Glossary of Distressed Real Estate – E
Encumbrance – A generic term referring to anything affecting title to a property. Some encumbrances are reasonable and necessary, such as easements for the installation, maintenance and repair of underground utilities. This type of encumbrance does not impair the marketability of a property. Certain recorded encumbrances, such as judgments, tax liens, mortgages and trust deeds, do affect marketability, and must be removed prior to closing in order to transfer clear title to the property. Some encumbrances, such as a building encroachment, do not normally show up on the public record, but if discovered, can also affect marketability of title.
Equator – A proprietary internet platform used by certain large banks/servicers when negotiating a pre-foreclosure distressed housing event [e.g. short sale] with a borrower or borrower’s representative. Equator also provides default servicing solutions.
Equity – The amount by which the fair market value of a property exceeds the total balance due of all recorded financial claims owed against it (such as loans, judgments, taxes, etc.). When recorded financial claims exceed the fair market value, it is called “negative equity”.
Escrow – The service provided by licensed companies acting as a neutral third party between seller and buyer in a real estate transaction. Escrow only acts on written instructions from the parties, known as “escrow instructions.” An escrow officer assigned to the transaction collects all sums due [such as the buyer’s down payment and the lender’s loan funds], solicits payoff statements from all existing creditors of record, and distributes all funds to those persons or companies necessary for removal of their recorded liens and other financial claims appearing on the public record. This process is known as “closing” or “settlement.” In Oregon closings are handled by licensed escrow companies, rather than attorneys.
Escrow Account – An account handled by escrow. Distribution of funds from this account cannot occur without joint written instructions from the parties. If any party objects to a disbursement, escrow will not do so until it has consent from everyone. If that cannot be obtained, escrow will tender the money into court and ask for judicial directions through a process called “interpleader.”
Eviction – The process of removing a commercial or residential tenant from the property they are possessing, usually under a rental or lease agreement. The technical name for the process is a “forcible entry and detainer” or “FED,” which is a “summary” or fast-track judicial proceeding, usually taking less than two weeks, unless contested. [See, ORS 105.105 to 105.168]