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Abstract of Title to Accretion

 

Abstract of Title

Any parties involved in a real estate transaction — whether it’s a purchase, sale or using the property as collateral for a debt — will typically require proof that the persons claiming to be owners of the property really do own it. That’s what an abstract of title provides.

To facilitate real estate transactions, title companies and attorneys will develop a summary history of the documents and known filings affecting the title to real property. The abstract of title will itemize the following recorded and known transactions for a parcel of land or any real property:

  • Deeds of conveyance
  • Grants and wills
  • Liens
  • Encumbrances
  • Judgments and legal filings

Many title abstracts trace the conveyances of the land all the way to earliest know subdivision. Again, the purpose of the abstract is to present evidence that clarifies the parties that own the subject property, as well as what claims remain possibly outstanding against that subject property.

 

Abstract of Title with Attorney’s Opinion

In lieu of or in conjunction with a title insurance policy, this abstract of title includes an attorney opinion letter. It’s meant to give the abstract greater standing. The attorney writes his or her legal opinion of the status and marketability of subject property’s title.

The attorney need not be the one who prepared the abstract of title. He or she just must have reviewed it. This opinion is not a guarantee, but a legal opinion is often sufficient to “perfecting” title. However, it doesn’t necessarily address the validity of the conveyances or encumbrances listed — or that all deeds and encumbrances have been properly listed.

 

Abstraction

In real estate valuation, abstraction is a method of determining the value of land, apart from any improvements to that land. This basic approach starts with an acceptable sale price, and then subtracts the value of the building and all other improvements.

For example, a four-bedroom ranch home sells for $200,000. The appraiser estimates that the building and other improvements are worth about $140,000. Subtracting that from the sale price, the appraiser estimates that the land portion of the real estate is worth about $60,000.

 

Accelerated Cost Recovery System

Depreciation deductions are the biggest benefits of real estate for many investors. This depreciation is available with any tangible investment property that an investor buys. The IRS figures that most capital equipment or improvements lose value over time because of their decreased useful life. [Of course, real estate is different, but the building and other improvements can still claim depreciation.]

The Accelerated Cost Recovery System (ACRS) is a method of depreciation introduced by the Economic Recovery Act of 1981. It calculates the useful life of various property types, for the purpose of determining depreciation. However, instead of giving a steady depreciation rate over the property’s projected life, ACRS allows for greater deductions in the earlier years.

 

Accelerated Depreciation

In comparison to the straight-line method, the accelerated depreciation method front-loads the investor’s depreciation deductions. It allows property owners to depreciate a greater amount during the initial years of ownership — and less during the later years. Of course, this does encourage investors to unload their tax shelter properties sooner rather than later.

 

Acceleration Clause

The clause in a mortgage or deed of trust that allows the lender to “accelerate” the payment schedule. This means that the borrower must pay off the full amount of the loan principal — not just catch up on the payment schedule.

Standard residential mortgage loans do not allow unrestricted acceleration clauses — they can only use it if the borrower is in default of their obligation.

Mortgage lenders typically only exercise this clause when the borrower fails to meet loan obligations and has been declared in default. In fact, the acceleration clause often accompanies either the notice of default or notice of foreclosure.

 

Access Right

Owners of all landlocked parcels of real property must have a way into the property. This is an established American real estate legal principle: real property cannot be landlocked. They must have easements through a neighboring property to provide access to that landlocked property — even if the owner of that neighboring property doesn’t want to provide access easements.

 

Accession

Just as a building becomes a full part of the real property when it is built on the land, fixtures can become a legal part of the real property. The legal process by which trade fixtures permanently become part of the real property is called accession. For example, built-in kitchen cabinets are fixtures that usually cannot be removed by the departing tenant or owner — because it has become part of the real property through accession.

 

Accommodator

Also called a qualified intermediary, the accommodator assists one or more of the parties involved in a real estate exchange.

 

Accredited Management Organization (AMO)

A designation awarded to qualified property management companies by the Institute of Real Estate Management (IREM).

 

Accretion

You’re walking down by the shore and you notice that sand has collected around the pier, to the point that it has become a sizable peninsula. That gradual addition of land by force of nature is called accretion, which can be considered the opposite of erosion. Accretion also happens in volcanic areas, such as Hawaii and Iceland, where lava has reached the shores and cooled to add more land mass.