Terms about the property's history
A title search reviews public records to trace ownership. An encumbrance is any claim against the property, such as a mortgage, easement or lien. A lien is a legal claim used to secure a debt. A cloud on title is a defect or doubt that could affect ownership.
A survey is a drawn measurement of the lot lines and structures. Lenders sometimes require one.
Terms about insurance and promises
A title commitment is the title company's offer to insure the title, with conditions that must be met before closing. Title insurance protects against certain past defects. An exception is something the policy will not cover.
A warranty is a promise about the title, which varies by deed type.
Terms about money
Escrow can mean two things. One is the neutral holding of funds and documents until conditions are met. The other is the lender account that collects taxes and insurance monthly. Proration splits costs like property tax between buyer and seller by days of ownership.
A payoff letter states the amount needed to clear a loan on a given date. A credit is money owed to one party at closing.
Terms about people and roles
The settlement agent or closing agent runs the closing. The grantor is the person giving the property, usually the seller, and the grantee is the receiver. The mortgagor is the borrower, and the mortgagee is the lender.
The notary is a separate role, confirming identity and witnessing signatures.
Terms about paperwork
A deed transfers ownership. A rider is an add-on to a main document. An acknowledgment is the notary certificate stating you signed willingly. Recording means filing a document in the public record. A scanback is a scan of signed pages returned before the originals arrive.
When a word is unfamiliar, ask the title company to define it before you sign.
Putting the words to work and terms people mix up
Try this with your own paperwork. Take the title commitment and underline every exception. Take the settlement statement and circle the prorations. Take the payoff letter and check the good-through date. Then write one question for each unclear item and send it to the title officer by email, so you have a record of the answer.
A short list of well-formed questions earns better responses than a vague call asking if everything looks fine. It also shows the title company where you need help, and it keeps closing day from being the first time you see unfamiliar words.
Escrow is the one that trips up most people, because it names both a neutral holding arrangement and a monthly account with your servicer. Closing and settlement mean the same thing in most places. Title and deed are different: title is the right of ownership, a deed is the paper that transfers it.
Lien and mortgage overlap, since a mortgage creates a lien, but not every lien is a mortgage. Judgments and unpaid taxes can also be liens.
Common questions
Is title insurance the same as homeowners insurance?
No. Homeowners insurance covers damage to the property. Title insurance covers certain defects in ownership.
Who is the settlement agent?
The person or firm responsible for collecting documents, handling funds and recording. It can be a title company, attorney or escrow office.
Does a notary need to know these terms?
A signing agent should recognize the documents, but the title company is the right source for what they mean in your deal.
This guide is general information, not legal advice. Fees and procedures change; check with the office involved or an attorney for your situation.