Real Estate Dictionary - A collection of common terms
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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
ABSTRACT OF TITLE - A compilation of the recorded documents relating to a parcel of land, from which an attorney may give an opinion as to the condition of title. This information is used by an attorney or a title company when writing TITLE INSURANCE.
ABUTTING OWNER - One whose land is contiguous to (abuts) another parcel under different ownership.
ACCEPTANCE - Voluntarily agreeing to the price and terms of an offer. Offer and acceptance creates a contract.
ACCESSIBILITY - The location of a site in terms of how easily it may be reached. Value is often determined by how much accessibility a parcel has.
ACCESS RIGHT - A right to ingress and egress to and from one’s property. May be express or implied.
ACCOMMODATION PARTY - Person who lends his name to help secure credit for another, by signing a note or other obligation without receiving consideration.
ACCORD - An agreement by which one accepts something different (usually less) from what is owed as full satisfaction. The amount owed may be in dispute or simply accepted as full satisfaction by the creditor or claimant. The agreement and acceptance is called "Accord and Satisfaction."
ACKNOWLEDGEMENT - The confirmation of the signing party who is or has executed a legal document that the signature is indeed his signature and that it was made voluntarily.
ACCRETION - The gradual and imperceptible accumulation of additional land by natural causes such as out of a sea or river.
ACRE - A measure, usually land equal to 160 sq. rods or 43, 560 sq. ft.
ACTION TO QUIET TITLE - A court action to remove a cloud on title and/or to establish ownership of real property.
ACT OF GOD - Damage by natural causes rather than the by the hand of man. (i.e.) floods, winds, fire etc.
ADDENDUM - An addition added to a contract or document. Also called an Amendment.
ADJUSTABLE MORTGAGE LOAN - Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. These mortgages have caps on how much the rate can increase per year as well as over the life of the loan.
ADJUSTED SALES PRICE - An appraisal term used when applying comparable properties to a subject property to reflect or determine the value of the subject property.
ADMINISTRATOR - One who has been appointed by the court to administer (settle) the estate of another.
AD VALOREM - A method of taxation using the value of the thing being taxed to determine the amount of tax. Real estate taxes are an example of Ad Valorem tax.
ADVANCE FEE - A fee charged by a broker to a seller to cover broker’s cost in advertising and promoting the seller’s property.
ADVERSE POSSESSION - The method by which a individual may acquire title to land by taking possession of the property and whose possession is: actual, open, hostile, notorious, exclusive and continuous.
AESTHETIC VALUE - A term used to define the value of a property which is attributable to the beauty of the improvements. Also used to define the repair clause in a real estate contract (i.e.) aesthetic improvements as versus functional.
AFFIDAVIT - A written statement or declaration , sworn to before an officer, notary, city clerk etc.
A-FRAME - A type of construction usually found in resort areas. Shaped like an A.
AGENCY - Any relationship in which one party (agent) acts for or represents another (principal) under authority and direction of the latter.
AGENCY AGREEMENT - An agreement between the buyer or seller and an agent in which the agent is guaranteed his/her commission .
AGENT - One who is authorized to represent another. May be a general agent or a special agent for one specific act.
AGRARIAN - As pertaining to land, to the division of land and the distribution of land.
AGREEMENT OF SALE - Separate meanings in different areas of the country. May mean purchase agreement or in other areas it could mean land contract.
ALLOCATION - The act of assigning a percentage of the total value of an improved parcel of land to the improvements thereon and the remaining portion to the land itself.
ALTA - American Land Title Association, an organization composed of title insurance companies which has adopted certain title insurance policy forms to standardize coverage on a national basis.
AMORTIZATION - The process by which a mortgage loan will be repaid in regular periodic payments over the life of the loan. Each monthly mortgage payment consists of principal which amount will increase with each additional payment made and reduce the loan balance and the interest which decreases with each payment made.
APPRAISAL - The professional examination of property for the purpose of estimating it’s current value.
APPRAISED VALUE - An opinion of an appraiser as to the value of a property at a given time based on recent sales and other criteria.
APPURTENANCE - Something belonging to something else ( a right or tangible structure attached to land) which passes to a new owner upon transfer of title. Example an easement or a structure.
ARM - Adjustable Rate Mortgage loan. Interest rate changes periodically, usually in relation to an index and payments go up or down accordingly. See Adjustable Mortgage Loan.
AS IS - Property that is accepted by the buyer in its current condition without any repairs performed on the property by the seller.
ASSESSED VALUE - Value placed upon property (by county tax appraiser) for property tax purposes.
ASSESSMENT - A levy (tax) against property usually for improvements in addition to regular taxes.
ASSIGNEE - One who receives the rights transferred.
ASSIGNOR - One who assigns rights to another.
ASSUMPTION - The act of assuming, (i.e.) becoming personally liable for repayment.
ATTACHMENT - The act of seizing (taking legal control of) a property by Judicial order.
Abstract- A history of all transactions shown in
the public records affecting a particular tract of land.
Abstract Plant- See Title Plant.
Adjustable Rate Mortgage (ARM)- Mortgage loans under which the interest rate is
periodically adjusted, in accordance with some market indicator, to more closely coincide
with the current rates. The extent and number of these adjustments are agreed to at the
inception of the loan.
Adverse Possession- The possession, by one person, of land belonging to another in
a manner deemed adverse to the interest of the owner. In most states, by operation of law,
title to the land becomes vested in such person after a fixed number of years if the owner
fails to assert his or her rights.
Affidavit- A written statement made under oath before a notary public or other
judicial officer.
Agreement- A legally binding contract made between two or more persons.
ALTA (American Land Title Association)- The trade association of the title
insurance industry, which has adopted certain insurance policy forms to standardize
coverage on a national basis.
Amortization- Payment to reduce the principal of a debt in regular, periodic
installments.
Appraisal- A report from an independent third party detailing the estimated value
of real estate.
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.
Assessment- (1) The valuation of real estate for purpose of taxes or special
improvement charges. (2) The amount of taxes or special improvement charges. Special
improvement charges are usually for the costs of streets, sidewalks, sewers, etc.
Assignment- (1) The act of transferring an interest, such as a loan secured by a
mortgage, from one person to another. (2) The instrument or paper by which one person
transfers such ownership to another.
Attorney's Opinion- A statement by an attorney as to the validity of a title,
arrived at after investigation of the history of the title as recorded in the public
records.
BACK TITLE LETTER - A letter given to an attorney by a title insurance company stating the condition of title as of a certain date.
BACKUP OFFER - A secondary offer accepted by the seller of property to be accepted as a contract to purchase in the event the first (primary) offer fails.
BALLOON MORTGAGE - A mortgage in which the entire balance becomes due at one time rather than being amortized in periodic payment.
BANKRUPTCY - An action, under federal law, which relieves a debtor from debts and distributes possessions to creditors in accordance with provisions of the law.
BENEFICIARY - One for whose benefit a trust is created. Also where "deeds of trust" are used instead of mortgages the lender is called the beneficiary.
BIANNUAL - Twice per year. (i.e.) same as semiannual.
BID - A method of making an offer to purchase property. A HUD bid requires a sealed, written offer that must be done according to specific guidelines and submitted by a certain date. HUD approved real estate licensees must help the buyer write up the offer and submit it. Other bids can be open and oral, such as at a property auction.
BILL OF SALE - A document which transfers personal property.
BLANKET MORTGAGE - A mortgage which covers more than one parcel. Commonly used when a builder borrows on several lots prior to building.
BLOCK BUSTING - An illegal act which is designed to lower housing prices in an area by causing present owners to sell quickly because of an impending influx of people of a different race or religion.
BOARDFOOT - A unit of measure used by the building industry. A piece of lumber 12" X 12" X 1" = 144 cubic inches or 1 board foot.
BOTTOM LAND - Land lying along a river or in a dale or valley.
BOUNDARY MAP - The map showing the boundaries for schools.
BREACH OF CONTRACT - Failure to follow through on requirements which are set out in a contract without legal excuse. Legal remedies for breach are often set out in the contract.
BREACH OF WARRANTY - The failure of the seller of real property to pass title as required by contract, either express or implied.
BREAK EVEN POINT - The point in a real estate investment (income property) in which the income equals evenly the expenses.
BROKER - A real estate licensee that has experience and met certain state guidelines to ascend to this level. A broker is usually the only level of a real estate licensee that can operate a real estate brokerage.
BROKERAGE - A real estate company that deals in all aspects of real estate and is run by a real estate broker.
BROKERAGE COMMISSION - A fee received by a licenses real estate broker for the service provided either to a buyer or a seller.
BUILDING & ZONING DEPARTMENT - The local governmental regulatory body that issues permits and inspects construction projects insuring that all aspects of the building project conform to the local zoning codes.
BUILDING CODE - A set of rules and regulations adopted by a governing body (usually county or municipality the regulate or control construction, repairs, remodeling of buildings.
BUILDING PERMIT - A permit given by a governing body to construct or make repairs to buildings.
BUYERS AGENT - See Single Agent.
BUYER’S AGREEMENT - A contract between the buyer and the real estate licensee that provides for the exclusive representation of the buyer by the licensee and usually allows for compensation from the buyer to the licensee.
Back Title Letter- Also called "back title
certificate" in some areas, and "starter" in others. When titles previously
have been examined up to a certain date by reliable examiners, title companies sometimes
give subsequent examiners of such titles a letter that sets forth the condition of the
title at the time of the previous examination and authorizes them to begin their
subsequent examination with the terminal date of the previous examination.
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 proceeding in U.S. District Court wherein assets of an insolvent
debtor are protected and distributed in an equitable manner.
Binder- Sometimes called "preliminary certificate" or
"commitment." (1) A preliminary report as to the condition of a title and a
commitment to issue a title insurance policy in a certain manner when certain conditions
are met. (2) A deposit in escrow of a small part of the purchase price of real estate as
evidence of good faith and to bind an agreement to purchase.
CAPITAL GAINS TAX - The tax on the gain realized on the sale of a capital asset, such as a home.
CAVEAT EMPTOR - Let the buyer beware. The buyer should determine for himself the condition of the property. The seller has no obligation to disclose defects but must not conceal defects known to him.
CERTIFICATE OF INSURANCE - Proof that the borrower has purchased necessary insurance (hazard, fire, homeowner’s, windstorm, flood) prior to closing.
CERTIFICATE OF SATISFACTION - Also known as Satisfaction of mortgage. A documented evidence of release of the lien which was created by a mortgage, deed of trust or other type of lien. Must be signed, stamped and recorded in the land records of the county in which the property is located.
CERTIFICATE OF TITLE - An opinion, in writing from an attorney defining the status of a particular property as shown in the public records.
CLOSING - The final procedure in a real estate transaction; documents are signed, title is transferred, funds are disbursed and the sale is complete.
CLOSING COSTS - Expenses incurred by the buyer and seller incidental to the closing of the real estate sale. Example of some of these costs are: loan origination fees, discount points, document preparation fees, surveys, title insurance policy, etc.
CMA - See Comparative Market Analysis.
CODE OF ETHICS - A strict set of professional standards by which all REALTORS are bound. The code contains aspects of fairness and duty to the real estate profession and to the general public. Complaints even by the general public may be made against REALTORS who violate any part of the code. Only real estate licensees who are members of NAR and are REALTORS come under this code.
COMMITMENT LETTER - Letter announcing that the borrower has been approved for a loan.
COMMUNITY PROPERTY - A form of ownership which exists in "Community Property States" in which property acquired during marriage belongs equally to both husband and wife.
COMPARATIVE MARKET ANALYSIS - CMA. A comparison of the market values of properties that have recently sold to that of one that is for sale to determine the fair market value.
CONDEMNATION - The act of taking private property by a government entity for public use. Fair compensation must be paid to the private property owner.
CONDO - See Condominium.
CONDOMINIUM - A form of ownership in multi-unit structures. Each unit is owned individually and all common areas are owned in an undivided interest ownership with all unit owners having an equal share.
CONDOMINIUM BYLAWS - The rules whereby condo associations govern themselves.
CONDOMINIUM DECLARATION - The legal instrument which officially causes a property to be subject to the CONDOMINIUM ACT.
CONTINGENCY - A condition of being subject to the occurrence of a specified but uncertain event.
CONTRACT - An agreement between two or more persons or entities. Rules apply as to terms and conditions which must be met in order that the contract be legally binding on both parties and in order to be enforceable. Usually requires offer and acceptance.
CONTRACT FOR DEED - also Land Contract, also Land Installment Contract. A method of purchasing property whereby the title (deed) stays with the seller until the purchase price has been paid in full.
CONVENTIONAL MORTGAGE LOAN - A loan other than a government insured or backed loan.
CO-TENANCY - A form of ownership of real property in which ownership is in the hands of more than one person as joint owners.
COUNTER OFFER - A counter (change) to an offer previously received. (see offer). The change could be to any or all of the terms set out in the original offer. Becomes a contract upon acceptance.
COVENANT - Written agreements as part of a deed to real property which spell out rights which the buyer is receiving and restrictions which apply to the property being received.
CONVENTIONAL LENDER - This generally refers to a lender who offers a variety of products and sells most of them through the government agencies, i.e.., Fannie Mae and Freddie Mac. Conventional lenders historically sell about 90% of their mortgages.
CONVEYANCE - The method of transferring title for real property. Includes all documentation regarding assignments, mortgages etc.
COOPERATIVE OWNERSHIP - A form of ownership in multi-unit buildings in which shares of stock are owned rather than the individual unit. A lease gives the stockholder the "right" to the use of a particular unit.
COUNTY RECORDS - The documented public records that show ownership, transfers, liens of real property within a governmental area. Usually in the county courthouse or other specific designation. Records are accessible to the general public.
Certificate of Title- A certificate issued by a
title examiner stating the condition of a title.
Chain- In real estate measurements (surveying), a chain is 66 feet long or 100
links, each link being 7.92 inches. The measurement may change when used in fields other
than surveying.
Chain of Title- The successive ownerships or transfers in the history of title to a
tract of land.
Claim- An adverse right or interest asserted by one party against another or
against an insurer or indemnitor. Claims may arise from unpaid debts or taxes, as well as
from hidden title defects such as fraud, forgery, missing heirs, etc.
Clear Title- Real property ownership free of liens, defects, encumbrances or
claims.
Closing- Also called "settlement." A meeting of all parties involved in a
property transaction during which the transaction is consummated.
Clouded Title- An irregularity, possible claim or encumbrance that, if valid, would
adversely affect or impair the title.
Coinsurance- Two or more policies of title insurance issued by different insurers,
each covering a portion of the same risk, which together provide total coverage of the
risk.
Commitment- Also called "binder." A document issued by a title insurance
company that contains the conditions under which a policy of title insurance will be
issued.
Condemnation- (1) The taking of private property for a public purpose, with
compensation to the owner under the right of eminent domain. Governmental units, railroads
and utility companies have the right to condemn and take private property. (2) The
destruction by government of private property that imperils the life, health or safety of
the public.
Conventional Loan- A loan secured by a mortgage or deed of trust for which the
loan-to-value ratio is within an acceptable range for a particular lending institution.
Conveyance- The transfer of title to property from one person to another.
Covenant- A formal agreement or contract between two parties in which one party
gives the other certain promises and assurances, such as covenants of warranty in a
warranty deed.
Courtesy- A right that a husband has in his wife's property at her death. It does
not exist in all states.
CAPS (interest) - Consumer safeguards which limit the amount the interest rateon an adjustable rate mortgage may change per year and/or the life of the loan.
DEED - Usually the written document used to convey an interest in real property. The deed must be signed acknowledged and delivered to the buyer of the property. Should be recorded in the books of land ownership in the local courthouse.
DEED OF TRUST - A form of deed which conveys the legal title to real property to a trustee to hold under a trust agreement.
DEED RESTRICTIONS - Restriction placed upon the property by the grantor affecting all future use of the land. Most often found in the deeds to property in subdivision which restrict such things as the use of outside antenna, clothes lines, vehicle parking etc.
DEPARTMENT OF REAL ESTATE - The department within state government regulation the licensing and regulations of those licensed to engage in the business of Real Estate within the state. AKA Real Estate Commission and Division of Real Estate.
DEPOSIT - A cash deposit accompanying an offer to buy a property. Upon acceptance of offer it becomes part of the down payment and closing costs.
DOCUMENTARY STAMPS - Stamps ( actual affixed stamps or by stamping with a rubber type stamp) which show the dollar value of the transfer fee collected by the governing entity of the county in which the land is located and in which the transfer will be recorded.
DOCUMENTARY TRANSFER TAX - The actual tax which the "Documentary Stamps" reflect. Rate varies from state to state and county to county.
DOWN PAYMENT - That amount of money, usually a percentage of the purchase price, that a buyer pays from his own funds and represents the unfinanced portion of the purchase price.
DRY ROT - Damage caused to wood by fungal decay. Usually found in the course of a termite inspection.
DUAL AGENT - One who represents both the buyer and seller at the same time. Most states require the licensee that acts in this capacity to obtain written permission from the buyer and seller before becoming a disclosed dual agent. Some states, such as Florida, have abolished this agency status.
DUPLEX - A structure containing two dwelling units. Usually under one ownership.
DUE ON SALE CLAUSE - A provision in a mortgage which gives the mortgage lender the right to declare the full balance due upon the sale of property prior to the maturity date of the mortgage.
Dedication- The setting aside of certain land by
the owner and declaring it to be for public use. Examples: streets, sidewalks and parks.
Deed- A document through which a conveyance of property is effected.
Deed Restriction- A covenant contained in a deed imposing limits on the use or
occupancy of the real estate or the type, size, purpose or location of improvements to be
constructed on it.
Defect- A blemish, imperfection or deficiency. A defective title is one that is
irregular and faulty.
Depreciation- Loss in value occasioned by ordinary wear and tear, destructive
action of the elements, or functional or economic obsolescence.
Devise- A gift of real estate made by a will.
Dominant Estate- The property for the benefit of which a right-of-way easement
exists across another's adjoining piece of land is said to be the dominant estate. The
land across which the easement runs is said to be the servient estate.
Dower- A right that a wife has in her husband's property at the time of his death.
Does not exist in all states.
EASEMENT - A right created under agreement or otherwise which give one the right to use a portion of another’s land. (i.e.) right of way.
EMINENT DOMAIN - The power of a governmental entity to take private land for public use. Just compensation must be paid to the owner under private property rights laws.
ENCROACHMENT - A structure (i.e.) fence, driveway, building etc) which extends over the property line onto adjoining property.
ENCUMBRANCE - Any lien recorded against real property .
ESCROW - Funds held by a third party. Usually either funds received as a down payment as part of a purchase of real property or funds collected as part of the mortgage payment for the future payment of taxes and insurance.
ESTATE BY THE ENTIRETIES - A form of property ownership between a husband and wife arising out of the purchase of property made to husband and wife during a marriage.
EQUITY - The market value of a property minus any liens.
Earnest Money- A deposit of funds by the purchaser
of a piece of real estate as evidence of good faith.
Easement- A right to use all or part of the land owned by another for a specific
purpose. An easement may, for example, entitle its holder to install and maintain sewer or
utility lines.
Eminent Domain- The right of a government to take privately owned property for
public purposes under condemnation proceedings subject to payment of its fair market
value.
Encroachment- Any building, improvement or structure located on one property (such
as a wall, fence or driveway) that intrudes upon the property of another.
Encumbrance- Any interest, right, lien or liability attached to a parcel of land
(such as unpaid taxes or an unsatisfied mortgage) that constitutes or represents a burden
or charge upon the property.
Equity- The market value of real property, less the amount of existing liens.
Escheat- The reversion of property to the state when an owner dies leaving no legal
heirs, devisees or claimants.
Escrow- A method of closing a real estate transaction in which all required
documents and funds are placed with a third party for processing and disbursement.
Estoppel- A legal restraint that stops or prevents a person from contradicting or
reneging on his previous position or previous assertions or commitments.
Examination- The study of the instruments and muniments incident to a chain of
title to determine their effect and condition in order to reach a conclusion as to the
status of the title.
Exception- A provision in a title insurance binder or policy that excludes
liability for a specific title defect or an outstanding lien or encumbrance.
Execute- To sign a legal instrument. A deed is said to be executed when it is
signed, sealed, witnessed and delivered.
FAIR HOUSING ACT - More correctly known as the Federal Fair Housing Law of the Fair Housing Amendments Act of 1988. This act prohibits discrimination in the selling of homes.
FEDERAL FAIR HOUSING LAW - See Fair Housing Amendments Act of 1988.
FANNIE MAE or FNMA - This is a quasi-owner government agency which buys mortgages from lending institutions. When Fannie Mae runs out of money to purchase these mortgages they turn to the general public and Gennie Mae securities.
FEE SIMPLE - A type of ownership of real property in which the owner is entitled to unrestricted powers to use the property, dispose of the property and to leave the property to his heirs at his death.
FHA - Federal Housing Authority. A government agency which insures repayment of a loan to the lender, enabling a borrower to obtain a home loan with a smaller down payment than required by conventional lenders.
FIDUCIARY - One who has a relationship of trust with another. In real estate the licensee acts as the agent of the principal, buyer or seller. The duties of a fiduciary are: loyalty, confidentiality, obedience, full disclosure, and accounting and the duties to use skill, care, and diligence.
FIXED RATE LOAN - A loan wherein the rate remains constant over the life of the loan.
FIXTURES - All personal property that is attached to real property. Unless specifically excepted in the sales contract, these fixtures transfer with the real property to which they are attached.
FNMA - See Fannie Mae.
FORECLOSURE - The means by which a mortgagee (lender) enforces the debt secured by the note and the lien secured by the mortgage. The foreclosure leads to the sale of the property and the satisfaction of the note.
FREDDIE MAC - Almost identical to Fannie Mae with slightly different guidelines.
Fannie Mae (FNMA)- Federal National Mortgage
Association. A private corporation dealing in the purchase of first mortgages.
Fee Simple Deed- The absolute ownership of a parcel of land. The highest degree of
ownership that a person can have in real estate, which gives the owner unqualified
ownership and full power of disposition.
FHA (Federal Housing Administration)- A federal agency that insures first
mortgages, enabling lenders to lend a very high percentage of the sale price.
Fixed Rate Mortgage- A mortgage having a rate of interest that remains the same for
the life of the mortgage.
Fixtures- Personal property that is attached to real property and is legally
treated as real property while it is so attached. Examples: medicine cabinets, window
blinds and chandeliers.
Foreclosure- A legal proceeding in which real estate secured by a mortgage or deed
of trust is sold to satisfy the underlying debt.
Forgery- The fraudulent signing of another's name to an instrument such as a deed,
mortgage or check.
Freddie Mac (FHLMC)- Federal Home Loan Mortgage Corporation. A federal agency that
purchases both conventional and federally insured first mortgages from members of the
Federal Reserve System and the Federal Home Loan Bank System.
GOOD FAITH ESTIMATE - Also known as Regulation Z. The Federal Reserve regulation under the Truth In Lending Law which requires that a buyer getting a mortgage loan be advised in writing of all costs connected with only the credit portion of the purchase.
Ginnie Mae (GNMA)- Government National Mortgage
Association. A federal association working with the FHA that offers special assistance in
obtaining mortgages and purchases mortgages in the secondary market.
Grant- To bestow or confer, with or without compensation, a gift such as land or
money by one having control or authority over the gift.
Grantee- One to whom a grant is made.
Grantor- One who makes a grant.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) -
HUD - Department of Housing and Urban Development. The federal department responsible for the major housing programs in the United States, such as FHA.
Hereditaments- Any and all kinds of estates,
interest and rights in real estate that can be inherited.
Homeowners Insurance- Real estate insurance protecting against loss caused by fire,
some natural causes, vandalism, etc., depending on the terms of the policy. Also includes
coverage such as personal liability and theft away from home.
HUD (Department of Housing and Urban Development)- The federal department
responsible for the major housing programs in the United States.
INCOME PROPERTY - Real property which produces income usually from rentals.
INSPECTION - An examination of the property for sale that may be made by individual licensed inspectors, such as for termite and roof inspections, or by an inspection company that entails all aspects of the property.
INSPECTION COMPANY - A company that may or may not be licensed in each aspect of the inspections performed, i.e., termite, roof, plumbing, electrical, etc. This type of company may only have an occupational license required by the local government.
Index- (1) An alphabetical listing in the public
records of the names of parties to recorded real estate instruments together with the book
and page number of the record. (2) The listing in abstract and title plants of recorded
real estate instruments in groups according to land descriptions, known as a geographic
index. (3) The alphabetical listing in abstract and title plants, by names of the parties,
of all recorded instruments that affect but do not describe particular real estate, such
as judgments, powers of attorney, wills and probate proceedings. Such indexes are known by
various names, such as "general index," "judgment index" and
"name index."
Instrument- Any written document having a legal effect.
JOINT TENANCY - See Co-Tenancy.
Judgment- The determination of a court regarding
the rights of parties in an action. A judgment of debt on a property owner can create a
lien on all of that owner's land within a certain jurisdiction.
Junior Mortgage- A mortgage lower in lien priority than another.
LAND CONTRACT - See Contract For Deed.
LICENSEE - Refer to Real Estate Licensees.
LIEN - A claim against a property in satisfaction of a debt, (i.e.) a mortgage or unpaid taxes.
LISTING AGREEMENT - A contract between the seller of real property and a real estate broker who agrees to market the property with the intent to find a buyer or tenant at terms and price agreeable to the seller in exchange for a commission.
LOCK - Means the borrower is guaranteed a specific interest rate for a specific amount of time.
LTV - Loan to value ratio which is derived by taking the loan amount and dividing it by the purchase price of the property.
Leasehold- The right to possession and use of land
for a fixed period of time. The lease is the agreement that creates the right.
Lessee- A tenant holding a leasehold.
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 monetary charge imposed on a property, usually arising from some debt or
obligation.
Lien Waver- Also called "waiver of liens." A waiver of mechanics' lien
rights, signed by contractors or subcontractors.
Link- In surveying, a length of 7.92 inches.
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.
Lis Pendens- A legal notice intending to bind third parties of litigation claiming
an interest in real estate.
Lot- Generally, any portion or parcel of real property. Usually refers to a portion
of a subdivision.
MARKET VALUE - The current value of real estate that a buyer is willing to pay and a seller is willing to accept.
MARKETABLE TITLE - Title which can be marketed to a prudent buyer. Must be clear of defects or have only minor defects which do not affect the value.
MECHANIC’S LIEN - A lien placed on property by a contractor, subcontractor, supplier or laborer for materials or labor supplied for which just compensation has not been received.
MIP - Mortgage insurance premium and is associated with FHA loans.
MLS - Multiple Listing Service. An agreement among real estate brokers within an association which gives them the right to sell property which is exclusively listed by other participating brokers.
MORTGAGE - A legal document between a lender and borrower stipulating the terms of repayment for a specific property. Becomes a lien on the property.
MORTGAGE LOAN OFFICER - One who works for a lender ( bank, mortgage company, etc.) and initiates a loan by taking an application from a buyer.
Market Value- The average of the highest price that
a buyer, willing but not compelled to buy, would pay and the lowest price a seller,
willing but not compelled to sell, would accept.
Mechanic's Lien- A lien on real estate, created by operation of law, that secures
the payment of debts due to persons who perform labor or services or furnish materials
incident to the construction of buildings and improvements on the real estate.
Metes and Bounds- A land description in which boundaries are described by courses,
directions, distances and monuments.
Mortgage- A conditioned pledge of property to a creditor as security for the
payment of a debt.
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.
Mortgagee- The holder of a mortgage. The party to whom a mortgage is made,
generally the lender.
Mortgagee Policy- See Loan Policy.
Mortgagor- A person who mortgages property. A person who executes a mortgage,
generally the property owner.
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.
NAR - The National Association of REALTORS that is the umbrella association under which there are the state and local REALTOR associations.
NOTE - A written promise to pay an amount certain at a time certain. The note is the document which guarantees repayment to a lender.
Note- Also called "promissory note." A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee.
OCCUPATIONAL LICENSE - A license required by one or more governments to operate a business within the governed boundaries. This license does not denote education or qualifications of the business.
OFFER - A proposal made by one which requires acceptance by another to become a contract. There are specific terms which must be set out in order that the contract be legally binding. Becomes a contract upon acceptance.
OWNER OCCUPANT - One who owns and occupies a property as one’s residence.
Owner's Policy- A policy of title insurance insuring an owner of real estate against loss occasioned by defects in, liens against or unmarketability of the owner's title
.
PERMITS - Documents from a governmental authority to perform specific tasks. Many repairs to homes require permits and follow-up inspections by building inspectors.
PITI - Principle, interest, taxes and insurance.
PLAT MAP - The map which shows the division of land into subdivisions and lots.
POINT - An amount equal to 1% of the principle of a mortgage loan..
PORTFOLIO LENDER - A lender who provides loans utilizing in-house programs and retains ownership of their mortgages.
POWER OF ATTORNEY - The written document which specifically gives one the right to act on behalf of another. In order to transfer real property for another the document must be a Specific Power of Attorney, for one specific transaction and must accurately describe the parcel of land in question.
PMI - Private Mortgage Insurance. Mortgage default insurance designed to pay a lender a portion of the outstanding balance of a loan in the event of default by the borrower.
POWER OF SALE - The clause found in either a mortgage or deed of trust (varies from state to state) which gives the mortgagee or trustee the power to sell the property should it fall into default.
PRE-APPROVED - When the buyer is approved for a mortgage loan prior to making an offer on a property. An excellent bargaining tool for the buyer with the seller.
PREMIUM - The payment for insurance (i.e.) monthly or yearly insurance premium. Also a bonus extra gift.
PREPAID EXPENSES - Those items requiring payment in advance at the time of closing. Usually real estate taxes and hazard and flood insurance.
PREPAYMENT PENALTY - An additional fee charged by some lenders if the loan is paid off prior to the end of the loan term.
PRE-QUALIFY - When a buyer finds out what the parameters are in obtaining a mortgage loan. Usually done by a Loan Officer that works for a lender.
PRESCRIPTIVE EASEMENT - An easement (right of way) granted by a court of law usually on the premise that a right of way existed because of past continued use by one other than the owner of the property.
PRIMARY RESIDENCE - A home which the borrower will be considering as his homestead and will spend more than 6 months of the year there.
Plat- Also called "plat map." A map
dividing a parcel of land into lots, as in a subdivision. A plat book contains the plat
maps for a given area.
Point- Also called "commission points" or "discount points."
One percent of the amount of the loan.
Premium- The amount payable for an insurance policy.
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- (1) A sum of money owed as a debt on which interest is payable. (2) A
person who empowers another to act as his representative or agent. (3) The person having
prime responsibility for an obligation as distinguished from one who acts as a surety or
endorser.
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 - An action to remove a cloud or claim from a title.
QUITCLAIM DEED - A document which relinquishes all claim to property but making no warranty as to the marketability of the title. Does not release obligation the person making the quitclaim may have on the mortgage to the property.
Quit Claim Deed- A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.
RATIOS - Numbers that determine if the debt obligation of a borrower is acceptable to the lender. Front Ratio; Total monthly housing divided by gross income. Back Ratio; All monthly debts divided by gross income.
REAL ESTATE BROKER - See Broker.
REAL ESTATE BROKERAGE - A real estate business that is operated by a licensed real estate broker who must comply with the laws of the state in which the business is licensed.
REAL ESTATE COMMISSION - (a.) The fee which a broker receives for certain contracted services that are performed. Also known as a Professional Service Fee. (b.) The state governing authority over all real estate licensees
REAL ESTATE COMPANY - See Real Estate Brokerage.
REAL ESTATE LICENSEES - Those persons who have received educational training and instruction and passed a state exam. Normally there are two levels of licensees: (1) broker and (2) salesperson.
REAL ESTATE OFFICE - A real estate brokerage that is under the control of a licensed real estate broker. See Real Estate Brokerage.
REALTOR - A member of the National Association of REALTORS (NAR), the state association, and a local association, if applicable. A REALTOR must have a real estate license from the state or states in which one works before being able to join NAR. REALTORS are bound by a strict Code of Ethics unlike a real estate licensee that does not belong to NAR.
REGULATION Z - Also known as Good Faith Estimate. The Federal Reserve regulation under the Truth In Lending Law which requires that a buyer getting a mortgage loan be advised in writing of all costs connected with only the credit portion of the purchase.
Real Estate- Also called "real property."
(1) Land and anything permanently affixed to the land, such as building, fences and those
things attached to the buildings, such as light fixtures, plumbing and heating fixtures,
or other such items that would be personal property if not attached. (2) May refer to
rights in real property as well as the property itself.
Recording- The noting in a public office of the details of a legal document - such
as a deed or mortgage - affecting the title to real estate. When such an instrument is
properly recorded, it is considered to be a matter of public record. Legally, that means
that all subsequent purchasers are deemed to have constructive knowledge of that
information.
Reinsurance- A contractual relationship between two insurance companies under which
one insurer assumes a portion of the risk of the insurance policy written by the other.
Release- (1) To relieve from debt or security or abandon a right, such as the
release of a mortgage lien from a part or all of the land mortgaged. (2) The instrument
effecting a release.
Restrictions- Limitations on the use of property imposed or created by deeds or
other documents in the chain of title. A restriction, for example, may prohibit the
placement of trailer or the construction of a commercial structure on the property.
Riparian Rights- The rights of owners of lands bordering watercourses which relate
to the water and its use.
SALESPERSON - One who has undergone educational training and instruction and has passed a state exam. This the first level of a real estate licensee in most states.
SELLERS AGENT - See Single Agent.
SETBACK - The zoning ordinance that regulates the distance from the lot line to the point on which an improvement may be built.
SINGLE AGENT - An agency relationship established by law. Establishes the duties which the agent has to the buyer or seller. In general these are : Dealing honestly; Loyalty; Confidentially; Obedience; Full Disclosure; Accounting for all funds; Skill, care and diligence; Presenting all offers in a timely manner. May vary from state to state.
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- The sale of an asset to a buyer who immediately leases it back
to the seller.
Search- A careful exploration and perusal of the public records in an effort to
find all recorded instruments relating to a particular chain of title.
Second Mortgage- A mortgage ranking in priority immediately below a first mortgage.
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.
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.
TARGET AREA - A particular area designated by a government entity in which special financing programs are available to buyers to purchase residential properties.
TITLE COMMITMENT - This is a promise by the title company to issue clear title to a property.
TITLE COMPANY - A company which issues title insurance and may handle the closing of a sale of real estate.
TITLE INSURANCE - Protection against the consequences of a pre existing lien or encumbrance on a property that is discovered after a change of ownership.
TRANSACTION BROKER - A brokerage relationship between the buyer and/or seller and the broker in which no agency or limited agency relationship exist. Usually no fiduciary obligation required.
Title- (1) A combination of all the elements that
constitute the highest legal right to own, possess, use, control, enjoy and dispose of
real estate or an inheritable right or interest therein. (2) The rights of ownership
recognized and protected by the law.
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. (See Warranty or Covenant.)
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 Policy- A contract of title insurance under which the insurer, in
keeping with the terms of the policy, agrees to indemnify the insured against loss arising
from claims against the insured interest.
Title Plant- Also called "abstract plant" in some areas. A geographically
filed assemblage of title information that helps in expediting title examinations, such as
copies of previous attorneys' opinions, abstracts, tax searches and copies or take-offs of
the public records.
UNDERWRITING - Standards established by a lender to determine whether a borrower qualifies for a loan.
Underwriter- An insurance company that issues insurance policies to the public or to another insurer.
UPPER LIMIT - The maximum amount of a mortgage loan for which a buyer qualifies.
VA - Veterans Administration. A government agency providing guarantees for lenders on approved loans to qualifying veterans.
Variable Interest Rate- Also called "flexible
interest rate." An interest rate that fluctuates as the prevailing rate moves up or
down. In mortgages, there are usually maximums as to the frequency and amount of
fluctuation.
Veterans Administration (VA) Loans- Housing loans to veterans by banks, savings and
loans, or other lenders that are guaranteed by the Veterans Administration, enabling
veterans to buy a residence with little or no down payment.
WARRANTED - See Warranty
WARRANTY DEED - A conveyance that expressly or implicitly contains certain covenants of title by the grantor (seller) by which he warrants the conveyance of clear and lawful title to the property to the grantee (buyer).
Waiver- The voluntary and intentional relinquishment of a known right, claim or privilege.
WARRANTY - A legal binding promise that gives certain assurances as to the condition
of the property being sold.
Warranty- In a broad sense, an agreement or undertaking by a seller to be
responsible for present or future losses of the purchaser occasioned by deficiency or
defect in the quality, condition or quantity of the thing sold. In a stricter sense, the
provision or provisions in a deed, lease or other instrument conveying or transferring an
estate or interest in real estate under which the seller becomes liable to the purchaser
for defects in or encumbrances on the title. (See Title Covenants.)
Will- A testamentary disposition of property, usually in a form prescribed by law,
that takes effect upon death.
Zoning- Laws passed by local governments regulating the size, type, structure, nature and use of land or buildings.
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