Glossary of Terms

Commercial Real Estate - Wikipedia describes it as "commercial property (also called commercial real estate, investment or income property) refers to buildings or land intended to generate a profit, either from capital gain or rental income.  Commercial property includes office buildings, industrial property, medical centers, hotels, malls, retail stores, farm land, multifamily housing buildings, warehouses, and garages."

 

Easement - Wikipedia describes an easement as "a non-possessory right to use and/or enter onto the real property of another without possessing it."  

 

Exceptions - Are the items listed on the title commitment schedules B and C for Texas commitments and schedules B-I and B-II for the rest of the United States.  

 

Land Title Survey - Is the document depicting the property and identifying the property lines, tying them to the adjoining properties and showing if there are gaps or overlaps between the properties, if any, and showing where all the exceptions listed on the Title Commitment are located on the property and where all improvements are located.

Objection Letter - Is the letter written by the buyer to the seller listing all items that are unacceptable on the title commitment, exception documents, and survey.  Changes are requested in the objection letter and negotiation of those items, the contract and the sales price are not unusual as a result of the letter.  Knowledge of what items will negatively impact the property and how to fix them is crucial.  Many times the buyer will require that certain items are remedied prior to closing, releases or documents are signed and recorded to settle other items or the sales price is reduced to allow the buyer to fix items after closing.  

Real Estate - Wikipedia describes real estate as "property consisting of land the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; and interest vested in this..."

Surveyor  - Is the person surveying the property and identifying the property lines, tying them to the adjoining properties and showing if there are gaps or overlaps between the properties, if any, and showing where all the exceptions listed on the Title Commitment are located on the property and where all improvements are located.

Title Commitment - Is the document showing the parties to the transaction and what policies have been requested.  The record title holder is shown, and the record legal description until a new survey legal is completed.  All restrictions, easements, and other pertinent documents filed against the property are also shown on one schedule and all items required to be taken care of prior to closing are shown on a separate schedule.  Costs of the policy and the requested endorsements are also listed on another schedule of the Commitment.  The Commitment is not valid if it is not signed, and the exclusions and terms are listed on the jacket which must also be attached.  The Commitment is just that - a commitment to issue the policy as written (without further changes) on the issued signed Commitment if the items on the requirement schedule are completed satisfactorily and the premium is paid.  If you request changes to the Commitment, the title company then has the option to add additional items to the Commitment when they make your changes.  The Texas title commitment form is regulated by the Texas Land Title Association (TLTA) and fees are promulgated (set).  The rest of the United States use the American Land
Title Association (ALTA) title commitment and fees are negotiable and are usually determined by the price bracket of the property sales price and the amount of business the customer brings to the title company.

Title Company - Is the company issuing the title insurance policy.  The policy is only as good as the financial stability of the insuring company.  The title search is only as good as the experience of the examiners.  Good examiners/abstractors can read between the lines to determine when additional documents need to be pulled to  find out the full story behind a property.  Getting an accurate Commitment of Title Insurance can mean the difference between losing time, energy, and possibly money when issues are found out down the road.

 

Title Insurance - Wikipedia describes it as "a form of indemnity insurance predominately found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.  The vast majority of title insurance policies are written on land within the United States.  Unlike some land registration systems in countries outside the US, the US states' recorder of deeds generally do not guarantee indefeasible title to those recorded titles.  Title insurance will defend against a lawsuit attacking the title, or reimburse the insured for the actual monetary loss incurred  up to the dollar amount of insurance provided by the policy...There are two types of policies - owner and lender...nearly all institutional lenders also require title insurance [a loan policy] to protect to protect their interest in the collateral of loans secured by real estate...A loan policy provides no coverage or benefit for the buyer/owner and so the decision to purchase an owner policy is independent of the lender's decision to require a loan policy."  In Texas, if one policy is bought, the other is sold at a very cheap fee.

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Did you know?  Title Companies do not check the zoning of a property - it is the responsibility of the buyer to be sure their business will be compliant with City Ordinances.