Glossary of Real Estate Terms (Oregon) – T
Tenancy – A right of possession or occupancy of real property. A tenancy can be “periodic,” that is, week-to-week or month-to-month, or for a fixed terms (i.e. a “lease”) such as a one, two, three or more year lease.
Tenant – One who has a right of occupancy under a tenancy agreement. A tenant may also known as a “Lessee.”
Title – One’s right of ownership to real or personal property. A deed is the physical document evidencing one’s title to real property and a bill of sale is evidence of one’s title to personal property. Upon each successive conveyance of title a new deed is given from the then-owner to the new buyer.
Title Company – In Oregon, title companies specialize in the examination and insuring of title to real estate. Attorneys are not usually involved in the process as they are in some states. Most title companies in Oregon also have an escrow department that provides closing (“settlement”) services to the parties.
Title Defect – Anything affecting the marketability of title to real estate, such as a gap in the chain of title where there is no evidence in the deed records showing that one transferring title ever received the same title from someone else. Sometimes title defects occur because an owner died and the estate was never probated, so it is unclear whether any of the heirs still have an interest in the property. A title defect is also referred to as a “cloud” on the title.
Title Insurance – A policy of insurance that that is typically issued to buyers and lenders effective as of the date of closing. The buyer’s policy is called an “owner’s policy” and it guarantees the marketability of the title subject to two sets of exceptions. The first set are called “standard exceptions” as they are found in all owner policies, and they generally include potential title defects that do not appear on the public record, such as boundary encroachments, unrecorded mechanics liens and persons (other than the seller) in possession of the property. The second set of exceptions are called “special exceptions” because they are unique to the specific land being sold. Banks require that their borrowers pay for a “lender’s policy” of title insurance to insure them against certain risks up to the face amount of the loan. Lender policies provide extended coverage beyond that found in owners’ policies.
Title Search – An investigation of the public records, in the county where the property is located, to determine whether title is marketable and can be transferred to a buyer free and clear of objectionable liens and encumbrances. In Oregon, such searches are provided by title companies, not lawyers. The results of the search are first disclosed in a “preliminary title report” that is distributed to the parties, the lender and the real estate agents. The standard statewide OREF Sale Agreement form contains a contingency period for buyers to review the preliminary title report and indicate whether they have any objections to the matters disclosed in the report and for sellers to try to cure any title defects.
Townhome – Generally used to refer to a residential design of side-by-side multiple units sharing a common wall, common roof line, and two-story construction. Each owner has deeded title to their property which is usually the size of the foundation footprint. It may include a strip in front and/or back. Maintenance of the owner’s land, if any, is usually governed by the CC&Rs. However, some townhome developments are actually condominiums, in which the owners merely own the interior of their units, and the rest of the property consists of either limited and/or general common elements. In either case, there is a homeowner association or unit owner association to maintain the common areas.
Tranche – In Real Estate Mortgage Investment Conduits (“REMICs”) (defined above) investors’ returns are based upon the amount of “risk” they are willing to accept. For this reason, REMICs are divided into “tranches” (French for “slice”), with each tranche consisting of bundles of loans rated by risk of default (e.g. subprime, Alt-A, Alt-B, prime, etc.). The higher the risk, the higher the return. However, upon default, the investors in higher risk tranches will find themselves in line behind (i.e. “subordinated to”) the investors in lower risk tranches.
Transfer Tax – A tax levied at the time of each recorded transfer of real estate within the county. Of Oregon’s 36 counties, only Washington County has a transfer tax, which is $1.00 per $1,000 of stated consideration. There are many exceptions to the tax, such as conveyances to clear title, adjust boundary lines, transfers between related companies, etc. In Oregon, it is customary that buyer and seller equally split the cost of the tax for transfers in Washington County.
Trespass – The act of coming upon the land of another without their consent. Trespass can be intentional, reckless, or negligent. It can technically occur when a structure encroaches upon the land of another or when particulate matter is spread upon other’s land. Under certain circumstances no proof of actual damages to the land is necessary for recovery against the trespasser.
Truth-in-Lending Act (“TILA”) – A federal law enacted to promote the informed use of consumer credit by requiring disclosures about loan costs and terms. TILA gives consumers the right to cancel certain credit transactions, regulates certain credit card practices, and provides a method for the resolution of credit billing disputes. The Act prohibits certain practices in connection with credit secured by a consumer’s principal residence.
Trust Deed – The name of the instrument used by most Oregon lenders to secure the promissory note given by the borrower for repayment of a loan. The trust deed, once recorded in the public records, acts as notification to the world that the lender holds a secured position on certain real property for repayment of a debt. The trust deed sets forth the lender’s legal rights of foreclosure should the borrower default under the terms of the note. Mortgages and trust deeds serve exactly the same purpose; they differ only in the terminology and the methods of foreclosure. Many people use the term “mortgage” generically, even though the security document is actually a trust deed. (See, ORS Chapter 86)
Trustee – A person who is appointed by a court or designated in a written document, such as a will or trust, to take control of property for the benefit of another. Under Oregon trust deed law, the trustee is the third party named in the trust deed who is designated to hold the property in trust pending the default or payoff of the promissory note. If the borrower (called the “Trustor” or “Grantor”) pays off the note, the lender (called the “Beneficiary”) instructs to Trustee to issue a Deed of Reconveyance which is the same as a satisfaction of mortgage under mortgage law. If the borrower defaults in the repayment of the note, the lender instructs the Trustee to commence the foreclosure process. In most cases, the original Trustee appointed by the Beneficiary (i.e. the lender) in the Trust Deed, is substituted by another trustee, known as the “Successor Trustee” to actually commence, handle, and complete the foreclosure. The foreclosure sale is sometimes referred to a “Trustee’s Sale.” When the foreclosure auction is completed, the high bidder (frequently the lender itself when there are no bids in excess of the lender’s bid) receives a Trustee’s Deed.
Trustee’s Deed – See “Trustee,” above.