insurance company (insurer) agrees to indemnify the policyholder (insured) against loss, damage, or liability resulting from the occurrence of some event.

conditional delivery

A delivery that passes possession subject to the happening of a specified event.

earnest money

A deposit made by a purchaser of real estate as evidence of good faith.

affirmative duty

A duty to take a positive step to do something. This means that buyers have a duty to inspect real property before they purchase it

breach of contract

A failure to perform on part or all of the terms and conditions of a contract.

fidelity bond

A form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals.

community property

A form of vesting title to property owned by married persons during their marriage that they intend to own together.

contract

A legally enforceable agreement made by competent parties, to perform or not perform a certain act.

cover letter

A letter that lists or describes accompanying documents and the reasons for including the documents or items.

conditional loan approval

A loan that is approved by the lender, subject to a list of "conditions" that must be met before the borrower receives his or her loan documents for signature.

agreement

A mutual exchange of promises (either written or oral).

eNotary

A notary who electronically notarizes documents (e-notarization).

hazard insurance

A property insurance policy that protects the owner and lender against physical hazards to property, such as fire and windstorm damage.

endorsement

A rider attached to a lender's or an owner's policy to expand or limit the policy coverage.

identity-of-interest transaction

A sale between parties with family or business relationships

deed of trust

A security instrument that is the evidence of the pledge of real estate as collateral for the loan.

acknowledgment

A signed statement, made before a notary public, by a named person confirming the signature on a document and that it was made of free will.

affirmation

A solemn declaration of the truth of a statement.

beneficiary statement

A statement of the unpaid balance of a loan and describes the condition of the debt.

closing statement

A statement that summarizes the final costs in a real estate sales transaction

credit score

A statistical summary of the information contained in the report.

documentary transfer tax

A tax charged by a county to collect fees from the owner of the property whenever real property transfers to another person.

escrow

A temporary, short-lived trust arrangement between parties wishing to transact business and exchange money or property.

"as is"

A term that means that the seller is not going to fix any problems a property may have.

arm's length transaction

A transaction in which neither the buyer nor the seller is acting under duress, the property is on the market for a reasonable length of time, and the buyer and the seller both have reasonable knowledge of the property's assets and defects.

impound account

A trust account required by the lender to collect funds to be set aside for future costs relating to a property to be paid on behalf of the borrower

grant deed

A type of deed in which the grantor warrants that he or she has not previously conveyed the property being granted, has not encumbered the property except as disclosed, and will convey to the grantee any title to the property acquired later

instrument

A written paper signed by persons transferring the title to, or giving a lien on real property, or giving a right to a debt or duty.

closed escrow

All of the conditions of the escrow are met, the loan funded, documents recorded, and the property and funds legally changed hands.

complete escrow

All terms of the escrow instructions have been met or performed (satisfied or waived).

appraisal

An act or process of developing an opinion of value.

gift letter

An affidavit that the funds were a gift and not a loan and will not need to be repaid

credit bureau

An agency that collects and maintains up-to-date credit and public record information about consumers.

binder

An agreement to issue insurance giving temporary coverage until such time as a formal policy is issued.

FAIR Plan

An association of all property insurers licensed to conduct business in California to make property insurance available to people who have difficulty obtaining it from private insurers because their property is considered high risk.

electronic signature

An electronic sound or symbol, attached to or logically associated with a contract or other record and executed by a person with the intent to sign the record.

appraisal management company

An entity through which mortgage lenders order residential real estate appraisals for properties on which they are considering extending loans to homebuyers.

financial closing

An escrow used to close a loan for a refinance or purchase of a property

executed contract

An indication that all parties have performed completely.

cloud on title

Any condition that affects the clear title of real property or minor defect in the chain of title which needs to be removed.

binding contract

Any legal agreement, such as a residential purchase agreement, evidencing a mutual agreement of the buyer and the seller.B

borrower's intention to proceed with the loan

Borrowers must indicate their intention to proceed with a loan transaction before actual loan processing can begin

appraisal contingency clause

Clause in the Purchase Agreement that states that the home must appraise at the contract price (or higher).

contingency clauses

Clauses in the Purchase Agreement that describe an action that must be met by a certain deadline in order to complete the transaction by the closing date.

deed of reconveyance

Deed that conveys title to the property from the trustee to the borrower (trustor)

EFT

Electronic Funds Transfer, also known as a wire transfer. Banks routinely wire monies from account to account via EFT so as to avoid any accrual of interest.

demand for pay-off

Escrow officer sends demand to existing lender if the seller's existing loan is to be paid in full through escrow.

actual notice

Express information of a fact such as seeing the grant deed, or knowing a person inherited a property

default

Failure to pay a debt or on a contract when due.

force placed insurance

Hazard insurance coverage obtained by the lender because the borrower did not maintain adequate insurance coverage

Grantor-Grantee Index

Index that the county recorder lists all recorded documents in alphabetical order according to the names of the grantors and grantees

actual cash value

Insurance policy that covers a structure at the depreciated value of the loss.

flood insurance

Insurance that covers losses from flooding, including structural damage; damage to furnace, water heater, and air conditioner units; flood debris clean up; and the replacement of floor surfaces.

business days

Monday through Friday.

controlled escrows

Non-independent escrows that are owned and operated by persons and entities that are exempt from the Escrow Law.

front ratio

Percentage of the borrower's monthly gross income (before taxes) that is used to pay housing costs, including principal, interest, taxes, and insurance (PITI).

homeowners' insurance

Property insurance that covers the main residence and any attached additions if they are damaged by such perils as fire, windstorm, lightning, theft, or vandalism.

credit report

Report generated by a credit reporting agency and is considered a reasonably reliable third-party record for purposes of verifying items customarily found on it, such as the borrower's current debt obligations, monthly debts, and credit history. C

CLUE report

Report that shows any insurance claims that were made on the property within the past 5 years.

collateral

Something of value given as security for a debt

consideration

Something of value—such as money, a promise, property, or personal services

fiscal year

Starts on July 1 and runs through June 30 of the following year; used for real property tax purposes

100-year flood zone

The area has a 1 percent or greater chance of a major flood occurring in any given year.

FICO® Score

The best-known type of credit score, which is calculated by the Fair Isaac Corporation

bilateral escrow instructions

The buyer and the seller sign identical sets of escrow instructions

appraisal report

The conclusion of the appraiser's research and analysis of all relevant data regarding the property

closing date

The day on which the grant deed is stamped and recorded by the county recorder's office. This is the official date on which transfer of ownership occurs and the buyer becomes the new owner of the property.

closing costs

The expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property.

fee simple

The greatest possible interest a person can have in real estate.

deadline

The latest time or date by which something should be completed.

constructive notice

The legal presumption that anything recorded in a public record can be known by anyone who wants to know it.

CLTA Standard Coverage Policy

The most common title insurance policy issued to homeowners

ALTA Extended Coverage Policy

The most common title insurance policy issued to lenders.

escrow agent

The neutral third party holding funds or something of value in trust for another or others

17-day period after acceptance

The number of days that buyers have within which to do their due diligence, order inspections, conduct investigations, and review any disclosures delivered by the seller about the condition of the property.

debt-to-income ratio (DTI)

The percentage of a borrower's monthly gross income that is used to pay his or her monthly debts

grantor

The person conveying, or transferring, the property

grantee

The person receiving the property, or the one to whom it is being conveyed

consummation

The point in time when a borrower/buyer becomes contractually obligated on the loan to the lender.

General Provisions

The procedures that the escrow holder follows for most of its escrows

allocation

The process of assigning closing costs between the seller and the buyer.

due diligence

The reasonable effort to secure accurate information about a property.

contingency period

The time in which the buyers have the right to back out, without losing their deposit money or incurring other liability.

funding

The time the lender actually "funds" (provides the money to finance) the loan

back ratio

The total monthly PITI and consumer debt divided by the gross monthly income.

conveyance

The transfer of title to land by use of a written instrument.

delivery (of a deed)

The unconditional, irrevocable intent of a grantor immediately to divest (give up) an interest in real estate by a deed or other instrument.

defective title

Title that is irregular and faulty

bare legal title

Title that lacks the usual rights and privileges of ownership. Also called naked legal title.

execute

To perform or complete; to sign.

acceptance

Unqualified agreement to the terms of an offer.

concurrent ownership

When property is owned by two or more persons or entities at the same time.

escrow instructions

Written documents signed by the principals to the transaction that direct an escrow holder in the steps to be completed so that the transaction can be closed.