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Real Estate Dictionary - NEW**

 

Abandonment

The voluntary relinquishment of rights of ownership or another interest (such as rights to an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).

Abstract

A summary of the key components of recorded deeds, mortgages, leases and other factors that affect a property’s title.

Abstracting

The act of composing an abstract.

Abstractor

The person or entity that composes an abstract.

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.

Access

The right to enter and leave a tract of land from a public way. Can include the right to enter and leave over the lands of another.

Accretion

The gradual addition to the shore or bank of a waterway.

Acknowledgment

Legal validity granted to a document by an authorized official (such as a notary public) who certifies that a document is indeed executed (signed) by the named executor (signer).

Acre

A measure, usually of land, containing 43,560 square feet in any shape.

Ad Valorem

"According to value". A method of taxation using the value of the thing taxed to determine the amount of the tax.

Addendum

Something added (additions to a document). Real property sales often have addenda (plural of addendum) as the buyer and seller negotiate fine points.

Adjustable-Rate Mortgage (ARM)

A loan with an interest rate that changes periodically in keeping with a current index, like one-year treasury bills. Typically, however, ARMs can't jump more than two percentage points per year or six points above the starting rate.

Administrator

A person appointed by the probate court to carry out the administration of a decedent's estate when the decedent has left no will. If a woman is appointed, she is called an administratrix.

Adverse Possession

An unauthorized possession of land for an allotted amount of time that results in the land owner losing land to the occupier.

Affidavit

A written statement or declaration, sworn to before an officer who has authority to administer an oath.

ALTA

The acronym for American Land Title Association, the title insurance industry’s national trade organization.

Agent

A licensed individual enacted to represent the buyer or seller in a real estate transaction.

Agreement of Sale

Known by various names, such as contract of purchase, purchase agreement, or purchase and 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.

Amortization

Derived from the French word “to kill,” it means paying off a debt through regular partial payments that reduce both the principal and interest of an incurred debt, instead of only paying down the interest.

Annual Percentage Rate (A.P.R.)

Is the annual rate on the loan and the rate used to calculate the monthly payments. The APR includes both the interest rate and any additional costs or prepaid finance charges such as prepaid interest, private mortgage insurance, closing fees, points, etc. It represents the total cost of credit on a yearly basis after all charges are taken into consideration.

Application Fees

The fees that a mortgage company charges to process a loan application, customarily equivalent to approximately 1% of the loan amount or a flat fee.

Appraisal

An expert judgment or estimate of the quality or value of real estate as of a given date.

Approved Attorney

In states where attorneys examine the chain of title before title insurance is issued, the title company will approve certain attorneys as those whose opinion it will accept for the issuance of a title policy.

Appurtenance

A right or privilege that is a part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.

Arrears

Payment made after the cost has been incurred. For example, rent is usually paid in advance of the time a space is to be used, whereas when you eat at a restaurant you pay after you eat, hence, in arrears.

“As-Is” Condition

The condition in which the buyer is accepting the home at the time of the sale, including its faults. The seller gives no guarantee on the quality of the asset and makes no repairs that may be necessary.

Asking Price

The price for which the seller has placed the property on the market.

Assessment

The placing of a value on property for the purposes of taxation.

Assessor’s Parcel Number (APN): A unique string of numbers that are used to identify a property, referenced on a parcel map.

 

Assignment

The act of transferring an interest, such as a loan secured by a mortgage, from one person to another.

Assumable Mortgage

A mortgage which, by its terms, allows a new owner to take over its obligations.

Assumption Fee

The cost a lender imposes for the purchase of an existing mortgage.

Assumption of Mortgage

A bank-approved agreement to transfer to a new purchaser the responsibility of an existing loan that is tied to a mortgage or deed of trust.

Attachment

Legal seizure of property to force payment of a debt.

Attorney in Fact

An authorization granted by the power of attorney to act as an agent on someone else’s behalf.

Attorney's Opinion

A written statement documenting the professional opinion of an attorney in regards to the status of a property title.

 

 

Balloon Note

A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.

Bankruptcy

A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor's creditors and the debtor.

Beneficiary

Regarding loans, it is the Lender.

Binder

An early agreement to buy a home from a seller, which is usually ensured with earnest money.

Binder

A contract consisting of a brief, written agreement acknowledging a deposit is made for a real estate purchase.

Blanket Mortgage

A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance or release from the blanket mortgage is ordinarily obtained.

Breach of Contract

Failure to perform a contract, in whole or part, without legal excuse.

Broker

A professional negotiator who acts on behalf of another and is paid in commission or fees.

Broker’s Market Analysis (BMA)

A document real estate brokers use to calculate and estimate property value, suggest a marketing strategy, and present the marketing strategy in a logical way.

Broker’s Price Opinion (BPO)

A professional estimate made by a real estate broker of the net sale price of a property. A BPO is based on the characteristics of the property being considered.

Buydown

A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first one to five years of the loan. (See also: Certificate Backed Mortgage).

Buyer

The person, persons, or company purchasing a property.

Buyer Agency

Where the real estate agent represents the buyer in a real estate transaction.

Buyer Agent

Working on behalf of the buyer, the agent who shows and seeks the property, negotiates the contract, and assists the buyer in closing the transaction.

 

 

Cap

A limit on how much an adjustable mortgage rate can vary (in an ARM or AML), either monthly, at each adjustment interval, or over the span of the entire mortgage.

Carrying Costs

Standard costs incurred when owning a property, such as taxes, insurance, interest, utilities, maintenance, etc.

CC&Rs

The acronym for Covenants, Conditions and Restrictions. A recorded document that controls the use, requirements and restrictions of a property, commonly created when a subdivision is built.

Certificate of Title

A document issued by an attorney or title company certifying the status of title to real property and the absence or presence of title defects, liens and adverse claimants.

Certified of Reasonable Value (CRV)

In a VA-guaranteed mortgage, this is a document establishing the maximum value and loan amount.

Certified Residential Broker (CRB)

For certification, a Broker is required to have worked as a licensed broker for five years, be a member of the National Association of REALTORS®, and complete five required Residential Division courses.

Chain of Title

The history of all owners and lienholders of real property along with the dates of their acquisition and the nature of their title, going back to the first deed out of the government.

Claim

To make a demand for money, property or for enforcement of a right provided by law.

Closing

The final step in the transaction process, where title exchanges hands, money is disbursed and all documents are signed. In some states, a real estate transaction is not considered “closed” until the documents record at the local recorder’s office. Also known as a settlement.

Closing Cost

The fees that are part of closing at a title company, such as legal fees, recording fees, title policy, mortgage company charges, etc., incurred by either the buyer or seller as is set forth in the contract of sale.

Closing Disclosure

A 5-page disclosure document designed to help consumers understand all of the costs associated with taking out a mortgage and purchasing a home. The Closing Disclosure must be provided to consumers three business days before they close on the loan.

Closing Statement

An all-inclusive summary itemizing debits and credits to each party, seller and buyer, and presented in the form of a balance sheet.

Cloud on Title

Any claim or encumbrance that may impair the title to a property, making its validity questionable, and that might prevent the title from being cleared to transfer.

C.L.U.E. (Comprehensive Loss Underwriting Exchange)

Is a claims-history database generated by the national insurance industry’s that enables insurance companies to access consumer claims information (personal property and personal auto) when they are underwriting or rating an insurance policy.

Commission

The compensation real estate brokers, mortgage brokers and real estate professionals are paid upon the final sale for their services.

Commission Split

The percentage by which a real estate agent and the real estate sales brokerage divide the commission amount.

Comparative Market Analysis

The study of active, pending and sold comparable properties to estimate a listing price for a property that is done by a real estate agent or broker.

Competitive Market Analysis

The analysis of market information that is provided to the seller and assists the real estate agent in securing the listing.

Conditions

A term related to restrictions and reservations, a term alluding to provisions in deeds and real estate documents that are hinged to a future event.

Condominium

Real estate ownership that provides title to a specific unit within a larger structure encompassing various units, and that also provides the owner with a proportionate interest in certain common areas.

Condominium Association

All the owners associated with a particular condominium.

Condominium Budget

A financial report of expenses and savings incurred by the condominium and the financial prediction of the future.

Condominium By-Laws

Rules set forth by an association that governs the administration of the property.

Condominium Declarations

A document that establishes a condominium legally.

Condominium Right of First Refusal

The first opportunity to purchase or meet an offer in condominium real estate that is granted to a person or association.

Condominium Rules and Regulation

Agreed-upon rules for the condominium that owners abide by.

Consumer Financial Protection Bureau (CFPB)

The CFPB is an independent agency of the United States government authorized and created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Act was passed in 2010 in response to the financial crisis of the 2000s that led to the Great Recession.The new agency was given jurisdiction over all of the consumer protection statutes that had been heretofore scattered among several government agencies, including RESPA and TILA.

Contingency

A condition that must be met before a contract is legally binding.

Continue to Show

When a seller does not stop showing prospective buyers a property although it’s under contract for the period in which there are outstanding contingencies waiting to be met.

Contract

A legal agreement between two or more parties that is written and enforceable by law.

Contract for Deed

Also referred to as an installment sale contract, it is a contract for which the buyer takes possession of the property but the seller holds the title until the loan has been paid.

Contract of Sale

A legally binding agreement between two parties concerning the terms of purchase or transfer of real property.

Conventional Loan

A term commonly applied to a fixed-term or fixed-rate loan, it refers to a mortgage loan that is not guaranteed by the VA or FHA.

Conventional Mortgage

A type of mortgage in which the underlying terms and conditions meet the funding criteria for Fannie Mae and Freddie Mac. About 35-50% of mortgages, depending on market conditions and consumer trends, are conventional mortgages. They may be fixed-rate or adjustable-rate mortgages.

Conversion Clause

A clause in a mortgage loan that allows the borrower to convert from an adjustable-rate mortgage to a fixed-rate mortgage.

Cooperating Commission

A commission offered by the selling broker to the buyer’s broker for bringing them a buyer.

Cooperative (Co-Op)

A form of property ownership whereby the occupants of the building are shareholders of the cooperation and entitled to a specific unit, as opposed to owning the unit itself.

Corporate Client

When relocating employees, this is the company that handles employee relocation with whom the third-party company has an agreement.

Counter-Offer

The response the seller makes to the potential buyer’s initial offer.

Covenant

A formal agreement between two parties in which one party makes promises and assurances to the other.

Credit Report

A report that includes a borrower’s financial history, including all credit cards, outstanding balances, and payments on past or current debts.

Credit Report Fee

The price charged by the lender to verify the information on the Credit Report, usually paid at the time of the loan application by the potential buyer.

Credit Score

A score based on the information provided in the credit report.

Curb Appeal

The appearance of property when viewed from the street.

 

 

Days on Market

A term used to refer to the number of days a property has been listed on the market.

Decree

A court judgment that delineates the rights and agreement between two parties.

Deed

The official document that represents ownership of a property. When property is sold, it is transferred from one owner to the other.

Deed Book

A place where deeds are recorded in public records, namely a book.

Deed of Re-conveyance

Is a written document that is issued when a Deed of Trust (or mortgage) has been paid off to formally close it.

Deed of Trust

A legal document issuing a trustee a land title as security for a loan between a lender and borrower. It contains all the mortgage information, such as property, loan amount, borrower, etc.

Default

Failure to pay an obligation when it is due or failure to fulfill a promise.

Defect

A title that is irregular and faulty such that it contains a blemish, imperfection or deficiency.

Deposit Receipt

A document whereby a seller is accepting earnest money from a potential buyer as a binding promise to adhere to a price and contract terms for a property.

Depreciation

Loss in value as a result of the elements, wear and tear, and functional or economical obsolescence.

Desk Fees

A fee charged by a brokerage or real estate company for the use of a desk by a real estate agent.

Destination Services

Services provided to the transferees upon arrival at the new location, such as school searches, temporary housing, etc.

Direct Home-Selling Costs (DHSC)

Carrying costs, commission, closing costs, interest on equity loans, loss on sale, principal, taxes and insurance, repairs and improvements, and utilities.

Disclosures

Requirements of disclosure at the local, county, state, and federal level made by the seller and acknowledged by the buyer.

Discount Points

The difference between the loan yield and the investment value of the money, expressed as a percentage, payable to the lender. One point equals one percent of the loan amount. Paying a point to the lender can buy down the interest rate of the loan.

Divorce

A court decree entirely dissolving the legal relationship of a husband and wife; the granting of a legal separation.

Document Preparation

The creation of all paperwork needed to consummate a real estate transaction.

DOM

Acronym for Days on Market. See Days on Market.

Down Payment

The cash amount a borrower places towards a property purchase.

Drive-by

The physical act of a real estate agent or broker driving past a potential or existing listing.

Dual Agent

An agent who is required to hold a state license, acting on behalf of both the buyer and the seller in a single real estate transaction.

Due On-Sale Clause

A provision that accelerates the full payment of the mortgage or deed of trust when the secured property changes ownership.

 

 

Earnest Money

A down payment or portion of the payment a buyer makes with an offer to demonstrate the good faith of their intention to buy. Usually held by the escrow agent.

Easement

A right of way giving persons other than the owner access to or over a property.

Egress

The right of a person to leave a property, usually used in terms of an easement.

Ejectment

An eviction; a legal action taken to repossess land by its owner. A legal action to remove an unwelcome trespasser or tenant from owned property.

Eminent Domain

The right of the government to oblige property owners to forfeit their property, or a portion thereof as in an easement, in exchange for fair market value in order to use the property for public purposes.

Encroachment

An instance where a piece of real property extends past its own property lines and onto another’s property.

Encumbrance

A servitude, claim, right or lien made on a property title that may be financial or non-financial.

Endorsement

An alteration made to the title insurance policy that affects the existing coverage at the request of the insured.

Escrow

As it pertains to title insurance, an arrangement whereby an impartial third party holds the property title, paperwork, funding and a series of instructions for which that party is responsible until all the conditions of the transaction have been met.

Escrow Agreement

A written agreement between the escrow agent and either the buyer and seller or both, setting forth the conditions as to how the objects being placed in escrow are to be administered.

Escrow Account

An Escrow account is an account set up to handle funds for bill payment of annual home expenses such as homeowners insurance and property insurance. The costs are divided into monthly payments, and the bills are then paid when they are due.

Escrow Account for Real Estate Taxes and Insurance

An account that is set up for monthly payments of real estate taxes and property insurance by a borrower.

Escrow Money

See Earnest Money.

Escrow Fee

The amount the Escrow Company charges for all the miscellaneous activities it must conduct to handle the transaction, such as notary fees, issuance of checks, etc.

Escrow Shortage

Is when there is not enough money in the Escrow account to cover the expenses. It must either be paid in a lump sum immediately or the monthly payments must be raised to compensate the difference.

Estate

The ownership interest of an individual in real property. The sum total of all the real property and personal property owned by an individual at time of death.

Examination

In reference to the title industry, it is the studying of all documents to determine the condition of a title.

Examiner

More accurately called Title Examiner, it is the one who conducts the examination.

Exchange / Service Account

An expense account that a brokerage uses to administer marketing monies.

Exclusions

Personal property or fixtures that are not to be included in the contract for purchase.

Expired (listing)

A property that has passed the terms for its listing agreement.

 

 

Fax Rider

A legal document authorizing a document sent via facsimile transmission (fax) to be accepted in lieu of the original.

Feedback

Commentary requested by a listing agent from a real estate agent and/or client about their thoughts on a property.

Federal Housing Administration (FHA)

An agency of the federal government that insures private first-mortgage loans for the financing of new and existing homes and home repairs, and does not permit second mortgages on insured mortgage loans.

FHA Loan

A loan program insured by the FHA obtained through an FHA-approved lender.

FHA Mortgage Insurance

A mortgage insurance program insured by the FHA obtained through an FHA-approved lender.

Federal National Mortgage Association (FNMA)

Better known as Fannie Mae. It is a congressionally chartered, shareholder-owned company that is the nation’s largest supplier of home mortgage funds.

Fee Simple

The highest level of home ownership attainable, providing the owner complete ownership and the full power of disposition.

Finance Charge

The cost for a borrower to obtain credit, whether directly or indirectly.

Fixed Rate

A mortgage with an unchanging interest rate for the life of the loan.

Fixture

Property that is personal but has become a permanent part of the property.

Flat Fee

A set fee that is predetermined for specific real estate services.

Flood Insurance

Insurance for flooding that must be pre-paid annually for a property in a FEMA-designated flood zone.

Flood Insurance Escrow

If required, it is the monthly amount collected in advance for Flood Insurance.

Floor Duty or Time

A specified time that a real estate agent is available to handle inquiries.

FSBO

An acronym for “For Sale By Owner”.

 

 

Gift Letter

A letter provided to a lender or government agency stating that money to be used as the down payment for a home loan was a gift and not a loan from the donor.

Graduated Payment Mortgage

A mortgage with payments that start low and are increased over time at set intervals.

 

Grant

A transfer of real property.

Grant Deed

A recorded document created at the time a part or all interest in a property is passed from one party to another.

Grantee

The party receiving a title or encumbrance.

Grantor

The party granting a title or encumbrance.

GRI

The acronym for Graduate REALTORS® Institute. A professional designation granted to a member of the National Association of REALTORS® who has in-depth training in legal and regulatory issues, technology, professional standards and the sales process.

Good Faith Estimate

An estimate of all mortgage fees and closing costs Lenders provided within three days of ta loan application, as mandated by the Real Estate Settlement Procedures Act (RESPA). The GFE was used for most residential real estate mortgage applications prior to Oct. 2, 2015. For most residential real estate loans applied for on or after Oct. 3, 2015, the new Loan Estimate replaced the GFE as the new CFPB mandated loan disclosure.

Gross Closed Commission Income

The amount of commission a real estate agent receives after a transaction is closed.

Gross Sale Price

The actual price prior to any concessions.

Guaranteed Offer

The property amount an employer offers a transferring employee after appraisals.

 

 

Hazard Insurance

Insurance that protects real estate value against damages such as fires, natural disasters, wind, vandalism etc.

Heir

A person inheriting property by provision of law or provisions of a will.

Home-finding Assistance

Community information and other assistance provided by a third party in relation to finding a property.

Home Inspection Report

A report made by a qualified inspector evaluating condition of the structure and mechanical systems on a property.

Homeowner’s Insurance

Insurance that covers personal liability and theft in addition to hazard insurance for a dwelling and its contents.

Home Warranty Plan

Protection that covers the mechanical, electrical, plumbing, heating systems and appliances of a home.

HUD

U.S. Department of Housing and Urban Development.

HUD-1

A document that reports all the monies transacted in a real estate property closing. The HUD-1 was used on most real estate transactions prior to Oct. 2, 2015. For most residential real estate loans applied for on or after Oct. 3, 2015, the new Closing Disclosure, mandated by the CFPB, replaced the HUD-1 as the final settlement statement for a real estate transaction closing.

Hybrid Adjustable Rate

A mortgage with the first few years (three, five, or seven) fixed, followed by the remaining years of the mortgage at adjustable rates.

 

 

IDX:

Acronym for Internet Data Exchange. A means for real estate agents to advertise each other’s listings on databases (MLS).

Impound Account

An account a lender uses to retain funds to cover items such as taxes and hazard insurance premiums.

Inclusions

Personal property or fixtures included in the property contract or offer.

Independent Contractor

A real estate agent who receives listings directly from a broker and does not receive a salary or benefits.

Index

The determining measure of interest rate changes for an ARM over the course of its life.

Ingress

Permission or right of entry, including the place and means of entry.

Inputting

Term used referring to the entry and changing of listing data in multiple listing services (MLS).

Inspection

A property examination.

Inspection Rider

Two types are commonly used. The first gives the buyer the right to have the property inspected by a professional home inspector of the buyer’s choice and at buyer’s expense. If defects are found, the buyer has the right to cancel the contract within a specified time. The second type gives the seller time to either repair any problems found by the inspection or agree to reduce the selling price by the cost of the repairs.

Installment Land Contract

A contractual agreement where until the property is paid, the seller keeps the title yet allows the buyer to take possession of the property.

Interest Rate Float

A period of time the borrower delays locking in a loan rate in anticipation of a rate decrease, and therefore “floats” until locking in a rate.

Interest Rate Lock

The mortgage interest rate that the lender and borrower agree to, applicable whether mortgage rates change. Usually set for a certain period of time such as 30, 45, 60 or 90 days.

Intestate

A description of a person who dies without making a valid will.

Inventory

A formal detailed list of articles of property of a person or estate, identifying the description, the quantity and value of each.

 

 

Joint Tenancy

Two or more people holding title to a property.

Joint Tenancy with Right of Survivorship

Two or more people hold title to the property together. If one person dies, the ownership automatically defers to the remaining owner(s).

Judgment

A court-ordered resolution to a legal matter.

Jumbo Loan

A loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits (subject to change annually), currently at $417,000 for a single-family home in the continental United States and Puerto Rico ($625,000 in Alaska, Hawaii, Guam and the U.S. Virgin Islands). Also called a nonconforming loan.

 

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Land Contract

An installment contract for the sale of land whereby the seller (vendor) holds legal title and the buyer (vendee) has equitable title until the sales price is paid in full.

Landmark

Any conspicuous object that helps establish land boundaries.

Lease

An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period of time (term) and for a specified consideration (rent).

Leasehold

An estate in real property held under a lease for a fixed term.

Legal Description

A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire piece of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

Lender

Any person or entity advancing funds which are to be repaid. A general term encompassing all mortgagees, and beneficiaries under deeds of trust.

Lender's Policy

A title insurance policy which insures the validity, enforceability and priority of a lender's lien. This policy does not provide protection for the owner.

Lessee

A party to whom a lease (the right to possession) is given in return for a consideration (rent).

Lessor

A landlord; one who gives a leasehold to a lessee.

License

Permission to go upon or use the land of another, the permission being a personal privilege and not constituting an interest in the land.

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.

Lien Waver

Also called "waiver of liens." A waiver of mechanic's lien rights, signed by contractors or subcontractors so that the owner or general contractor can receive funds from a construction loan.

Life Estate

A grant or reservation of the right of use, occupancy and ownership for the life of an individual.

Link

In surveying, a length of 7.92 inches.

Lis Pendens

A legal notice recorded to show pending litigation relating to real property, and giving notice that anyone acquiring an interest in said property subsequent tot eh date of the notice may be bound by the outcome of the litigation.

Loan Policy

Also called "mortgage policy." A title insurance policy insuring a mortgagee, or beneficiary under a deed of trust, against loss caused by invalidity or unenforceability of a lien, or loss of priority of the mortgage or deed of trust.

Lock-In

A guarantee, for which you are usually charged a fee, that you will receive a specific rate when you close your mortgage.

Loss Payable Clause

A provision added to a Fire and Casualty Policy which says any loss will be paid to two or more parties as their interest may appear. Usually the owner and the mortgage lender.

Lot

Generally, any portion or parcel of real property. Usually refers to a portion of a subdivision.

 

 

Majority

The age at which a person no longer considered a minor and is entitled to contract and enjoy civic rights, such as voting.

Market Value

The price that a home will likely fetch on the market, based on comparisons to similar homes that have sold recently.

Marketable Title

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 for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land, and which attaches to the land as well as the improvements.

Metes and Bounds

A land description in which boundaries are described by courses, directions, distances and monuments.

Minor

One who because of insufficient age or status is legally incapable of making contracts.

Monument of Survey

Visible marks or indications left on natural or other objects indicating the lines and boundaries of a survey. May be posts, pillars, stones, cairns, and other such objects. May also be fixed natural objects, blazed trees, roads and even a water course.

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-Backed Securities

Securities similar to bonds, but having their value based on a pool of mortgages. The rate of return is based on the interest rate of the mortgages, plus early payoffs, which increases the value of any discounts. The price of the securities will vary as interest rates rise and fall.

Mortgage Banker

A specialized lending institution that lends money solely with respect to real estate and secures its loans with mortgages on the real estate.

Mortgage Broker

A person or company that buys and sells mortgages for another on commission or who arranges for and negotiates mortgage contracts.

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

Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default, thus enabling the lender to lend a higher percentage of the sale price.

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.

Mortgagee Policy

See Lender's Policy.

Mortgagor

The borrower in a mortgage agreement.

Multiple Listing

The pooling in a central bureau of listings of properties for sale. These listings are held individually by members of a group of real estate brokers, with the agreement that any member of the group may sell the properties and, in the case of a sale, the commission will be divided between the broker making the sale and the broker who filed the listing.

Muniments of Title

Written evidence (documents) that an owner possesses to prove his or her title to property.

 

 

National Association of REALTORS® (NAR)

A professional organization for real estate agents.

Negative Amortization

An occurrence when payments do not cover the interest and the remaining interest is then added to the principal balance, essentially increasing the amount you owe instead of decreasing your debt over time.

Net Sales Price

The gross sales price after concessions have been made to the buyers.

 

Notice of Default (NOD)

A warning notice declaring that a mortgage is not being paid and is recorded as proof there is certain amount of time to make payments current or the property can be foreclosed.

Notice of Trustee Sale (NOT)

A document that is recorded to inform the defaulting homeowner of the specific date the property will be sold if the mortgage is not made current before then.

 

 

Origination Fee

A one-time cost for the service of processing a loan.

Off-Market

A temporary or permanent removal of a home from the market.

Offer to Purchase

The potential buyer’s terms proposed to a seller.

Office Tour/Caravan

A tour taken by agents of the listing properties their office represents.

Open House (public)

The time in which a listing is open for the public to view.

Opinion

Meaning title opinion, it is the conclusive result attained by a title expert in examining a title.

Owner’s Title Insurance

The title policy issued to a homeowner to protect against title defects.

 

 

Parcel

Any area of land contained within a single description.

Partnership

An association of two or more persons who have contracted to join in business and share the profits.

Party Wall

A wall erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.

Patent

A conveyance of title to land by the Federal or State Government.

Personal Property

Any property that is not designated by law as real property (i.e., money, goods, evidences of debt, rights of action, furniture, automobiles).

Personal Representative

A person appointed by the probate court to administer a decedent's estate. See also "Executor."

"P.I.Q."

A title term referring to Property In Question.

PITI

Abbreviation for principal, interest, taxes and insurance, all of which are lumped together in your monthly mortgage payment.

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. An insurance contract which insures that the named lender will re cover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.

Points

A one-time-only fee you pay up front to your lender, sometimes in exchange for a slightly lower mortgage rate. One point equals one percent of the total amount you plan to borrow.

Policy

A general term used to describe all contracts of insurance.

Power of Attorney

A document by which one person (called the "principal") authorizes another person (called the "attorney-in-fact") to act for him/her in a specific manner in designated transactions.

Power of Sale

A clause in a will, mortgage, deed of trust or trust agreement authorizing the sale or transfer of land in accordance with the terms of the clause.

"PRE," "PRELIM" or Preliminary Title Report

A written report issued by a title company, prior to issuing title insurance, which shows the recorded condition of title of the property in question. See Commitment.

Premium

The amount paid for an insurance policy.

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.

Prescriptive Easement

A right to use another's property that is not inconsistent with the owner's rights and that is acquired by an open, notorious, adverse and continuous use for the statutory period, for example 20 years.

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.

Priority

The order of preference, rank or position of the various liens and encumbrances affecting the title to a particular parcel of land. Usually, the date and time of recording determine the relative priority between documents.

Priority Inspection

A title term referring to the type of inspection made in connection with insuring a new construction loan. In making the inspection of the property, the title company must be assured that the work of improvement had not yet begun when the lender's deed of trust was recorded.

Pro rate

To allocate between seller and buyer their proportionate share of an obligation paid or due.

Public Domain

Land owned by the government and belonging to the community at large.

Public Records

The records of all documents which are necessary to give notice and are available to the public.

Purchase Money Mortgage

A mortgage given by a purchaser to a seller on the subject property to secure payment of a part of the purchase price.
 

 

 

Quiet Title

To free the title to a piece of land from the claims of other persons by means of a court action called a "quiet title" action. The court decree obtained is a "quiet title" decree.

Quitclaim Deed

A deed transfer whereby the grantor relinquishes all claims on the property without making any promises as to their claim in the title. Usually transferred between people who have an existing relationship, as in a divorcing husband and wife, or a government auctioning property. It is a fast way to transfer property.

 

 

 

 

R & I

Acronym for repairs and improvements, which stands for the actual cost of repairs and improvements.

Real Estate Agent

A state-licensed individual who acts on a buyer’s or seller’s behalf.

Real Estate Contract

A legally binding agreement that is made between a buyer and seller of property, which consists of an offer, acceptance and any necessary considerations.

Real Property

Fixed permanent structures such as land and buildings, as opposed to belongings that can be moved.

REALTOR®

A trademark of the National Association of REALTORS® that can only be used by its members.

Record Title

Refers to a title as it appears in the public record after a deed is properly recorded.

Recordation

The act of filing a record in the county recorder’s office.

Regulation Z

Based on the Truth in Lending Act, Regulation Z is a set of rules issued by the Federal Reserve that requires lenders to disclose all the specifics of a given loan.

Release Deed

A legal document by the mortgagee reconveying or returning the title to the real estate to the mortgagor. Also known as a Reconveyance Deed.

Relist

Listing a property with a Broker after previously having had it listed with another Broker.

Refinance

A replacement loan to an existing loan.

Refinance Rate

The new finance rate attained by refinancing an existing loan.

Reissue Rate

A reduced rate for title insurance that is attainable if the title had been previously insured in a short period of years. Each state has specific rules governing the reissue rate.

Rider

A schedule or writing that is added to an existing document in order to modify it.

Right of Way

1) the right to pass over another’s property, as in an easement; 2) the strip of land on which highways, power lines and railroads are built; or 3) the land on which a passage is made.

Riparian Rights

Refers to the rights a landowner whose land borders a body of water has in reference to the shore, bed, banks, shallows, and shore, water and stream borders.

Risk Rate

A quantifiable rate used by a lender for the purpose of determining the overall soundness of a loan.

 

 

Sale Agreement

A contract entered into between a buyer and seller, setting forth the terms, provisions and conditions of a sale of real estate.

Sale and Leaseback

A situation in which the grantor in a deed to a parcel of property sells it and retains possession by simultaneously leasing it from the grantee.

Search

A careful exploration and examination of the public records in an effort to find all recorded instruments relating to a particular chain of title.

Second Mortgage

A mortgage taken out on a property in addition to the initial mortgage, and ranking below the first mortgage in lien priority.

Section or Section of Land

A parcel of land comprising one square mile or 640 acres.

Separate Property

Real property owned by one spouse exclusive of any interest of the other spouse.

Set Back Lines

Those lines which delineate the required distances for the location of structures in relation to the perimeter of the property.

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.

Squatter

One who lives on another's land without legal claim or authority. (See Adverse Possession.)

Starter

A copy of the last policy or report issued by a title insurer which described the title to land upon which a new search is to be made. In some states, this is called a back title letter or back title certificate.

Street Improvement Bonds

Interest-bearing bonds issued, usually by a city or county, to secure the payment of assessments levied against land to pay for street improvements. The property owner may pay off the particular assessment against the property, or may allow the assessment to "go to bond" and pay installments of principal and interest over a period of years, usually at the city or county treasurer's office. The holder of a bond received payments from these offices.

Subdivision

An area of land laid out and divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.

Subordination

The act or process by which a person's rights are ranked below the rights of others. For example, a second mortgagee's rights are subordinate to those of the first mortgagee.

Subordination Agreement

An agreement by which one encumbrance (for example, a mortgage) is made subject (junior) to another encumbrance. To "subordinate" is to "make subject to," or to make of lower priority.

Subrogation

The substitution of one person for another, so that the former may exercise certain rights or claims of the latter. Used primarily when a surety relationship exists, as in insurance.

Subsurface Rights

The rights of ownership to things lying beneath the physical surface of the property.

Surety

(1) A person who agrees to be responsible for a debt or obligation of another. (2) The pledge or agreement by which one undertakes responsibility for the debt or obligation of another.

Surface Rights

Rights to enter upon and use the surface of a parcel of land, usually in connection with an oil and gas lease or other mineral lease. They may be "implied" by the language of the lease (no explicit reservation or exception of the surface rights) or "explicitly" set forth.

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 Certificate

A certificate usually purchased by the seller from a tax service company. It provides the title company with the certified authority that the taxes on the title are current. It also includes the information necessary to prorate the taxes for purposes of transacting the final conveyance of the property to the buyer.

Tax Deed

A deed executed by the tax collector to the state, county or city after a period of non-payment of taxes according to statute.

Tax Lien

A legally imposed lien on property as a claim for a payment of a tax liability.

Tenancy by the Entirety

Ownership by married persons where each owns the entire estate, with the survivor taking the whole upon the other's death.

Tenancy in Common

An estate or interest in land held by two or more persons, each having equal rights of possession and enjoyment, but without any right of succession by survivorship between the owners.

Tenant

Any person occupying real property with the owner's permission.

Testate

Leaving a legally valid will at death. See Intestate.

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 Covenants

Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as "common law covenants" includes: covenants against encumbrances; covenants for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); covenants of good right and authority to convey; covenants of quiet enjoyment; covenants of seisin; covenants of warranty.

Title Defect

(1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.

Title Insurance

Insurance against loss resulting from defects of title to a specifically described parcel of real property. 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 Plant

A library that houses and stores certified title documents, public records, attorney’s opinions, tax searches, copies and title information that is used by title companies during title searches to verify the authenticity to title. Also known as Abstract Plant.

Title Search or Examination

A review of all recorded documents affecting a specific piece of property to determine the present condition of title.

Torrens Title

A system whereby, title to land is registered with a registrar of land titles, instead of being recorded.

Township

A territorial division of land established by federal survey, being six miles square, containing 36 sections or 36 square miles.

Tract

A parcel of land.

Trust

A fiduciary relationship under which one holds property for the benefit of another.

TRID

TRID, or the TILA/RESPA Integrated Disclosure Rule, was mandated by the 2010 Dodd Frank Act. The Consumer Financial Protection Bureau (CFPB) finalized the rule in 2013, with a final implementation date of Oct. 3, 2015. As part of the rule, the CFPB integrated the TILA and RESPA disclosures for most residential real estate transactions, creating the new Loan Estimate and Closing Disclosure to replace the traditional Good Faith Estimate, Truth in Lending disclosure and HUD-1 settlement.

 

 

Under Contract

Refers to a property when a contract has been accepted between a buyer and a seller.

Underwriter

A company that issues insurance either directly to the public or to other insurance companies.
 

 

 

VA

An acronym for the U.S. Department of Veterans Affairs, an agency of the federal government that administers a variety of benefits and services providing financial and other forms of assistance to members of the military, veterans, their dependents and survivors.

VA Loan

A loan partially insured by the VA and provided by a private lender.

VA Guarantee

An insurance contract in which the Veterans Administration (VA) insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad.

VA Loan Guarantee

A guarantee for a loan made by the VA.

VA Funding Fee

A fee to the VA charged upon closing to the buyer, customarily 1% of the loan amount, unless otherwise financed.

Variable Interest Rate

An interest rate that fluctuates with the current cost of money; subject to adjustment if the prevailing rate moves up or down.

Vendee

Purchaser or buyer, especially on a land contract.

Vendor

The person who transfers property by sale. Another word for "seller".

Vendor's Lien

A lien either express or implied given to a vendor for the remaining unpaid and unsecured part of a purchase price.

Venue

Used to refer to the county or place in which an acknowledgment is made before a notary; also refers to the county in which a lawsuit may be filed or tried.

Vested

Present ownership rights, absolute and fixed.
 

 

 

W-2

An IRS form that an employer issues its employee stating compensation and deductions thereof.

W-9

An IRS form stating taxpayer identification numbers and verification thereof.

Waiver

When a known right, privilege or claim is intentionally relinquished.

Warranty

A legal, binding, promise, given at the time of a sale, whereby the seller gives the buyer certain assurances as to the condition of the property being sold.

Warranty Deed

A deed that transfers real property from one person to another and in which the grantor promises that title is good and clear of any claims.

Will

A document made by the person during their lifetime that delineates how to administer a person’s personal property after a person’s death.
 

 

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Zoning

Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.