Title Insurance Terms Worth Knowing

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By Barbara Pronin

Acronyms and business terms are often tossed into conversation as though everyone knows their meaning. But just as first-time home buyers may not be familiar with terms like PMI or PITI, some new real estate agents may not either – and even some who are more experienced. It is beneficial for agents and home buyers to know and understand the meaning of acronyms and terminology commonly used in title insurance transactions.

As your title partner, and with appreciation that some of these terms and acronyms may already have a comfortable place in your vocabulary, we offer a few with which you may be less familiar:

Abstract of Judgment: A summary of a money judgment obtained in court. (When recorded in the county recorder’s office, the judgment becomes a lien on the debtor’s presently owned or any newly acquired property within that county.)
CC&R’s: The Covenants, Conditions and Restrictions, which set out various agreements, conditions and prohibitions established to create uniformity within a particular community, and may affect the use and enjoyment of the real property.
Encumbrance: A right or claim held by others on real property that does not hinder its conveyance or sale – such as taxes, mortgage or other liens, or non-lien limitations on ownership such as easements or restrictions.
F/C: Free and clear
Indemnity Agreement: An agreement signed by an owner or builder/contractor to induce the title company to take an extended risk for a third party’s benefit; usually the lender. (Indemnity means, ‘exemption from loss or damage.’)
Legal Description: A description of land recognized by law, which uniquely describes real property, usually based on maps recorded or filed at the recorder’s office or on private or government surveys. It spells out the exact boundaries of a piece of land and so thoroughly identifies that parcel that it cannot be confused with any other.
NACRC: National Association of County Recorders and Clerks
Lis Pendens: When a court action begins to affect the title or right of possession of real property, notice of that action to the public may be recorded in the county recorder’s office, in order to provide constructive notice to third parties.
PIQ: A title term referring to the Property In Question
Prelim: Short for “Preliminary Report.” A written report issued by the title company showing that it is prepared to issue a policy of title insurance. It also reflects the title company’s requirements, exceptions and exclusions from coverage.
TILA: Truth in Lending Act
Quiet title: The name of an action brought to establish ownership of real property or to remove a “cloud” on title. It identifies all p-arties with any interest in the land.
Vesting: The entities and manner in which the title or ownership is held in real property. It may also refer to that portion of a title report or policy that sets forth the above.
VOE: Verification of Employment.

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

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