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Glossary of Terms Relating to Title Insurance in the State of Florida

Abstract of title: Charge to review the abstract and deliver marketable title to the buyer.

Affidavit: A sworn statement in writing.

Attorney fee: Fee charged by the attorney for legal services.

Closing costs: Loan, title and recording charges disclosed on the Closing Disclosure and itemized for buyer and seller in the contract.

Closing Disclosure (“CD”): Effective 2015, this is the form now used for all federally regulated loan transactions on residential single-family homes. The final Closing Disclosure is issued three days before closing.

Closing statement: Effective 2015, the Closing Disclosure is the form now used for all federally regulated loan transactions on residential single-family homes.

Consumer Finance Bureau: Regulates the U.S. loan industry and the credit markets. Also known as the CFPB, it oversees all aspects of consumer lending.

Contract: The real estate contract stating agreed to terms between buyer and seller including but not limited to as price, deposit, inspection periods, financing periods and closing date.

Deed: A written document by which the ownership of land is transferred from one person to another.

Deed tax: A tax paid on the sale of a property. This varies by county, but it always based on the sales price.

Effective date of contract: Generally, the date on which the last party has signed the contract and delivered it. The real estate contract usually specifies how an effective date is defined inside the contract itself.

Escrow deposit: Advance payment of part of the purchase price to bind a contract for property.

Escrow: (1) A procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer. (2) Money that is kept by the mortgage company to ensure that taxes can be paid in full when due. Escrow is paid up-front and is added to the mortgage payment monthly over the principal and interest figure.

Escrow agent: An escrow agent holds funds “in trust” for a transaction. The funds can be held for a buyer, a seller or a lender. Escrow agents are required to be bonded and insured in most states. Verify your escrow agent’s licensing credentials in your state before giving them any funds.

Estimated settlement charges: An estimate provided by your bank of your total closing costs and loan terms.

Foreign Investment in Real Property Tax Act (FIRPTA): Foreign nationals selling US real estate face special tax implications and are subject to the Foreign Investment in Real Property Tax Act also known as FIRPTA. FIRPTA was enacted in 1980 by the US government and provides that if the seller of real property is a foreign person or foreign corporation, the buyer must withhold a tax equal to 15% of the gross purchase price, unless an exemption applies.

FIRPTA Certificate: This form known as the “withholding certificate” is issued by the Internal Revenue service and authorizes the title company to reduce the amount of the required 15% withholding tax from the seller.

FIRPTA form: These are customarily the 8288 A and B forms used to remit funds to the Internal Revenue Service on a FIRPTA sale.

Good faith estimate (GFE): An estimate from your lender of your closing costs including title charges. This may be delivered in the form of a Loan Estimate or a Closing Disclosure form.
Hazard insurance: The homeowner’s insurance policy on the physical property (i.e. roof, structure, etc.).
HUD1 settlement statement: Prior to October 2015, the HUD1 form was used for loan closings. This form was replaced in 2015 with the Closing Disclosure but is still used for cash, private loans, and commercial transactions.

Judgment: A decree of a court for monetary compensation between two parties.

Lien: A hold, a claim, or charge allowed a creditor upon the lands of a debtor.

Lien search: Review of public records and other departments and cities for liens, open permits, and code violations. This is a municipal search and often confused with the title search. The lien search looks for local fines and violations that a city has placed.

Mortgage: A security instrument used to encumber land as security for a debt.

Mortgage closing statement: This is formally called the Closing Disclosure and discloses all loan terms and costs.

Owners title insurance policy: This protects an owner of real property against title defects such as forgery, claims by prior heirs, open mortgages, judgments and liens. The Owners Title Policy is issued about eight weeks after closing.

Power of Attorney: An instrument authorizing another to act on one’s behalf as his agent or attorney. A Florida Power of Attorney form for a real estate closing should be prepared by a title company or attorney.

Promissory note: A promise to pay.

Real estate contract: A Florida real estate contract outlines and defines the terms and the parties to a sale. It includes but is not limited to sale prices, buyers, sellers, deposits, inspection period, financing period, closing date and other critical information regarding the sale of real estate.

Right of rescission: The three-day period a borrower has to wait in which they can reconsider their loan refinance transaction. They can cancel the loan within this three-day period.

Quit Claim Deed: An instrument of conveyance commonly known as a “title transfer” of real property that passes any title, claim, or interest that the grantor has in the premises but does not make any representations or guarantee the validity of such title. A quit claim deed should be prepared by a qualified party.

“Quick Claim” Deed: The misnomer often used for “Quit Claim Deed.” This is not an actual item but refers to the Quit Claim Deed which is used to transfer title often among related parties.

Seller documents: An attorney or title company customarily prepares seller documents on behalf of the seller to transfer a property. These documents include a warranty deed, bill of sale, compliance agreement, CMA (Continuous Marriage Affidavit), and non-identity affidavits and other notarized legal documents required to cure or transfer title.

Seller representation: When a title company or attorney represents the seller in a closing and prepares all the closing documents in addition to clearing title defects, should they arise. Seller documents are also prepared as part of seller representation.

Settlement fees or charges: The fee the title company charges for the processing of the real estate file for the buyer and seller in preparation for the conveyance including payoffs to banks, handling and recording deeds and mortgages, and recording satisfaction of mortgages. In addition, we verify the seller’s financial standing with the Condo/Homeowners Association, establish legal ownership, and verify liens and taxes that may be due on the property. Both buyers and sellers usually have either an attorney or title company handle their settlement. You will find your settlement fees on your Closing Disclosure.

Shipping, handling and delivery: Covers all administrative and courier costs for a closing. These include payoff of mortgage(s), recording of deeds, affidavits, and other documents for public record.

Surtax: An additional deed tax for commercial properties or multi-unit properties. This varies by county, but it is always based on the sales price.

Survey: The process of measuring land to determine its size, location, and physical description and the resulting drawing or map. A survey will show any problems regarding property boundaries.

Title: The evidence or right a person has to the ownership and possession of land. A title search determines ownership.

Title examination: The act of examining title to verify legal ownership of property. The attorney reviews publicly recorded documents associated with a property.

Title insurance: Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property. Your Owners Title Insurance Policy will protect you against title defects or fraud.

Title insurance binder or title commitment: A report issued by a title insurance company binding or committing the title insurance company to issue the form of policy designated in the commitment or binder upon compliance with and satisfaction of requirements set forth in the commitment or binder.

Title search: An examination of public records and court decisions to disclose the current facts regarding ownership of real estate. A title search will reveal title defects and issues affecting the property.

Title update/Recertification fee: A title update must be conducted immediately after closing and before issuing a title insurance policy.

Truth in lending disclosure: This law requires lenders to disclose the total, amortized closing costs to borrower over the life of their loan.

Transfer taxes: Money paid to the county and or state when property is sold.

Wire fee: Fee for receiving and sending out wires.