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A B
C D E
F G H
I J K
L M N
O P Q
R S T
U V W
X Y Z
This glossary is for informational purposes only and should not
be used
without legal counsel for the purpose of
reading/understanding a contract.
- Abandonment
- The voluntary relinquishment of rights of
ownership or another form of interest (an easement) by failure
to use the property over an extended period of time.
- ABR
- The Accredited Buyer Representative
designation indicates a real estate agent specializing in
representing buyers in the real estate transaction.
- Abstract (Of Title)
- A summary of the public records relating to
the title to a particular piece of land. An attorney or title
insurance company reviews an abstract of title to determine
whether there are any title defects which must be cleared before
a buyer can purchase clear, marketable, and insurable title.
- Acceleration Clause
- Condition in a mortgage that may require the
balance of the loan to become due immediately, if regular
mortgage payments are not made or for breach of other conditions
of the mortgage.
- Acre
- A measure of land, equal to 160 sq. rods
(43,560 sq.ft.). An acre is approximately 209' x 209'.
- Acknowledgment
- A formal declaration before an authorized
official (usually a notary public) by a person who has executed
a document, that he did in fact execute (sign) the document
- Addendum
- Something added. A list or other items added
to a document, letter, contract, escrow instructions, etc.
- Adverse Possession
- A method of acquiring title by open and
notorious possession usually vary with each state.
- Agent
- Acts of behalf of another, representing that
person's interests and serving as an intermediary.
- Agreement of Sale
- Known by various names, such as contract of
purchase, purchase agreement, or sales agreement according to
location or jurisdiction. A contract in which a seller agrees to
sell and a buyer agrees to buy, under certain specific terms and
conditions spelled out in writing and signed by both parties.
- Alienation Clause
- A clause within a loan instrument calling for
a debt in its entirety upon the transfer of ownership of the
secured property. Also called a "due on sale" clause.
- Amortization
- A payment plan which enables the borrower to
reduce his debt gradually through monthly payments of principal.
- Appraisal
- An expert judgment or estimate of the quality
or value of real estate as of a given date.
- Assessed Value
- Value placed on property by the tax assessor.
- Assignment
- A transfer or making over to another the
whole of any property, real or personal, or of any estate or
right therein. To assign is to transfer.
- Assumption of Mortgage
- An obligation undertaken by the purchaser of
property to be personally liable for payment of an existing
mortgage. In an assumption, the purchaser is substituted for the
original mortgagor in the mortgage instrument and the original
mortgagor is to be released from further liability in the
assumption, the mortgagee's consent is usually required
- Attachment
- Seizure of property by court order, usually
done in pending law suit to make property available in case of
judgment.
- Balloon Payment
- The final installment paid at the end of the
term of a note; used only when preceding installments were not
sufficient to pay off the note in full.
- Bill of Sale
- An instrument used to transfer personal
property
- Binder or "Offer to Purchase"
- A preliminary agreement, secured by the
payment of earnest money, between a buyer and seller as an offer
to purchase real estate. A binder secures the right to purchase
real estate upon agreed terms for a limited period of time. If
the buyer changes his mind or is unable to purchase, the earnest
money is forfeited unless the binder expressly provides that it
is to be refunded.
- Blanket Mortgage (Trust Deed)
- A single mortgage or trust deed which covers
more than one piece of real estate
- Bond
- An insurance agreement by which one party is
insured against loss or default by a third party. In the
construction business a performance bond ensures the interested
party that the contractor will complete the project. A bond can
also be a method of financing debt by a government or
corporation which is interest-bearing and has priority over
stock in terms of security.
- Breach
- Violation of an obligation in a contract
- Broker, Real Estate
- An agent licensed by the state to carry on
the business of operating in real estate. He usually receives a
commission for his services of bringing together buyers and
sellers, owners and tenants, in exchange agreements.
- Building Code
- A set of stringent laws that control the
construction of buildings, design, materials and other similar
factors
- Building Line or Setback
- Distances from the ends and/or sides of the
lot beyond which construction may not extend. The building line
may be established by a filed plat of subdivision, by
restrictive covenants in deeds or leases, by building codes, or
by zoning ordinances.
- Built-Ins
- Items that are not movable, such a stoves,
ovens, microwave ovens, dishwashers.
- Buyers Market
- A market condition which occurs in real
estate where more homes are for sale than there are interested
buyers
- Capital Gains
- A term used for income tax purposes which
represents the gain realized from the sale of an asset less the
purchase price and deductible expense.
- Capitalization
- An appraising term used in determining value
by considering net operating income and a percentage of
reasonable return on investment.
- Cash Flow
- The owner's spendable income after operating
expenses and debt service is deducted
- Certificate of Title
- A certificate issued by a title company or a
written opinion rendered by an attorney that the seller has good
marketable and insurable title to the property which he is
offering for sale. A certificate of title offers no protection
against any hidden defects in the title which an examination of
the records could not reveal. The issuer of a certificate of
title is liable only for damages due to negligence. The
protection offered a homeowner under a certificate of title is
not as great as that offered in a title insurance policy.
- Chain Of Title
- A history of conveyances and encumbrances
affecting the title as far back as records are available
- Client
- One who employs another's services, as in an
attorney, real estate agent, insurance agent, etc.
- Closing
- In the sale of real estate it is the final
moment when all documents are executed and recorded and the sale
is complete. Also a general selling term where a sales person is
attempting to sell something and the buyer agrees to purchase
- Closing Costs
- The numerous expenses which buyers and
sellers normally incur to complete a transaction in the transfer
of ownership of real estate. These costs are in addition to
price of the property and are items prepaid at the closing day.
- Closing Statement
- A list of the final accounting of all Moines
of both buyer and seller prepared by an escrow agent which notes
all costs each must pay at the completion of a real estate
transaction.
- Cloud (On Title)
- An outstanding claim or encumbrance which
adversely affects the marketability of title.
- Commission
- Money paid to a real estate agent or broker
by the seller as compensation for finding a buyer and completing
the sale. Usually it is a percentage of the sale price- - 6 to 7
percent on houses, 10 percent on land.
- Common Area
- That area owned in common by owners of
condominiums and planned sight development homes within a
subdivision.
- Community Property
- Both real and personal property accumulated
by a husband and wife after marriage through joint efforts of
both living together.
- Condemnation
- A declaration by governing powers that a
structure is unfit for use.
- Conditional Sales Contract
- A contract for the sale of property where the
buyer has possession and use, but the seller retains title until
the conditions of the contract have been fulfilled. Also known
as a land contract.
- Condominium
- Individual ownership of a dwelling unit and
an individual interest in the common areas and facilities which
serve the multi- unit project.
- Consideration
- Anything of value given to induce someone
into entering into a contract.
- Construction Loan
- The short-term financing of improvements on
real estate. Once the improvements are completed a 'take out'
loan for a longer term is usually issued.
- Contingency
- A condition upon which a valid contract is
dependent. For example; the sale of a house is contingent upon
the buyer obtaining adequate financing.
- Contract
- An agreement between tow or more parties,
written or oral, to do or not to do certain things.
- Contractor
- In the construction industry, a contractor is
one who contracts to erect buildings or portions of them. There
are also contractors for each phase of construction: heating,
electrical, plumbing, air conditioning, road building, bridge
and dam erection, and others.
- Conventional Mortgage
- A mortgage loan not insured by HUD or
guaranteed by the Veterans' Administration. It is subject to
conditions established by the lending institution and State
statutes. The mortgage rates may vary with different
institutions and between States. (States have various interest
limits.)
- Conveyance
- The transfer of the title to land from one to
another.
- Counter Offer
- An offer in response to an offer. 'A' offers
to by 'B's' house for $20,000 which is listed for $22,000. 'B'
counter offers 'A's' offer by stating that he will sell the
house to 'A" for $21,000. The $21,000 is the counter offer.
- Covenants
- Agreements written into deeds and other
instruments stating performance or non-performance of certain
acts or noting certain uses or non-uses of property.
- Deed
- A formal written instrument by which title to
real property is transferred from one owner to another. The deed
should contain an accurate description of the property being
conveyed, should be signed and witnessed according to the laws
of the State where the property is located, and should be
delivered to the purchaser at closing day. There are two parties
to a deed: the grantor and the grantee. (See also deed of trust,
general warranty deed, quitclaim deed, and special warranty
deed.)
- Default
- Failure to make mortgage payments as agreed
to in a commitment based on the terms and at the designated time
set forth in the mortgage or deed of trust. It is the
mortgagor's responsibility to remember the due date and send the
payment prior to the due date, not after. Generally, thirty days
after the due date if payment is not received, the mortgage is
in default. In the event of default, the mortgage may give the
lender the right to accelerate payments, take possession and
receive rents, and start foreclosure. Defaults may also come
about by the failure to observe other conditions in the mortgage
or deed of trust.
- Depreciation
- Decline in value of a house due to wear and
tear, adverse changes in the neighborhood, or any other reason.
- Documentary Stamps
- A State tax, in the forms of stamps, required
on deeds and mortgages when real estate title passes from one
owner to another. The amount of stamps required varies with each
State.
- Down Payment
- The amount of money to be paid by the
purchaser to the seller upon the signing of the agreement of
sale.
- Earnest Money
- The deposit money given to the seller or his agent by the
potential buyer upon the signing of the agreement of sale to
show that he is serious about buying the house. If the sale goes
through, the earnest money is applied against the downpayment.
If the sale does not go through, the earnest money will be
forfeited or lost unless the binder or offer to purchase
expressly provides that it is refundable.
- Easement Rights
- A right- of- way granted to a person or company authorizing
access to or over the owner's land. An electric company
obtaining a right- of- way across private property is a common
example.
- Economic Obsolescence
- Loss of useful life and desirability of a property through
economic forces, such as change in zoning, changes in traffic
flow, etc., rather than deterioration.
- Encroachment
- An obstruction, building, or part of a building that
intrudes beyond a legal boundary onto neighboring private or
public land, or a building extending beyond the building line.
- Encumbrance
- A legal right or interest in land that affects a good or
clear title, and diminishes the land's value. It can take
numerous forms, such as zoning ordinances, easement rights,
claims, mortgages, liens, charges, a pending legal action,
unpaid taxes, or restrictive covenants. An encumbrance does not
legally prevent transfer of the property to another. A title
search is all that is usually done to reveal the existence of
such encumbrances, and it is up to the buyer to determine
whether he wants to purchase with the encumbrance, or what can
be done to remove it.
- Equity
- The value of a homeowner's unencumbered interest in real
estate. Equity is computed by subtracting from the property's
fair market value the total of the unpaid mortgage balance and
any outstanding liens or other debts against the property. A
homeowner's equity increases as he pays off his mortgage or as
the property appreciates in value. When the mortgage and all
other debts against the property are paid in full the homeowner
has 100% equity in his property.
- Escalation Clause
- A clause in a lease providing for an increased rent at a
future time due to increased costs to lessor, as in cost of
living index, tax increases, etc.
- Escheat
- The reverting of property to the state in the absence of
heirs.
- Escrow
- Funds paid by one party to another (the escrow agent) to
hold until the occurrence of a specified event, after which the
funds are released to a designated individual. In FHA mortgage
transactions an escrow account usually refers to the funds a
mortgagor pays the lender at the time of the periodic mortgage
payments. The money is held in a trust fund, provided by the
lender for the buyer. Such funds should be adequate to cover
yearly anticipated expenditures for mortgage insurance premiums,
taxes, hazard insurance premiums, and special assessments.
- Estate
- The ownership interest of a person in real property. Is also
used to refer to a deceased person's property. And often used to
describe a large home with spacious grounds
- Fair Market Value
- That price a property will bring given that both buyer and
seller are fully aware of market conditions and comparable
properties.
- Fee Simple
- Ownership of title to property without any limitation, which
can be sold, left at will, or inherited.
- Fixtures
- Items affixed to buildings or land usually in such a way
that they cannot be moved without damage to themselves or the
property, such as plumbing, electrical fixtures, trees, etc.
- Foreclosure
- A legal term applied to any of the various methods of
enforcing payment of the debt secured by a mortgage, or deed of
trust, by taking and selling the mortgaged property, and
depriving the mortgagor of possession.
- Front Footage
- The linear measurement along the front of a parcel. That
portion of the parcel which fronts the street or walkway.
- Functional Obsolescence
- Loss in value due to out-of-date or poorly designed
equipment while newer equipment and structures have been
invented since it's construction.
- General Warranty Deed
- A deed which conveys not only all the grantor's interests in
and title to the property to the grantee, but also warrants that
if the title is defective or has a "cloud" on it (such as
mortgage claims, tax liens, title claims, judgments, or
mechanic's liens against it) the grantee may hold the grantor
liable.
- Grantee
- That party in the deed who is the buyer or recipient.
- Grantor
- That party in the deed who is the seller or giver.
- Ground Lease
- A lease of vacant land
- Hazard Insurance
- Protects against damages caused to property by fire,
windstorms, and other common hazards.
- Home Owners Association
- An association of homeowners within a community formed to
improve and maintain the quality of the community. An
association formed by the developer of condominiums or planned
developments.
- HUD
- U.S. Department of Housing and Urban Development. Office of
Housing/Federal Housing Administration within HUD insures home
mortgage loans made by lenders and sets minimum standards for
such homes.
- Interest
- A charge paid for borrowing money. (See mortgage note)
- Involuntary Lien
- A lien which attaches to property without the consent of the
owner such as tax liens as opposed to voluntary liens
(mortgages).
- Joint Tenancy
- Joint ownership by two or more persons with right of
survivorship. Upon the death of a joint tenant, his/her interest
does not go to his/her heirs, but to the remaining joint
tenants.
- Lease
- A contract between the owner of real property, called the
lessor, and another person referred to as the lessee, covering
all conditions by which the lessee may occupy and use the
property.
- Lease With Option To Purchase
- A lease where the lessee has the option to purchase the
leased property. The terms of the purchase option must be set
forth in the lease.
- Legal Description
- The geographical identification of a parcel of land
- Lessee
- One who contracts to rent property under a specified lease>
- Lessor
- An owner who contracts into a lease with a tenant (lessee).
- Lien
- A claim by one person on the property of another as security
for money owed. Such claims may include obligations not met or
satisfied, judgments, unpaid taxes, materials, or labor. (See
also special lien.)
- Life Estate
- A estate in real property for the life of a person
- Listing
- A contract between owner and broker to sell the owner's
property
- Marketable Title
- A title that is free and clear of objectionable liens,
clouds, or other title defects. A title which enables an owner
to sell his property freely to others and which others will
accept without objection.
- Mechanic's Lien
- A lien created by statute on a specific property for labor
or materials contributed to an improvement on that property.
- Mortgage
- A lien or claim against real property given by the buyer to
the lender as security for money borrowed. Under government-
insured or loan- guarantee provisions, the payments may include
escrow amounts covering taxes, hazard insurance, water charges,
and special assessments. Mortgages generally run from 10 to 30
years, during which the loan is to be paid off.
- Mortgage Commitment
- A written notice from the bank or other lending institution
saying it will advance mortgage funds in a specified amount to
enable a buyer to purchase a house.
- Mortgage Insurance Premium
- The payment made by a borrower to the lender for transmittal
to HUD to help defray the cost of the FHA mortgage insurance
program and to provide a reserve fund to protect lenders against
loss in insured mortgage transactions. In FHA insured mortgages
this represents an annual rate of one- half of one percent paid
by the mortgagor on a monthly basis.
- Mortgage Note
- A written agreement to repay a loan. The agreement is
secured by a mortgage, serves as proof of an indebtedness, and
states the manner in which it shall be paid. The note states the
actual amount of the debt that the mortgage secures and renders
the mortgagor personally responsible for repayment.
- Mortgage (Open- End)
- A mortgage with a provision that permits borrowing
additional money in the future without refinancing the loan or
paying additional financing charges. Open- end provisions often
limit such borrowing to no more than would raise the balance to
the original loan figure.
- Mortgagee
- The lender in a mortgage agreement.
- Mortgagor
- The borrower in a mortgage agreement.
- Multiple Listing
- A listing taken by a member of an organization of brokers,
whereby all members have an opportunity to find a buyer.
- Negative Amortization
- When monthly payments are not enough to cover interests
costs, they are added to the principal balance, and you may end
up owing more than when you started. This is most likely to
occur with ARMs that have payment
caps.
- Notary Public
- One who is authorized by federal or local government to
attest authentic signatures and administer oaths.
- Note
- A written instrument acknowledging a debt and promising
payment
- Offer
- A presentation to form a contract or agreement.
- Option
- A right given, for consideration, to purchase or lease
property upon stipulated terms within a specific period of time
- Origination Fee
- Application fee(s) for processing a proposed mortgage.
- Plat
- A map or chart of a lot, subdivision or community drawn by a
surveyor showing boundary lines, buildings, improvements on the
land, and easements.
- P.M.I. (Private Mortgage Insurance)
- Insurance which covers a portion of the first mortgage
allowing the lender to offer more lenient terms to a borrower.
- Points
- Sometimes called "discount points." A point is one percent
of the amount of the mortgage loan. For example, if a loan is
for $25,000, one point is $250. Points are charged by a lender
to raise the yield on his loan at a time when money is tight,
interest rates are high, and there is a legal limit to the
interest rate that can be charged on a mortgage. Buyers are
prohibited from paying points on HUD or Veterans' Administration
guaranteed loans (sellers can pay, however). On a conventional
mortgage, points may be paid by either buyer or seller or split
between them.
- Prepayment
- Payment of mortgage loan, or part of it, before due date.
Mortgage agreements often restrict the right of prepayment
either by limiting the amount that can be prepaid in any one
year or charging a penalty for prepayment. The Federal Housing
Administration does not permit such restrictions in FHA insured
mortgages.
- Prepayment Penalty
- A penalty within a note, mortgage, or deed of trust imposing
a penalty if the debt is paid in full before the end of its
terms.
- Principal
- The basic element of the loan as distinguished from interest
and mortgage insurance premium. In other words, principal is the
amount upon which interest is paid.
- Purchase Agreement
- An agreement between buyer and seller denoting price and
terms of the sale.
- Real Estate Agent
- a licensed person who works under the direction of a broker
selling and renting real estate.
- Real Estate Broker
- A middle man or agent who buys and sells real estate for a
company, firm, or individual on a commission basis. The broker
does not have title to the property, but generally represents
the owner.
- Realtor
- A real estate broker holding membership with the National
Association of Realtors.
- Refinancing
- The process of the same mortgagor paying off one loan with
the proceeds from another loan.
- Restrictive Covenants
- Private restrictions limiting the use of real property.
Restrictive covenants are created by deed and may "run with the
land," binding all subsequent purchasers of the land, or may be
"personal" and binding only between the original seller and
buyer. The determination whether a covenant runs with the land
or is personal is governed by the language of the covenant, the
intent of the parties, and the law in the State where the land
is situated. Restrictive covenants that run with the land are
encumbrances and may affect the value and marketability of
title. Restrictive covenants may limit the density of buildings
per acre, regulate size, style or price range of buildings to be
erected, or prevent particular businesses from operating or
minority groups from owning or occupying homes in a given area.
(This latter discriminatory covenant is unconstitutional and has
been declared unenforceable by the U.S. Supreme Court.)
- Seller's Market
- More buyers than sellers.
- Special Assessments
- A special tax imposed on property, individual lots or all
property in the immediate area, for road construction,
sidewalks, sewers, street lights, etc.
- Special Lien
- A lien that binds a specified piece of property, unlike a
general lien, which is levied against all one's assets. It
creates a right to retain something of value belonging to
another person as compensation for labor, material, or money
expended in that person's behalf. In some localities it is
called "particular" lien or "specific" lien. (See lien.)
- Special Warranty Deed
- A deed in which the grantor conveys title to the grantee and
agrees to protect the grantee against title defects or claims
asserted by the grantor and those persons whose right to assert
a claim against the title arose during the period the grantor
held title to the property. In a special warranty deed the
grantor guarantees to the grantee that he has done nothing
during the time he held title to the property which has, or
which might in the future, impair the grantee's title.
- Survey
- A map or plat made by a licensed surveyor showing the
results of measuring the land with its elevations, improvements,
boundaries, and its relationship to surrounding tracts of land.
A survey is often required by the lender to assure him that a
building is actually sited on the land according to its legal
description.
- Tax
- As applied to real estate, an enforced charge imposed on
persons, property or income, to be used to support the State.
The governing body in turn utilizes the funds in the best
interest of the general public.
- Title
- As generally used, the rights of ownership and possession of
particular property. In real estate usage, title may refer to
the instruments or documents by which a right of ownership is
established (title documents), or it may refer to the ownership
interest one has in the real estate.
- Title Insurance
- Protects lenders or homeowners against loss of their
interest in property due to legal defects in title. Title
insurance may be issued to a "mortgagee's title policy."
Insurance benefits will be paid only to the "named insured" in
the title policy, so it is important that an owner purchase an
"owner's title policy", if he desires the protection of title
insurance.
- Title Search or Examination
- A check of the title records, generally at the local
courthouse, to make sure the buyer is purchasing a house from
the legal owner and there are no liens, overdue special
assessments, or other claims or outstanding restrictive
covenants filed in the record, which would adversely affect the
marketability or value of title.
- Trustee
- A party who is given legal responsibility to hold property
in the best interest of or "for the benefit of" another. The
trustee is one placed in a position of responsibility for
another, a responsibility enforceable in a court of law. (See
deed of trust.)
- Variable Interest Rate
- A fluctuating interest rate which can go up or down
depending on the going market rate.
- Voluntary Lien
- A voluntary lien by the owner such as a mortgage, as opposed
to involuntary liens (taxes).
- Waive
- To relinquish, or abandon. To forego a right to enforce or
require anything.
- Wrap-Around Mortgage
- A second mortgage which is subordinate to but includes the
face value of the first mortgage.
- Zoning Ordinances
- The acts of an authorized local government establishing
building codes, and setting forth regulations for property land
usage.
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109 Westpark Dr., Suite 100