Glossary

    Title & closing terms, in plain English.

    A reference for agents, lenders, and clients navigating real estate transactions and 1031 exchanges in North Carolina.

    Title Insurance
    An insurance policy protecting real estate owners and lenders against financial loss from defects in title, liens, or other matters affecting ownership.
    Title Search
    An examination of public records to determine and confirm a property's legal ownership and identify any claims, liens, or encumbrances.
    Closing
    The final step of a real estate transaction where ownership transfers from seller to buyer and funds are disbursed. In North Carolina, closings are conducted by a licensed attorney.
    Closing Attorney
    In North Carolina, a licensed attorney who oversees the legal aspects of a real estate closing, including reviewing documents, conducting the title search, and disbursing funds.
    Settlement Statement (CD/ALTA)
    A document that itemizes all costs, credits, and charges in a real estate transaction for both the buyer and the seller.
    Escrow
    Funds or documents held by a neutral third party until specific conditions of a real estate transaction are met.
    Earnest Money Deposit (EMD)
    A good-faith deposit a buyer makes to demonstrate serious intent to purchase a property, typically held in trust until closing.
    Deed
    The legal document that transfers ownership of real property from one party to another and is recorded with the county Register of Deeds.
    Lien
    A legal claim against a property used as security for a debt that must be resolved before clear title can transfer.
    Encumbrance
    Any claim, lien, easement, or restriction on a property that may affect its use, value, or transferability.
    1031 Exchange
    A tax-deferred exchange under IRC Section 1031 allowing investors to defer capital gains tax by reinvesting proceeds from the sale of investment property into like-kind replacement property.
    Qualified Intermediary (QI)
    An independent third party required in a 1031 exchange to hold sale proceeds and facilitate the acquisition of replacement property to preserve tax-deferred treatment.
    Reverse 1031 Exchange
    A 1031 exchange in which the replacement property is acquired before the relinquished property is sold, typically using an Exchange Accommodation Titleholder (EAT).
    Build-to-Suit Exchange
    A 1031 exchange variation where exchange proceeds are used to construct or improve replacement property during the 180-day exchange period.
    Identification Period (45-Day Rule)
    The 45-day window after closing on the relinquished property in a 1031 exchange during which the taxpayer must identify potential replacement properties in writing.
    Exchange Period (180-Day Rule)
    The 180-day window after closing on the relinquished property in a 1031 exchange during which the taxpayer must close on the replacement property.
    Title Commitment
    A preliminary report issued by the title company outlining the conditions under which a title insurance policy will be issued.
    Refinance
    The process of replacing an existing mortgage with a new loan, typically requiring an updated title search and policy for the lender.