It helps to have context for words and terms used as part of the closing process. Here are the definitions of some frequently used words in as you go through a closing process:
Title Insurance Commitment – A written commitment from the title insurance underwriting company that reflects their commitment to insure your transaction with title insurance, and if the title commitment requirements are satisfied at the closing, the commitment will be converted into a title insurance policy.
Title Insurance Policy – An insurance policy specific to real estate that is issued by a title insurance underwriting company for the purposes of providing insurance coverage to the insured party for claims that may be made against the insured party by third-parties stating they have a superior right or interest in the real estate covered by the insurance policy.
Title Insurance Underwriting Company – An insurance company that underwrites the risk and covers claims that would be insured against by the title insurance policy.
Owner’s Title Insurance Policy – A title insurance policy where the insured party is a buyer of real estate.
Lender’s Title Insurance Policy – A title insurance policy where the insured party is a mortgage lender providing financing for real property.
Title Agent – A party that issues the title insurance policy, as its insurance agent, for the title insurance underwriting company.
Closing Agent – A party that closes a real estate transaction, which closing is generally either a real estate contract or a mortgage refinance.
Escrow Agent – A party that is holding the escrow funds (deposit or other closing funds) pursuant to a real estate contract or mortgage refinance.
Closing Statement or Settlement Statement – A statement that breaks down and summarizes all of the funds necessary to close a real estate transaction, and ends with the total amount due from buyer and to seller in order to close the transaction.
Title Agency – A company where title agents work and usually owned and operated by non-attorneys.
Settlement Agent – A party that is acting as the closing agent, title agent, and escrow agent in the same transaction.
Municipal Lien Search – A search of local governmental records to determine whether a specific property has any active or pending code enforcement actions, open or active permits, or unpaid utility bills.
Closing Fee or Settlement Fee – A fee charged by the closing agent to cover its costs to close a real estate transaction.
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