Escrow Terms

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

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

ACCELERATION CLAUSE: This clause in a note and trust deed permits the payee or beneficiary to declare the entire unpaid balance immediately due and payable when a given condition occurs. Such a condition can be the sale of the land. This clause is sometimes called an "alienation clause."

ACKNOWLEDGEMENT: A written declaration by a person executing an instrument, given before an officer authorized to give an oath (usually a notary public) stating that the execution is of his or her own volition.

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.

ADJUSTABLE RATE MORTGAGE (ARM): A mortgage with an interest rate that changes over time in line with movements in the Index. (see index)

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

AFFIANT: A person who makes an affidavit.

AFFIDAVIT: a sworn statement in writing, made before an authorized official.

ALL INCLUSIVE TRUST DEED (AITD/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.

AMORTIZATION: Provision for the payment of a debt as to both principal and interest in equal installments over a period of time.

ANNUAL PERCENTAGE RATE (APR): The total finance charge (interest, loan fees, points expressed as percentage of the loan amount).

APPRAISAL: An opinion as to the fair market value of land and the improvements on it.

ASSESSED VALUE: The value placed on land and improvements as a basis for taxation. In California this is usually accomplished by the county assessor’s office,and the assessed values for real estate taxes are usually one quarter of market value.

ASSESSMENTS: Special and local levies upon property in the immediate vicinity of an improvement. Assessments can be imposed by such entities as flood control districts, street lighting districts and air pollution control districts which serve an area.

ASSIGNEE: One to whom a transfer of interest is made. For example, the assignee of a Deed of Trust or contract.

ASSIGNMENT: The transfer, in writing, of a person’s interest to another person or entity in an asset, such as an assignment of stock, a Deed of Trust and note or a lease.

ASSIGNOR: One who makes an assignment. For example, the assignor of a Deed of Trust or contract.

ASSUMPTION: An agreement by one party to pay an obligation previously owed by another. For example, the assumption of an existing Trust Deed by a new owner may occur when property is sold.

ATTORNEY IN FACT: One who holds a power of attorney from another allowing him to act on behalf of the grantor of the power.

BENEFICIARY: In a Trust Deed, the lender is designated as the beneficiary. He obtains the benefit of the security.

BENEFICIARY’S STATEMENT: A report from the lender, usually in writing, setting forth the terms and conditions of a loan already of record, such as amounts still owed, interest rate, monthly payments, etc.

BILL OF SALE: A document that attests to the transfer of ownership of personal property.

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

BUYER: One who purchases or acquires property.

CERTIFICATE OF REASONABLE VALUE (CRV): A document that establishes the maximum value and loan amount for a VA guaranteed loan.

CLOSING STATEMENT: The financial disclosure statement that accounts for all of the funds received and expected at the closing, including deposits for taxes, loan costs, title fees, escrow fees, etc.

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

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

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

CONDOMINIUM: A multifamily or other structure in which units are individually owned and in which owners of individual units also have an undivided interest in common areas.

CONTINGENT: Dependent upon conditions or events specified but not yet accomplished. Property may be sold contingent upon the seller or buyer meeting a predetermined condition.

CONVEYANCE: A written document that transfers title to an asset from one person to another. A deed and an assignment are both conveyances, as is a bill of sale.

COUNTY ASSESSOR: One who sets value of property for taxation purposes.

COVENANTS, CONDITIONS AND RESTRICTIONS (CC&R’S): A document that controls the use, requirements and restrictions of a property.

DECLARATION OF TRUST: A written acknowledgement by one holding title to property that the property is held in trust for the benefit of another.

DEED: A written document which conveys ownership of land from one person to another.

DEED OF TRUST: A document executed by the owner of land by which the land is given as security for the payment of a note or other performance of an obligation. In California and some other states the Deed of Trust is usually used in place of a mortgage.

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

DEFICIENCY JUDGEMENT: A personal judgement in a judicial foreclosure action for the remaining amount due after a sale of the security.

DEMAND/BENEFICIARY’S DEMAND: A statement from a lender showing the amount due on a loan.

DOMESTIC PARTNERSHIP: In 2005 the California legislature passed a new all-encompassing act which gave the registered partners of the same sex many of the same benefits previously only afforded to husband and wife. The law, which took effect on January 1, 2005, applies only to parties of the same sex or to a different-sex couple if one of the parties is over age 62 and meets certain requirements under the federal Social Security Act.

EARNEST MONEY: An amount of money given as part of the purchase price of property to bind the agreement between buyer and seller.

EASEMENT: A right or interest in the land of another, such as a right to cross over another person’s property to reach yours.

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

ENCUMBRANCE: A lien affecting the land and improvements, such as a mortgage or Trust Deed.

ENDORSEMENT: A writing on a negotiable instrument by which property mentioned therein is assigned and transferred. Also, a notation on an instrument to change, clarify, or enlarge its contents.

EQUITY: Market value of property, less any encumbrance or other liens on it.

ESCHEAT: The reverting of property to the State of Californ