Glossary of title terms

Plain-English definitions of the words you'll see in your commitment, policy and closing documents.

Abstract
A summary history of a property's recorded documents, such as deeds, mortgages and liens.
ALTA
American Land Title Association. Its standard forms are used for most title commitments and policies.
Chain of title
The sequence of recorded transfers of ownership from one owner to the next.
Closing Disclosure
A five-page form from your lender showing final loan terms and closing costs, delivered at least three business days before closing.
Commitment
The title company's written promise to issue a policy once listed requirements are met.
Deed
The document that transfers ownership of real property from the grantor to the grantee.
Easement
A right for someone else to use part of a property for a specific purpose, such as utility lines or a shared driveway.
Encumbrance
Any claim, lien or restriction on a property, such as a mortgage or easement.
Endorsement
An addition to a title policy that changes or extends its coverage.
Escrow
Funds or documents held by a neutral party until the conditions of a transaction are met.
Exception
An item listed in the commitment and policy that the title insurance will not cover.
Grantee
The person or entity receiving ownership in a deed.
Grantor
The person or entity transferring ownership in a deed.
Land contract
A sale in which the seller finances the purchase and keeps legal title until the buyer pays in full.
Lender's policy
Title insurance that protects the mortgage lender, usually for the amount of the loan.
Lien
A legal claim against a property for a debt, such as a mortgage, tax or contractor's claim.
Owner's policy
Title insurance that protects the buyer's ownership for as long as they or their heirs own the property.
Payoff statement
A lender's statement of the exact amount needed to pay a loan in full on a given date.
Principal Residence Exemption (PRE)
A Michigan exemption from most school operating taxes for an owner's primary home.
Property Transfer Affidavit
Michigan Form 2766, filed by a new owner with the assessor within 45 days of a transfer.
Quitclaim deed
A deed that transfers whatever interest the grantor has, without promising that the title is good.
Recording
Filing a document such as a deed or mortgage with the county Register of Deeds so it becomes public record.
Requirements
Items in the commitment that must be satisfied before closing, such as payoffs or signatures. Also called Schedule B, Part I.
Schedule A
The part of a commitment or policy that identifies the property, the insured parties and the amount of coverage.
Schedule B
The part of a commitment listing requirements (Part I) and exceptions (Part II).
Settlement statement
The itemized list of every charge and credit for the buyer and seller at closing.
SEV
State equalized value: generally half of a property's true cash value, as set by the assessor.
Survey
A measurement of a property's boundaries and improvements by a licensed surveyor.
Taxable value
The value property taxes are based on in Michigan. Its increase is capped until the property is sold.
Title
Legal ownership of a property, and the rights that come with it.
Title insurance
Insurance against loss from defects in title that existed before the policy date.
Transfer tax
Michigan state and county taxes on the transfer of real estate, collected at closing.
Underwriter
The insurance company that backs a title policy. Abacus Title is an agent for First American Title Insurance Company.
Warranty deed
A deed in which the grantor promises the title is good and will defend it against claims.