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Escrow Glossary of Terms & Definitions


ABANDONMENT: To relinquish or give up a right or any further interest.

ABSTRACT OF JUDGMENT: A condensation or summary of the essential provisions of a court judgment.

ABSTRACT OF TITLE: A condensed history or a summary of the condition of title based on an examination of public records.

ACCELERATION CLAUSE: A clause in an installment note or trust deed permitting the payee or beneficiary to declare the entire unpaid balance immediately due and payable upon the occurrence of a stated event, such as the failure to pay an installment when due.

ACCOMMODATOR (INTERMEDIATE): A party to an IRC S1031 exchange transaction who, pursuant to an Exchange Agreement, acquires relinquished property, holds money from the sale of the relinquished property, acquires replacement property to the Exchanger.

ACCESS RIGHT: The right of an owner of land to have ingress and egress to and from his property to a public street.

ACTUAL NOTICE: Notice which a party has received in fact or in reality, as compared with constructive notice which is implied or inferred.

ADMINISTRATOR: A person appointed by a probate court as the representative of a decedent’s estate where the decedent left no will.

AD VALOREM: Literally, "according to value." This term is usually used in reference to real property taxes which are assessed according to value, i.e., ad valorem.

ADVANCES: Money advanced by the beneficiary under a trust deed to pay real estate taxes, hazard insurance premiums, and other items needed to protect the beneficiary’s interest under the trust deed.

AFFIDAVIT: A written sworn statement made before an authorized official.

AFFIDAVIT OF DEATH OF JOINT TENANT: The sworn statement recorded to evidence the death of a person whose title to property is held in joint tenancy.

AGENCY: The contractual relationship between a principal and an agent in which the agent is employed to act on behalf of the principal in dealings with third parties. Any relationship in which one party (agent) acts for or represents another (principal) under the authority of the later. Agency involving real property should be in writing, such as listings, trusts, powers of attorney, etc.

AGENT: A person who acts on behalf of a principal.

A.K.A.: This abbreviation refers to “also known as” and is used in instances where confusion exists concerning the identity of a party on the vesting.

ALIENATION CLAUSE: A clause in a note or trust deed permitting the payee or beneficiary to declare the entire balance immediately due and payable upon a transfer of the property. Also referred to as a "due on sale" clause.

ALL INCLUSIVE TRUST DEED (A.I.T.D. / WRAP-AROUND): A junior Deed of Trust securing a promissory note, the face amount of which is the sum of the liability secured by prior Trust Deeds plus the cash or equity advanced by the AITD lender.

A.L.T.A.: American Land Title Association, commonly used in reference to a form of title policy required by lenders.

AMORTIZATION: Paying on an installment basis at stated times for a stated period until the debt is paid in full.

APPRAISAL: An opinion as to the fair market value of property.

ASSESSED VALUE: Value placed on property as a basis for taxation.

ASSESSMENTS: Special taxes imposed to pay for public improvements beneficial to a limited area.

ASSIGNEE: The person being assigned the position. For example, in a sale transaction, the Buyer’s Assignee will complete the transaction in place of the Buyer.

ASSIGNMENT: A transfer in writing of a person’s interest.

ASSIGNOR: The person who assigns or transfers property.

ASSUMPTION: The taking over by one party of an obligation that was originally incurred by another, as in the assumption of an existing trust deed by the new owner when property is sold.

ATTORNEY-IN-FACT: An agent authorized to act for another as granted in a Power of Attorney document.


BALLOON PAYMENT: The final payment on an installment note which is greater than the preceding payments and which pays the note in full. Also, a payment that exceeds the normal payment program.

BENEFICIARY: As used in a trust deed loan, the Beneficiary is the lender. The Beneficiary is the party who obtains the benefit of the security.

BENEFICIARY DEMAND: A statement setting forth the amount required to payoff a loan in full.

BENEFICIARY STATEMENT: A statement supplied by a lender for purposes of verifying the loan balance, present status, and terms of the loan. In the case of a sale transaction in which the buyer is assuming the loan, the statement will often provide the lender’s loan transfer requirements and a list of required transfer fees.

BILL OF SALE: A written instrument evidencing the transfer of title to personal property.

BINDER: A report issued by a title insurance company binding or committing the title insurance company to issue a policy within a specified time.

BLANKET MORTGAGE OR TRUST DEED: A mortgage or trust deed which covers more than one lot or parcel of real property, often an entire subdivision.

BORROWER: One who obtains a loan and owes money to a lender.

BUYER: One who purchases or acquires property.


C.A.R.: California Association of Realtors. This Association guides the activities of the real estate licensees in the State of California.

C.C. & R’s: Covenants, Conditions and Restrictions are those matters that limit the use and enjoyment of property usually by agreements contained in deeds and other documents.

C.E.A.: California Escrow Association. An active, State-wide organization providing guidance and services for escrow personnel, including training seminars and materials.

CHAIN OF TITLE: The sequence of ownership or title on the property as evidenced by a chronological list of recorded instruments affecting the title to land.

CLOUD ON TITLE: A defect in chain of title or in documentation keeping the title from being clear and easily conveyed.

COLLATERAL: The item used to secure a loan to assure the lender of repayment or provide a source of repayment in the event of default.

COLLECTION SERVICE: A service performed by a neutral third party in receiving and disbursing loan payment as instructed by the parties concerned.

COMMUNITY PROPERTY: Property acquired by husband or wife or both during marriage when not acquired as separate property.

CONDEMNATION: The exercise of the power of eminent domain by which property is taken for public use upon payment of just compensation. Condemnation can also refer to the condemning of unsafe structures.

CONDOMINIUM (CONDO’S): A form of ownership of a property wherein certain parts (units) of the property are in fee title to individuals and a portion of the property is owned “in common” with the other owners.

CONFIRMATION OF SALE: Court approval of the sale of property by an executor, administrator, guardian or conservator.

CONSERVATOR: A person appointed by the court to take care of the person or property of an adult person needing such care.

CONSIDERATION: The inducement for entering into a contract sometimes known as the sales price.

CONSTRUCTIVE NOTICE: Notice given by the public records of a claim of ownership or interest in property.

CONTINGENCY: A condition of closing which is dependent upon an uncertain future event. Such conditions may prevent close of escrow by one of the principals in the event the contingency cannot be removed, such as Buyer obtaining a new loan, a Seller being able to purchase a new house, or a Buyer being able to sell an existing house.

CONTRACT: An agreement by which a person undertakes to do or not to do a certain thing.

CONVENTIONAL LOAN: A mortgage loan which is not insured or guaranteed by a governmental agency.

CONVEYANCE: A written instrument transferring the title to or interest in real estate from one person or entity to another.

CORPORATION: An artificial being, created by law, possessing certain rights, privileges, and duties of natural persons.


DECLARATION OF HOMESTEAD: Document recorded by a homeowner to protect his home from a forced sale up to a prescribed amount in satisfaction of certain types of creditors.

DECREE: A type of court order.

DEED: Written instrument by which the ownership of land is transferred from one person to another.

DEED OF TRUST: Written instrument by which title to land is transferred to a trustee as security for a debt or other obligation. Also known as a trust deed.

DEFAULT: Failure to perform a duty or to discharge an obligation.

DEPOSIT RECEIPT: A document used when accepting “earnest money”

DOCUMENTARY TRANSFER TAX: A State tax on the sale or conveyance of real property located in any county in the state. Applies when the consideration exceeds $100. Tax is computed at the rate of $.55 for each $500.00 of consideration or fraction thereof. Some cities have their own City Transfer Taxes.

D.R.E.: Department of Real Estate. The agency which regulates real estate licensees and the sale of property by developers in the State of California.

DUE-ON-SALE CLAUSE: A provision in a real estate loan calling for automatic maturity at the lender’s option upon the sale or transfer of the real property to a third party. Also called an alienation clause or acceleration clause.


EARNEST MONEY: Funds given as a part of the purchase price to bind a bargain, usually the initial good faith deposit of the Buyer.

EASEMENTS: A right or interest in the land of another which exists apart from the ownership of the land, such as a right to cross over another person’s property. Examples include utilities easements and ingress and egress easements.

EGRESS/INGRESS: An easement right of way for egress (exit) and ingress (entry) to a property owned by another.

EMINENT DOMAIN: The right or power of the government to take property for a public purpose upon payment of just compensation.

ENCROACHMENT: The extension of an improvement onto the property of another, for example, a garage, fence or driveway that crosses over a lot line.

ENCUMBRANCE: A lien or charge on a property encumbering the subject parcel.

ENDORSEMENT: As to a title insurance policy, a rider or attachment forming a part of the insurance policy expanding or limiting coverage. Endorsement also refers to the act of signing a name of the back of a check or promissory note to evidence its transfer.

EQUITY: Property value in excess of mortgages and other liens.

ESCHEAT: The transfer of unclaimed funds to the State of California.

ESCROW: A transaction in which an impartial third party (escrow holder) acts upon written instructions for both seller and buyer (or for borrower and lender) by holding and delivering documents and disbursing funds when certain conditions have been fulfilled.

ESCROW ACCOUNT: An account in which the borrower’s monthly deposits for taxes, hazard insurance, and mortgage insurance, if any, are held in trust by the lender for the future payment of these items as they become due. Also known as an Impound Account.

ESCROW ANALYSIS: The periodic examination of escrow accounts to determine if monthly deposits will provide sufficient funds to pay tax and insurance bills when due.

ESCROW HOLDER: The escrow officer, escrow company or escrow agent.

EXCEPTION: An interest in real property which is excluded form the conveyance and remains in the grantor or which had been excluded in a prior conveyance.

EXCHANGE: A reciprocal transfer of real property which has certain tax advantages over a sale. Definite procedures must be followed in order to qualify the transfer as an exchange.

EXECUTOR: A person who is designated in a will as the representative of a decedent‘s estate.

EXECUTRIX: Feminine of executor


FIDUCIARY: One who holds a position of trust and confidence. As an example: an escrow holder.

FIRE INSURANCE: Insurance against loss or damage by fire to specific property.

FIRPTA: Under the Foreign Investment of Real Property Act, every buyer must, unless an exemption applies, deduct and withhold 10% of the gross sales price from seller's proceeds and send it to the Internal Revenue Service, if the seller is a "foreign person" under that statute.

FORECLOSURE: A proceeding to enforce a lien by a sale of the property in order to satisfy the debt.


GRANT: A transfer of real property.

GRANT DEED: A written instrument transferring title to real property.

GRANTEE: The person to whom a grant is made.

GRANTOR: The person who makes a grant.

GUARDIAN: A person appointed by the court to care for the person or estate of a minor or incompetent person.


HOMESTEAD: A residence upon which the owner has recorded a Declaration of Homestead under California law.

HYPOTHECATE: To mortgage or pledge without delivery of the security to the lender. To give something as security without parting with possession.


IMPOUND ACCOUNT: Funds retained by a lender to cover such items as taxes and hazard insurance premiums. Also known as Escrow Account.

INDEMNITY: Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.

INSTALLMENT NOTE: A promissory note providing for payment of the principal in two or more fixed amounts at different stated times.

INSURANCE CERTIFICATES: On condominium or townhome properties, an insurance certificate is the evidence that the unit owner and lender, if any, are insured under the terms of a Master Insurance Policy.


JOINT TENANCY: Title held by two or more persons in equal shares with right of survivorship.

JOINT VENTURE: A business undertaking by two or more persons to conduct a single enterprise for profit.

JUDGMENT LIEN: A statutory lien created by recording an abstract of judgment.

JUNIOR LIEN: A subordinate lien.

JURAT: The sworn statement form of the notary public certificate. The clause at the end of an affidavit with the date, location and person before whom the statement was sworn.



LAND SALES CONTRACT: A contract used in connection with the sale of real property where the seller retains legal title until all or a certain part of the purchase price is paid by the buyer.

LEASE: A contract for the possession of land in consideration of payment of rent.

LEASEHOLD INTEREST: Having possession of a property by virtue of a Lease.

LEASE OPTION (LEASE WITH OPTION TO PURCHASE): A lease containing an option giving the lessee the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the leases or only for a portion of the lease period.

LENDER: One who lends money to borrowers.

LESSEE: The tenant under a lease.

LESSOR: The landlord under a lease.

LIEN: A charge, claim, or liability upon property for the payment of a debt or performance of an obligation. Examples include taxes, special assessments, judgments, mortgages, and mechanic's liens.

LIFE ESTATE: An estate measured by the life of a natural person.

LIMITED PARTNERSHIP: A partnership composed of partners whose contribution and liability are limited.

LIQUIDATED DAMAGES: An agreed-to sum of money to be paid under a contract in the event of a breach where it would be difficult to prove the amount of actual damages.

LIS PENDENS: A legal notice recorded against property to show that litigation is pending, typically used to control or stop the transfer of the property when a conflict arises between parties in a transaction.


MARKET VALUE: The price that real property would reasonably be expected to bring were it to be offered for sale with a reasonable sales effort over a reasonable period of time.

MECHANIC'S LIEN/CONTRACTOR'S LIEN: A statutory lien in favor of laborers and suppliers who have contributed to a work of improvement.

METES AND BOUNDS: A term used in describing the boundary lines of land setting forth all the boundary lines together with their terminal points and angles.

MORTGAGE: A written document executed by the owner of land by which the land is given as security for the payment of a debt or performance of an obligation.

MORTGAGEE: The party who obtains the benefit of a mortgage.

MORTGAGOR: The party who executes a mortgage.

MUTUAL WATER COMPANY: A water company organized by or for the benefit of water users in a given district with the object of securing an ample water supply at a reasonable rate. Shares of stock are issued to the users.


NOMINEE: A party designated to act in place of the original buyer in a real estate transaction.

NOTE: A written acknowledgment of a debt by a borrower including a promise of payment in accordance with specified terms. Also known as Promissory Note.

NOTICE OF COMPLETION: A notice which should be recorded to indicate completion of work of improvement to real property. A valid notice of completion limits the time for filing valid mechanic's liens.

NOTICE OF DEFAULT: Recorded notice that a default has occurred under a deed of trust.

NOTICE OF SALE: A notice recorded by the Trustee of a Deed of Trust stating that a foreclosure action has begun and giving the date of the proposed foreclosure sale.


OFFSET STATEMENT/ESTOPPEL CERTIFICATE: Statement obtained to verify or substantiate terms of an agreement or sums of money. As an example: A Tenant Offset or Estoppel is a statement signed by the Tenant giving monthly rental sum, security deposits, last month rent paid, and describing any special agreements with the Lessor (Landlord).

OPEN END DEED OF TRUST: A Deed of Trust which secures additional notes for funds that a lender may advance to a trustor, subsequent to the execution of the original loan.

OWNER CARRY BACK: A term used to indicate that the seller is willing to take back a purchase money mortgage.


PARTNERSHIPS: A voluntary association of two or more persons to carry on as co-owners of a business for profit.

PAYEE: One who receives payments.

PAYER: One who makes payments.

PERSONAL PROPERTY: Movable property such as furniture, clothing, or a car. Property which is not real property.

PLAT MAP: A drawing giving the general physical lay-out of the land covered and included in the preliminary title report.

P.M.I.: Private Mortgage Insurance. It is obtained by a lender at the borrower's expense as insurance covering the payment of the loan.

POINTS: A charge made by a lender. One point equals one percent of the loan.

POWER OF ATTORNEY: A document authorizing another to act on one's behalf as his agent.

PRELIMINARY TITLE REPORT: The initial report issued by a title insurer reflecting results of the search of title. This report sets out the terms upon which a title insurer is willing to insure the title, provides a description of the property, the vesting of the title, and any liens and encumbrances against which the company is not willing to insure.

PREPAYMENT PENALTY: A provision in a note providing for the payment of a penalty in the event the note is paid off prior to its due date

PRINCIPAL: One who employs an agent to act on his behalf, such as the seller and buyer in an escrow transaction. Also, an amount of debt or the face value of a note or mortgage.

PROBATE: The official proving of a will as authentic or valid in a probate court.

PROPERTY PROFILE: A informational package furnished by title companies to real estate agents which usually provides copies of the current vesting deed, the tax parcel number, copies of trust deeds, and a plat map.

PRORATE: To divide equally or proportionately as to the time of use. In a sales escrow, it is the custom to prorate taxes, interest, rents, and hazard insurance premiums between buyer and seller in accordance with the respective periods of ownership.

PUBLIC REPORT: A report issued by the Department of Real Estate containing information of interest to a buyer about newly subdivided property.

PURCHASE MONEY DEED OF TRUST: A deed of trust to secure payment of all or a portion of the purchase price of real property.


QUALIFIED INTERMEDIARY: A person or entity serving as an intermediary in an exchange transaction.

QUIET TITLE: A legal action to establish title to real property usually used to obtain clear title on a property that is clouded by an issue of title.

QUITCLAIM DEED: A deed which conveys whatever present right, title or interest the grantor may have in real property but not containing any warranty of a valid interest on title in the grantor.


REAL PROPERTY: Land and buildings affixed to the land, including the air space above and mineral rights below, as opposed to personal property or chattels.

RECONVEYANCE: A document releasing the lien of a deed of trust.

RECORDATION: Filing a document for record in the office of the county recorder, thereby making the document part of the public record.

RENT STATEMENT: A detailed statement provided by the seller covering the rental income of a property and amounts of deposits. The statement is used in escrow for rent proration purposes and for making adjustments between the parties for deposits.

REQUEST FOR NOTICE OF DEFAULT: A notice recorded by the holder of a junior lien requesting that he be notified in the event that a Notice of Default is recorded under a senior deed of trust. If the deed of trust is foreclosed, the person requesting the notice will be notified of the foreclosure by the trustee processing the foreclosure.

R.E.S.P.A.: The Real Estate Settlement Procedures Act enacted by Congress in 1974, provides protective measures for borrowers, including establishing the manner in which closing costs are disclosed. Lenders are required to use the R.E.S.P.A. settlement statement at closing. In common usage, this form is called a 'H.U.D." statement.

RESERVATION: Right reserved by the grantor in conveying property, or a right which had previously been reserved.

RESTRICTIONS: This is often referred to as covenants, conditions, and restrictions (CC&R) in regard to a piece of property, setting limitations on its use.

RIGHT OF WAY: A right of another to cross over, under or through a parcel of land.


SATISFACTION OF JUDGMENT: Evidence of the payment in full of a judgment lien.

SELLER: One who sells property to another.

SECURITY DEPOSIT: A deposit made to assure performance of an obligation, usually by a lessee.

SHORT PAY (SHORT SALE): A short sale is the sale of real property where the fair market sale price is less than the loan balance.

STATEMENT OF INFORMATION FORM: A brief statement of facts relied upon by title insurers to assist in the proper identification of persons.

SUBESCROW AGENT: An approved agent to receive and disburse funds on behalf of the escrow holder or a lender, usually the title company named in the escrow.

SUBJECT TO: Usually referred to as the condition of title that exists at the time of acquisition by the buyer, such as subject to a Deed of Trust or record.

SUBORDINATION: The procedure of allowing a new loan or obligation to take priority over an existing encumbrance.

SUBORDINATION AGREEMENT: An agreement under which a prior lien is given a lower priority to an otherwise junior lien.

SURVEY: A map or plat containing a statement of courses, distances and quantity of land and showing boundary lines of real property. Also, a process of measuring a parcel of land and ascertaining its area and boundaries.

SWING LOAN: A short-term loan obtained on a Seller's equity for the purpose of purchasing a second property.


TAX SERVICE: A service which provides notification to a lender of whether or not a borrower is paying the real property taxes. Companies who perform this service audit the tax rolls and issue notices to lenders when taxes are delinquent.

TENANCY IN COMMON: Ownership of property by two or more persons in an undivided interest without right of survivorship.

TITLE: The evidence of ownership.

TITLE INSURANCE: An insured statement of the condition of title or ownership of real property. For a one-time-only premium, the named insured and their heirs are protected against title defects, liens, and encumbrances existing as of the date of the policy and not specifically excluded from coverage. In the event of a claim, the title company provides legal defense for the policyholder and pays any covered losses incurred as a result of such claim.

TRUST: A fiduciary relationship in which one party (trustee) holds the title to property for the benefit of another party (beneficiary).

TRUST AGREEMENTS: A fiduciary relationship in which a trustee holds title to property for the benefit of a beneficiary.

TRUST DEED: A three-party security instrument conveying title to land as security for the performance of an obligation. The three parties are the Trustor (borrower), Trustee (acts only at time of payoff and in case of foreclosure), and Beneficiary (lender).

TRUSTEE: The acting principal named in a Trust Agreement or the third party named in a trust deed.

TRUSTEE'S DEED: In a case of a foreclosure, the deed given by the trustee under a deed of trust when the property is sold under the power of sale. TRUSTOR: The person who conveys property in trust or the borrower under a deed of trust.

TRUSTOR (IN A DEED OF TRUST): The borrower under a Deed of Trust.


UNINCORPORATED AREA: Property located outside the limits of any city.

UNLAWFUL DETAINER: A legal action to recover possession of real property.

USURY: Charging more interest than the law allows on a loan.


VENDEE: One who is purchasing property under a land sale contract.

VENDOR: One who is selling property under a land sale contract

VEST: To give title to or to pass ownership to property.

VESTING: The manner in which the owner of real property holds title. For example, John Jones a single man.


WILD DOCUMENT: A commonly used expression for a document that is recorded against a property but seems to have no basis for application or connection with the property.

WILL: A disposition of property effective upon the maker's death often referred to as a "last will and testament".




ZONING: Governmental regulations relating to the use of real property.