Title Company: The entity that performs title searches, issues title insurance, and often acts as the escrow agent. It coordinates the closing process.

Escrow Agent (or Settlement Agent): The impartial third party (often from the title company) responsible for holding funds/documents, following written instructions, and facilitating the closing. Also called a closer in some regions.

Closing (or Settlement): The final step in a real estate transaction where documents are signed, funds are disbursed, the deed is recorded, and title officially passes from seller to buyer. Also known as "close of escrow."

Title Search: An examination of public records to verify the chain of ownership, uncover any liens, encumbrances, or defects, and confirm the seller has the right to transfer clear title.

Chain of Title: The chronological history of all recorded documents affecting ownership of the property, from the original grant to the current owner.

Abstract of Title: A condensed summary of the public records relating to the property’s title history, including deeds, mortgages, liens, and legal actions.

Cloud on Title: Any irregularity, claim, lien, or encumbrance that could potentially impair or affect the marketability of the title (e.g., an old unpaid judgment).

Clear Title (or Marketable Title): Ownership that is free from reasonable doubt, defects, liens, or encumbrances, allowing a prudent buyer to accept it without risk.

Encumbrance: Anything that burdens or affects the title or use of the property, such as liens, easements, restrictions, or covenants.

Lien: A legal claim or right against the property for payment of a debt (e.g., mortgage lien, tax lien, mechanic’s lien, or judgment lien).

Deed: The legal document that transfers title/ownership from the grantor (seller) to the grantee (buyer). Common types include warranty deed, grant deed, or bargain and sale deed.

Deed of Trust: A security instrument (used instead of a mortgage in some states) that conveys title to a trustee as collateral for a loan until the debt is repaid.

Preliminary Title Report (or Title Commitment): A report issued by the title company early in the process, showing the current condition of title, exceptions, and requirements that must be met before issuing a final policy.

Earnest Money Deposit (EMD): A good-faith cash deposit from the buyer (often 1–3% of the purchase price) placed into escrow to show serious intent. It is credited toward the down payment or closing costs if the sale closes, or may be forfeited under certain conditions if the buyer backs out.

Closing Costs: Fees and expenses paid at closing (e.g., title insurance premiums, escrow fees, recording fees, lender fees, prorated taxes, and attorney fees). These are itemized in the Closing Disclosure.

Closing Disclosure (or HUD-1 in older transactions): The standardized form that details all loan terms, closing costs, and cash required from the buyer (or proceeds to the seller).

Prorations: Division of ongoing expenses (such as property taxes, HOA dues, or insurance) between buyer and seller based on the exact closing date.

Escrow Instructions: Written directions signed by buyer and seller that outline the conditions, documents, and timeline for the escrow agent to follow.

Title Insurance: Protection against financial loss due to defects in the title that existed before the policy was issued (e.g., forged deeds, undisclosed heirs, or errors in public records). It does not cover future events.

Owner’s Title Policy: Insurance that protects the buyer/homeowner against title defects for as long as they (or their heirs) own the property. Usually paid by the buyer or negotiated in the contract.

Lender’s Title Policy (Loan Policy): Insurance that protects the mortgage lender’s interest in the property. Almost always required by lenders and typically paid by the buyer.

Exceptions: Specific defects, liens, or issues listed in the title policy that are not covered by insurance.

Easement: A non-ownership right to use another’s property for a specific purpose (e.g., driveway access or utility lines).

CC&Rs (Covenants, Conditions & Restrictions): Rules governing property use, often in subdivisions or condos (recorded against the title).

Vesting: How title is held (e.g., as an individual, joint tenants with right of survivorship, tenants in common, or in a trust).

Recording: The official filing of documents (deed, mortgage, etc.) with the county recorder’s office to make them part of the public record and establish priority.

Wire Instructions: Secure bank details provided by the escrow agent for transferring funds (down payment, loan proceeds, etc.). Always verify directly with the escrow officer to avoid fraud.