Real Estate Terms
Abandonment - The voluntary surrender or relinquishment of possession of
real property with the intention of terminating one's possession or interest,
such as easement, but without vesting this interest in any other person. Failure
to use or maintain the property, coupled with an intent to abandon and give up
rights or interest.
Addendum - Something added. A list or other material added to a document,
letter, contractual agreement, etc.
Abatement - A reduction or decrease in amount, degree, intensity or
worth. A reduction or decrease from a full amount of tax. Applies to a decrease
of assessed valuation of ad valorem taxes after the assessment and levy.
Absentee Landlord - A lessor of real property who does not live in a
portion of the property.
Absentee Owner - An owner of property who does not occupy said property.
Absorption Rate - An estimate of the rate at which a particular
classification of space, such as new office space, new housing, new condominium
units and the like - will be sold or occupied each year.
Abstract - A summary or abridgment.
Abstractor - An individual familiar with the filing systems and retrieval
of recorded documents. Sometimes used synonymously with "searcher".
Abstract of Title - A concise, summarized history of the title to a
specific parcel of real property, together with a statement of all liens and
encumbrances affecting the property. The abstract of title does not guarantee or
assure the validity of the title of the property, it merely discloses those
items about the property which are of public record, and thus does not reveal
such things as encroachments, forgeries, etc..
Accelerated Depreciation - A method of calculating the depreciation of
certain property (that property which is used in a trade or business, or which
is held for the production of income) at a faster rate than would be achieved
from using the straight line method of depreciation.
Acceleration Clause - Clause used in a note, mortgage or deed of trust
which gives the lender the right to demand payment in full upon the happening of
a certain events, such as failure to pay an installment by a certain date,
change of ownership ownership without the lender's consent, destruction of the
property or other event which endangers the security of the loan.
Acceptance - The expression of the intention of the person receiving an
offer (offeree, usually the seller) to be bound by the terms of the offer
Access - A general or specific right of ingress and egress to a
Accrued Interest - The interest earned for the period of time that has
elapsed since interest was last paid.
Acknowledgement - A formal declaration made before a duly authorized
officer, usually a Notary Public, by a person who has signed a document.
Acre - A measure of land equaling 43,560 square feet; 4,840 square yards;
160 square rods
Acreage - Also known as Sectional Descriptions. A style of describing
real property by section, township, and range.
Adjusted Sale Price - An appraisal term used when a comparable property's
sale price is adjusted to reflect the value of the subject property. The
adjustment is made based on the differences between the subject property and
comparable property in time of sale, terms of sale, location and physical
Adhesion - Contract A contract which is very one-sided and favors the
party who drafted the document.
Administrators Deed - Record of appraisal and sale of property of
deceased persons by administrators, giving name of estate, date of appraisement
and sale, consideration, description of property, authority to sell, name of
administrator, date and time filed, and certificate of recorder. Arranged
chronologically by date filed.
Ad Valorem - Latin for "according to valuation," usually referring to a
type of tax or assessment. A method of taxation using the value of the thing
taxed to determine the amount of tax. Taxes can be either "Ad Valorem" or
Adverse Possession - The acquiring of title to real property owned by
someone else, by means of open, notorious and continuous possession for the
statutory period of time (20 years in Hawaii).
Affidavit - A sworn statement reduced to writing made under oath before a
Notary Public or other official authorized by law to administer an oath.
A-Frame - type of construction usually found in resort areas. The
exterior framing of the building is shaped like the letter A.
Agency - A relationship created when one person, the "principal,"
delegates to another, the "agent," the right to act on the principal's behalf in
business transactions and to exercise some degree of discretion while so acting.
An agency gives rise to a fiduciary relationship and imposes on the agent, as
the fiduciary of the principal, certain duties, obligations and high standards
of good faith and loyalty.
Agent - One who is authorized to represent and to act on behalf of
another person (called the principal). A real estate broker is the agent of his
client, be it the seller or buyer, to whom he owes a fiduciary obligation. A
salesman is the agent of his broker and does not have a direct personal
contractual relationship with either the seller or buyer.
Agreement of Sale - An agreement between the seller (vendor) and buyer
(vendee) for the purchase of real property.
Alienation clause - A provision in a document giving a person the right
to transfer or forbidding him from transferring the property which is the
subject of the document.
Alternative Financing - Mortgages at a lower than market rate, such as
adjustable rate, graduated payment and buy down mortgages.
Amenties - Features, both tangible and intangible, which enhance and add
to the desirability of real estate.
Amortization - The gradual repayment of a debt by means of systematic
payments of principal and interest over asset period, where at the end of the
period there is a zero balance.
Annual Percentage Rate - The relationship of the total Finance Charge to
the total amount to be finance as required under the Federal Truth-in-Lending
Appraisal - The process of estimating, fixing, or setting the market
value of real property. An appraisal may take the form of a lengthy report, a
completed form, a simple letter, or even an oral report.
Appreciation - An increase in the worth or value of property due to
economic or related causes, which may prove to be either temporary or permanent.
Appurtenant - Belonging to; adjunct; appended or annexed.
Arbitration - The non-judicial submission of a controversy to selected
third parties for their determination in the manner provided by agreement or by
Assessed Valuation - The value of real property as established by the
state government for purposes of computing real property taxes.
Assessment - A specific levy for a definite purpose, such as adding curbs
or sewers in a neighborhood. Individual condominium owners are subject to
special assessments benefiting the project as a whole and not funded through
regular maintenance charges.
Assignment - The transfer of the right, title and interest in the
property of one person, the assignor, to another, the assignee. In real estate,
there are assignments of mortgages, contracts, agreements of sale, leases, and
options, among others.
"As is" - A clause that is sometimes used in the transfer of property. It
means that the present property is being transferred with no guarantee or
warranty provided by the seller.
Assumption of Mortgage - The act of acquiring title to property which has
an existing mortgage on it and agreeing to be personally liable for the terms
and conditions of the mortgage, including payments.
Attachment - The legal process of seizing the real or personal property
of a defendant in a lawsuit, by levy or judicial order, and holding it in the
custody of the courts as security for satisfaction of the judgment which the
plaintiff may recover in any action upon a contract, express or implied.
Attorney-In-Fact - One who is authorized by another to act in his place
under a power of attorney.
Attornment - The act of a tenant formally agreeing to become the tenant
of a successor landlord; as in attorning to a mortgagee who has foreclosed on
the leased premises.
Balance Sheet - A financial statement that shows assets, liabilities, and
net worth as of a specific date.
Balloon Mortgage - A mortgage that has level monthly payments that will
amortize it over a stated term but that provides for a lump sum payment to be
due at the end of an earlier specified term.
Basis - The financial interest which IRS attributes to the owner of an
asset for purposes of determining annual depreciation and gain or loss on sale
of the asset.
Balloon Payment - The final payment of a note or obligation, which is
substantially larger than the previous installment payments, and which repays
the debt in full; the remaining balance which is due at the maturity of a note
Bargain & Deed Sale - A deed which recites a consideration and conveys
all of the grantor's interest in the property to the grantee.
Bankrupt - A person, firm, or corporation that, through a court
proceeding, is relieved from the payment of all debts after the surrender of all
assets to a court-appointed trustee.
Bankruptcy - A proceeding in a federal court in which a debtor who owes
more than his or her assets can relieve the debts by transferring his or her
assets to a trustee.
Base Line - Latitudinal starting line from which townships are measured
to the North and South.
Before-Tax Income - Income before taxes are deducted.
Beneficiary - The person designated to receive the income from a trust,
estate, or a deed of trust.
Bilateral Contract - A contract in which each party promises to perform
an act in exchange for the other party's promise to perform.
Bill of Sale - A written agreement by which one person sells, assigns or
transfers his right to, or interest in, personal property to another.
Binder - A preliminary agreement, secured by the payment of an earnest
money deposit, under which a buyer offers to purchase real estate.
Biweekly Payment Mortgage - A mortgage that requires payments to reduce
the debt every two weeks (instead of the standard monthly payment schedule). The
26 (or possibly 27) biweekly payments are each equal to one-half of the monthly
payment that would be required if the loan were a standard 30-year fixed-rate
mortgage, and they are usually drafted from the borrower's bank account. The
result for the borrower is a substantial savings in interest.
Blanket Mortgage - A mortgage which is secured by several structures or a
number of lots. A blanket mortgage is often used to finance proposed
subdivisions or development projects, especially cooperatives.
Block - An area of land within a Section that has been surveyed and
platted, most often containing Lots.
Bond - An interest-bearing certificate of debt with a maturity date. An
obligation of a government or business corporation. A real estate bond is a
written obligation usually secured by a mortgage or a deed of trust.
Book and Page - The location of a recorded document in an office of
records referenced by separate book number and page number within that book,
listed chronologically and alphanumerically.
Breach of Contract - Violation of any of the terms or conditions of a
contract without legal excuse; default, non-performance, such as failure to make
payment when due.
Bridge Loan - A form of second trust that is collateralized by the
borrower's present home (which is usually for sale) in a manner that allows the
proceeds to be used for closing on a new house before the present home is sold.
Also known as "swing loan."
Budget Mortgage - A mortgage with payments set up to cover more than
interest and principal reductions.
Broker - A person who, for a commission or a fee, brings parties together
and assists in negotiating contracts between them.
Bundle of Rights - An ownership concept describing all those legal rights
which attach to the ownership of real property, including the right to sell,
lease, encumber, use, enjoy, exclude, will, etc.
Business Days - Days of the week excluding Saturdays, Sundays, and
holidays; normal working days.
Buy-down Mortgage - A temporary buy-down is a mortgage on which an
initial lump sum payment is made by any party to reduce a borrower's monthly
payments during the first few years of a mortgage. A permanent buy-down reduces
the interest rate over the entire life of a mortgage.
Certified Check - A check which the bank guarantees to be good, and
against which a stop payment is ineffective.
Call Option - A provision in the mortgage that gives the mortgagee the
right to call the mortgage due and payable at the end of a specified period for
Cap - A provision of an adjustable-rate mortgage (ARM) that limits how
much the interest rate or mortgage payments may increase or decrease.
Capital Improvement - Any structure or component erected as a permanent
improvement to real property that adds to its value and useful life.
Capitalization - A mathematical process for converting net income into an
indication of value, commonly used in the income approach to appraisal.
Cap Rate (Capitalization Rate) - The percentage selected for use in the
income approach to valuation of improved property. The cap rate is designed to
reflect the recapture of the original investment over the economic life of the
improvement, to give the investor an acceptable rate of return (yield) on the
original investment, and to provide for the return on borrowed capital.
Cash-out Refinance - A refinance transaction in which the amount of money
received from the new loan exceeds the total of the money needed to repay the
existing first mortgage, closing costs, points, and the amount required to
satisfy any outstanding subordinate mortgage liens. In other words, a refinance
transaction in which the borrower receives additional cash that can be used for
Census Tract - A portion of a county from which statistics are derived,
typically consisting of 2,500 - 8,000 people.
Certificate of Reasonable Value (CRV) - A document issued by the
Department of Veterans Affairs (VA) that establishes the maximum value and loan
amount for a VA mortgage.
Certificate of Title - A statement provided by an abstract company, title
company, or attorney stating that the title to real estate is legally held by
the current owner.
Chain - 1. A list of previous owners of a certain piece or parcel of
land, typically going back to 1940, showing recorded date, grantor, grantee, and
recorded instrument information; or 2. A unit of measurement equaling sixty-six
feet, or 4 Rods.
Chain of Title - The recorded history of matters which affect the title
to a specific parcel of real property, such as ownership, encumbrances and
liens, usually beginning with the original recorded source of the title.
Change Frequency - The frequency (in months) of payment and/or interest
rate changes in an adjustable-rate mortgage (ARM).
Chattel - Personal property which is tangible and moveable.
Clear Title - Title to property that is free from liens, defects or other
encumbrances, except those which the buyer has agreed to accept, such as
mortgage to be assumed, the ground lease of record, and the like; established
title; title without clouds.
Closing - A meeting at which a sale of a property is finalized by the
buyer signing the mortgage documents and paying closing costs. Also called
"settlement." Closing Cost Item - A fee or amount that a homebuyer must pay at
closing for a single service, tax, or product. Closing costs are made up of
individual closing cost items such as origination fees and attorney's fees.
Closing Costs - Expenses (over and above the price of the property)
incurred by buyers and sellers in transferring ownership of a property. Closing
costs normally include an origination fee, an attorney's fee, taxes, an amount
placed in escrow, and charges for obtaining title insurance and a survey.
Closing costs percentage will vary according to the area of the country.
Closing Statement - Also referred to as the HUD1. The final statement of
costs incurred to close on a loan or to purchase a home.
Cloud on Title - Any conditions revealed by a title search that adversely
affect the title to real estate. Usually clouds on title cannot be removed
except by a quitclaim deed, release, or court action.
Collateral - An asset (such as a car or a home) that guarantees the
repayment of a loan. The borrower risks losing the asset if the loan is not
repaid according to the terms of the loan contract.
Collection - The efforts used to bring a delinquent mortgage current and
to file the necessary notices to proceed with foreclosure when necessary.
Color of Title - A condition which has the appearance of good title, but
which in fact is not valid title, as where title is founded on some written
document which on its face appears valid and effective, but which is actually
Co-maker - A person who signs a promissory note along with the borrower.
A co-maker's signature guarantees that the loan will be repaid, because the
borrower and the co-maker are equally responsible for the repayment. See
Commercial Property - A classification of real estate which includes
income producing property such as office buildings, gasoline stations,
restaurants, shopping centers, hotels and motels, parking lots and stores, and
other similar uses.
Commission - The fee charged by a broker or agent for negotiating a real
estate or loan transaction. A commission is generally a percentage of the price
of the property or loan.
Commitment - A pledge or promise to do a certain act, such as the promise
of a lending institution to loan a certain amount of money at a fixed rate of
interest to a qualified buyer, provided the loan is obtained on or before a
Commitment Letter - A formal offer by a lender stating the terms under
which it agrees to lend money to a home buyer. Also known as a "loan
Common Areas - Those portions of a building, land, and amenities owned
(or managed) by a planned unit development (PUD) or condominium project's
homeowners' association (or a cooperative project's cooperative corporation)
that are used by all of the unit owners, who share in the common expenses of
their operation and maintenance. Common areas include swimming pools, tennis
courts, and other recreational facilities, as well as common corridors of
buildings, parking areas, means of ingress and egress, etc.
Community Property - In some western and southwestern states, a form of
ownership under which property acquired during a marriage is presumed to be
owned jointly unless acquired as separate property of either spouse.
Comparables - An abbreviation for "comparable properties"; used for
comparative purposes in the appraisal process. Comparables are properties like
the property under consideration; they have reasonably the same size, location,
and amenities and have recently been sold. Comparables help the appraiser
determine the approximate fair market value of the subject property.
Compound Interest - Interest which is computed upon the principal sum
plus accrued interest.
Condemnation - Either a judicial or administrative proceeding to exercise the
power of eminent domain, i.e., the power of the government to take private
property for public use.
Condominium - A real estate project in which each unit owner has title to
a unit in a building, an undivided interest in the common areas of the project,
and sometimes the exclusive use of certain limited common areas.
Condominium Conversion - Changing the ownership of an existing building
(usually a rental project) to the condominium form of ownership.
Consideration - An act or forbearance, or the promise thereof, which is
offered by one party to induce another to enter into a contract; that which is
given in exchange for something from another
Construction Loan - A short-term, interim loan for financing the cost of
construction. The lender makes payments to the builder at periodic intervals as
the work progresses.
Constructive Eviction - Acts done by a landlord which so materially
disturb or impair the tenant's enjoyment of the leased premises that a tenant is
effectively forced to move out and terminate the lease without liability for any
Constructive Notice - Notice of certain facts which are implied bylaw to
a person because he could have discovered the fact by reasonable diligence or by
inquiry into public records.
Consumer Reporting Agency - An organization that prepares reports that
are used by lenders to determine a potential borrower's credit history. The
agency obtains data for these reports from a credit repository as well as from
Contingency - A condition that must be met before a contract is legally
binding. For example, home purchasers often include a contingency that specifies
that the contract is not binding until the purchaser obtains a satisfactory home
inspection report from a qualified home inspector.
Contract - A legal agreement between competent parties who agree to
perform or refrain from performing certain acts for a consideration. In real
estate, there are many different types of contracts, including listings,
contracts of sale, options, mortgages, assignments, leases, deeds, escrow
agreements, and loan commitments, among others.
Convertibility Clause - A provision in some adjustable-rate mortgages
(ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at
specified timeframes after loan origination.
Conveyance - The transfer of title to real property by means of a written
instrument such as a deed or an assignment of lease.
Cooperative (co-op) - A type of multiple ownership in which the residents
of a multiunit housing complex own shares in the cooperative corporation that
owns the property, giving each resident the right to occupy a specific apartment
or unit corporate relocation - Arrangements under which an employer moves an
employee to another area as part of the normal course of business or under which
it transfers a
substantial part or all of its operations and to another area because it is
relocating its headquarters or expanding its office capacity.
Cooperative Ownership - Cooperative ownership of an apartment unit means
that the apartment owner has purchased shares in a corporation which holds title
to the entire apartment building.
Corporate Grant Deed - A grant deed in which the Grantor is a
corporation. Not used in all states.
Cost of Funds Index (COFI) - An index that is used to determine interest
rate changes for certain adjustable-rate mortgage (ARM) plans. It represents the
weighted-average cost of savings, borrowings, and advances.
Co-Tenancy - A form of concurrent property ownership in which two or more
persons own an undivided interest in the same property.
Counter-offer - A new offer made as a reply to an offer received from
another; this has the effect of rejecting the original offer, which cannot
thereafter be accepted unless revived by the offeror's repeating it.
Covenant & Conditions - A clause in a mortgage that obligates or
restricts the borrower and that, if violated, can result in foreclosure.
Credit - An agreement in which a borrower receives something of value in
exchange for a promise to repay the lender at a later date.
Credit History - A record of an individual's open and fully repaid debts.
A credit history helps a lender to determine whether a potential borrower has a
history of repaying debts in a timely manner.
Credit Report - A report of an individual's credit history prepared by a
credit bureau and used by a lender in determining a loan applicant's
creditworthiness. See merged credit report.
Credit Repository - An organization that gathers, records, updates, and
stores financial and public records information about the payment records of
individuals who are being considered for credit.
Debt - An amount owed to another.
Daily - A method of recording a document recorded first by the date, then
by a number indicating the document?s order in which it was recorded that
Debt Service - The amount of money needed to meet the periodic payments
of principal and interest when a debt is amortized.
Decree of Distribution - The final declaration of the rights of heirs to
receive the property of an estate.
Deed - A written instrument by which a property owner "grantor" transfers
to a "grantee" an ownership in.
Deed-in-Lieu - A deed given by a mortgagor to the mortgagee to satisfy a
debt and avoid foreclosure.
Deed in Trust
- Instrument of conveyance into a trust; a fiduciary relationship under which
one holds property (real or personal) for the benefit of another.
Deed of Trust - Record of conveyance of real estate to a trustee as
security for the repayment of money loaned, showing date; names of grantor,
grantee, trustee, and beneficiary; description and amount of note; description
and location of property; terms of instrument; maturity; acknowledgement; date
filed; and certificate of recorder. The document used in some states instead of a mortgage;
title is conveyed to a trustee.
Default - Failure to fulfill a duty or promise or failure to perform any
obligation or required act. The most common occurrence of default on the part of
a buyer or lessee is non-payment of money. Failure to make mortgage payments on
a timely basis or to comply with other requirements of a mortgage.
Deficiency Judgment - A judgment against a borrower, endorser, or
guarantor for the balance of the debt issued when the security for a loan is
insufficient to satisfy the debt.
Delinquency - Failure to make mortgage payments when mortgage payments
Deposit - A sum of money given to bind the sale of real estate, or a sum
of money given to ensure payment or an advance of funds in the processing of a
Depreciation - A decline in the value of property; the opposite of
Depreciation (Tax) - For tax purposes, depreciation is an expense
deduction taken for an investment in depreciable property.
Descent - The acquisition of an estate by inheritance, where an heir
succeeds to the property by operation of law. Descent literally means the
hereditary succession of an heir to property of an ancestor who dies intestate.
Devise - A transfer of real property under a will.
Discrimination - The act of making a distinction against or in favor of a
person on the basis of the group or class to which the person belongs; the
failure to treat people equally.
Distraint - The right of a landlord, pursuant to a court order, to seize
a tenants belongings for rents in
Document ID Number - The identifying number assigned to a document by the
local recording agency's office.
Docket - The location of a recorded document in an office of records,
listed chronologically and alphanumerically.
Domicile - The state where an individual has his true, fixed, permanent
home and principal business
establishment and to which place he has the intention of returning whenever he
Dower - The legal right or interest a wife acquires in property her
husband held or acquired anytime
Down Payment - The part of the purchase price of a property that the
buyer pays in cash and does not finance with a mortgage.
Due-on-Sale Provision - A provision in a mortgage that allows the lender
to demand repayment in full if the borrower sells the property that serves as
security for the mortgage.
Duress - Unlawful constraint or action exercised upon a person whereby he
is forced to perform some act against his will. A contract entered into under
duress is void
Easement - A right of way giving persons other than the owner access to
or over a property.
Effective Age - An appraiser's estimate of the physical condition of a
building. The actual age of a building may be shorter or longer than its
Effective Gross Income - Normal annual income including overtime that is
regular or guaranteed. The income may be from more than one source. Salary is
generally the principal source, but other income may qualify if it is
significant and stable.
Encumbrance - Anything that affects or limits the fee simple title to a
property, such as mortgages, leases, easements, or restrictions.
Endorser - A person who signs ownership interest over to another party.
Contrast with co-maker.
Entirety, Tenancy By - A form of joint ownership of property between
husband and wife with the right of survivorship.
Equal Credit Opportunity Act (ECOA) - A federal law that requires lenders
and other creditors to make credit equally available without discrimination
based on race, color, religion, national origin, age, sex, marital status, or
receipt of income from public assistance programs.
Equity - A homeowner's financial interest in a property. Equity is the
difference between the fair market value of the property and the amount still
owed on its mortgage.
Escheat - The reversion of property to the state when a decedent dies
intestate and there are no heirs capable of inheriting, or when the property is
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.
Estoppel - A legal doctrine by which a person is prevented from asserting
rights or facts which are inconsistent with a previous position or
representation he had made by his act, conduct or silence.
Ethics - A system of moral principles, rules and standards of conduct
Eviction - The legal process of removing a tenant from possession of the
premises for some breach of the lease contract.
Examination of Title - The report on the title of a property from the
public records or an abstract of the title.
Executor - A person appointed by a testator to carry out the directions
and requests in the last will and testament, and to dispose of property
according to the provisions of the will.
Extenstion - An agreement to continue the period of performance beyond
the specified period.
Fair Credit Reporting Act - A consumer protection law that regulates the
disclosure of consumer credit reports by consumer/credit reporting agencies and
establishes procedures for correcting mistakes on one's credit record.
Fair Market Value - The highest price that a buyer, willing but not
compelled to buy, would pay, and the lowest a seller, willing but not compelled
to sell, would accept.
Federal Tax Lien - A federal lien which attaches to real property, either
if the federal estate tax is not paid, or if the taxpayer has violated the
federal income tax or payroll tax laws.
Fee Simple - The greatest possible interest a person can have in real
Fiduciary - A relationship which implies a position of trust or
confidence wherein one is usually entrusted to hold or manage property or money
for another. Among the obligations a fiduciary owes to the principal are duties
of loyalty; obedience; full disclosure; the duty to use skill, care and
diligence; and the duty to account for all monies.
Financial Statement - A formal statement of the financial status and net
worth of a person or company, setting forth and classifying assets and
liabilities as of a specified date.
Finder's Fee - A fee paid to someone for producing a buyer to purchase or
a seller to list property; also called a referral fee.
First Mortgage - A mortgage that is the primary lien against a property.
Fixed-Rate Mortgage - A mortgage in which the interest rate does not
change during the entire term of the loan.
Flood Insurance - Insurance that compensates for physical property damage
resulting from flooding. It is required for properties located in federally
designated flood areas.
Foreclosure - The legal process by which a borrower in default under a
mortgage is deprived of his or her interest in the mortgaged property. This
usually involves a forced sale of the property at public auction with the
proceeds of the sale being applied to the mortgage.
Fraud - Any form of deceit, trickery, breach of confidence or
misrepresentation by which one party attempts to gain some unfair or dishonest
advantage over another.
Free & Clear Title - Title to real property which is absolute and
unencumbered by any liens, mortgages, clouds or other encumbrances.
Functional Obsolescence - A loss in value of an improvement due to functional
inadequacies, often caused by age or poor design.
- One of many types of deeds used to transfer real
property. Contains implied warranties against prior conveyances or encumbrances.
Grantee - The person who receives from the grantor a grant of real
Garnishment - A legal process designed to provide a means for creditors to
safeguard for themselves the personal property of a debtor which is in the hands
of a third party ("garnishee").
Good Faith Estimate - An estimate of charges, which a borrower is likely
to incur in connection with a settlement.
Government Offices -
* ASSESSOR: A county office tasked to assess the value of a
property. Also assigns parcel numbers for the purposes of numerically
identifying property. Function may also be
performed by Auditor, Appraiser, Equalization Office, or Selectmen in some
* RECORDER: A county office where instruments are recorded,
giving public notice. Also known as the Register of Deeds, Registrar of Deeds,
* TREASURER: A county or state office tasked to administer
funds, including taxes. Also known as Tax Collector in some areas.
Grantor - The person transferring title to, or an interest in, real
property. A grantor must be competent to convey; thus, for example, an insane
person cannot convey title to real property.
Gross Income Multiplier - A useful rule of thumb to estimate market value
of income producing residential property. The multiplier is derived by using
comparable sales divided by the actual or estimated monthly rentals and arriving
at an acceptable average.
Guardian - One who is given the lawful custody and care of another
(called a ward).
Habitable - Being fit to live in. The residential landlord has an
obligation to keep the leased premises in a habitable condition.
Hazard Insurance - Insurance protecting against loss to real estate
caused by fire, some natural causes, vandalism, etc., depending upon the terms
of the policy.
Heir - A person who inherits under a will or a person who succeeds to
property by the laws of descent if the decedent dies without a will (intestate).
Holdover Tenant - One who stays on the leased premises after his lease
has expired. The landlord
normally has the choice of evicting the holdover tenant or permitting him to
remain and continue to pay rent
Homestead - A home which is used as a personal residence.
HUD - A federal cabinet department officially known as the Department of
Housing and Urban
Injunction - A legal action which forbids a party defendant from doing
some act; it requires a person to whom it is directed to refrain from doing a
Imputed Interest - Interest implied by the federal tax law.
Income Property - Property purchased primarily for the income to be
derived plus certain tax benefits, such as accelerated depreciation. Income
property can be commercial, industrial or residential.
Incorporeal Rights - Intangible or non-possessory rights in real property
such as easements, licenses, profits and the like.
Initial Point - The intersection of the Base Line and Principal Meridian
in sectional land descriptions.
Institutional Lender - Financial institutions such as banks, insurance
companies, savings and loans or any lending institution whose loans are
regulated by law.
Interest - The sum paid or accrued in return for the use of money.
Interim Financing - A short-term loan usually made during the
construction phase of a building project; often referred to as the "construction
Intestate - To die without a valid will.
Inventory - An itemized list of property. Many brokers recommend that
their clients attach to the sales contract an inventory of property to be
included in the sale of a residential property, including a condominium
Inverse Condemnation - An action for "just compensation "brought by one
whose property has been effectively "taken" or substantially interfered with or
taken without just compensation.
Joint & Several Liability - A situation in which more than one party is
liable to repay a debt or obligation and a creditor can obtain compensation from
one or more parties, either individually or jointly, whichever he chooses.
Joint Tenancy - A form of property ownership by two or more persons in
which the joint tenants have one and the same interest, arising by one and the
same conveyance, commencing atone and the same time and held by one and the same
possession the concept of "four unities").
Joint Venture - The joining of two or more people in a specific business
enterprise such as the development of a condominium project or a shopping
Judgment Lien - A lien binding on all the real estate of a
judgment-debtor and giving the holder of the judgment a right to levy (i.e. to
seize) the land for satisfaction of the judgment.
Judicial Foreclosure - A method of foreclosing upon real property by
means of a court supervised sale. After an appraisal, the court determines an
upset price below which no bids to purchase will be accepted.
Jurisdiction -The authority or power to act, such as the authority of a
court to hear and render a decision that binds both parties.
Just Compensation - An amount of compensation to be received by a party
for the taking of property under the power of eminent domain.
Landlord - The lessor or the owner of leased premises. The landlord
retains a reversion interest in the property so that when the lease ends the
property will revert to the landlord.
Land Contract - Another name for an installment purchase contract, by
which the buyer obtains equitable title (the right to use the property) while
the seller retains legal title (recorded title) as security for payment of the
balance of the purchase price.
Land Index - A filing system of deeds and encumbrances of real property,
typically located in a countys courthouse or office of records.
Law Day - The date an obligation becomes due; sometimes refers to the
Lease - A lease is both a contract between lessor (landlord) and lessee
(tenant) and a conveyance or demise of the premises by the lessor to the lessee.
A lease is a contract in that item bodies the agreement between the parties.
Leasehold - A less-than-freehold estate which a tenant possesses in real
Legal Description - A description of a tract of land in legally
acceptable terms, intended to show the location and dimensions of a piece of
property. Typically described as Sectional, or Metes & Bounds.
Legal Notice - That notice which is either implied or required by law.
Constructive notice under the recording laws is also referred to as legal
Legal Rate of Interest - The maximum interest rate permitted bylaw, with
anything above that rate being usury.
Lessee - The person to whom property is rented or leased; called a
"tenant" in most residential leases.
Lessor - The person who rents or leases property to another. In
residential leasing, the lessor is often referred to as a landlord.
Lien - An encumbrance against property for money due, either voluntary or
Line of Credit - A maximum amount of money a bank will lend one of its
more reliable and credit worthy customers without need for any formal loan
Liquidated Damages - An amount predetermined by the parties to an
agreement as the total amount of compensation an injured party should receive in
the event the other party breaches a specified part of the contract.
Liquidity - The ability to sell an asset and convert it into cash at a
price close to its true value.
Lis Pendens - A legal document recorded in the Bureau of Conveyances,
which gives constructive notice that an action has been filed in either a state
or federal court affecting a particular piece of property. "Lis Pendens" is a
Latin term which means "action pending" and is in the nature of a quasi-lien.
Loan to Value Ratio (LTV) - The ratio of the amount of your loan to the
appraised value of the home. The LTV will affect programs available to the
borrower and generally, the lower the LTV the more favorable the terms of the
programs offered by lenders.
Lot - A piece of land surveyed and platted within a Block.
Mail Address - The address to which a tax
assessment bill is sent regarding a property. Typically distinct from the
property address in the case of rental properties.
reasonable time to find a purchaser who buys with knowledge of all the uses to
which the property is adapted for.
Maps - Parcel Map, Surveyors Map, and Topographical Map
Market Value - The highest price, estimated in terms of money, which a
property will bring if exposed for sale in the open market, allowing a
Mechanic's Lien - A statutory lien created in favor of material-men and
mechanics to secure payment for materials supplied and services rendered in the
improvement, repair or maintenance of real property.
Metes & Bounds - A description of a tract of land beginning at a starting
point, following lines and arcs back to the point of beginning, creating a
perimeter of the property.
Misrepresentation - A false statement or concealment of a material fact
made with the intent to induce some action by another party.
Mortgage - A legal document that pledges a property to the lender as
security for payment of a debt.
Mortgagee - The person or company who receives the mortgage as a pledge
for repayment of the loan.
Mortgagor - The mortgage borrower who gives the mortgage as a pledge to
Multiple Parcels - It is not uncommon that multiple parcels are assembled
into one large tract of land for the purpose of development. For example, it is
unlikely that a large shopping center has been developed on a single parcel,
since the size of such a development would require the assemblage of multiple
parcels of land. In many cases the developer would have had to acquire all the
separate parcels of land from different owners.
Municipality Code - A coded value (typically representing an
abbreviation) for the parish, county or township.
Negotiable Instrument - Any written instrument which may be transferred
by endorsement or delivery so as to vest legal title in the transferee.
Net Worth - The value remaining after deducting liabilities from assets.
Nominal Consideration - A consideration bearing no relation to the real
value of the contract. A deed often recites a nominal consideration, such as
"ten dollars and other valuable consideration."
Note - A document signed by the borrower of a loan, stating the loan
amount, the interest rate, the time and method of repayment and the obligation
to repay. The note is the evidence of the debt. When secured by a mortgage, it
is called a mortgage note.
Notice - (1) Legal notice is notice which is required to be made by law,
or notice which is imparted by operation of law as a result of the possession of
property or the recording of documents. (2) Notice which is required by
contract, for example, when the parties agree to terminate a contract
by the written notice of either party 30 days prior to termination.
Notice of Completion - Document filed to give public notice that a
construction job has been completed and that mechanics' liens must be filed
within 45 days to be valid.
Notice of Default - A notice to a defaulting party that there has been a
default, usually providing a grace period in which to cure the default.
Notice of Nonresponsibility - A legal notice designed to relieve a
property owner from responsibility for the cost of improvements ordered by
Notice to Quit - A written notice given by a landlord to his tenant,
stating that the landlord intends to regain possession of the leased premises
and that the tenant is required to quit and remove himself from the premises
either at the end of the lease term or immediately if there is a breach of lease
or if the tenancy is at will or by sufferance; sometimes refers to the notice
given by the tenant to the landlord that he intends to give up possession on a
Novation - The substitution of a new obligation for an old one;
substitution of new parties to an existing obligation, as where the parties to
an agreement accept a new debtor in place of an old one.
Null & Void - Having no legal force or effect; of no worth;
unenforceable; not binding.
Obsolescence - A type of depreciation of property.
Offer - A promise by one party to act or perform in a specified manner
provided the other party will act or perform in the manner requested.
Offer & Acceptance - The two components of a valid contract; a "meeting
of the minds
Open-End Mortgage - A mortgage in which the borrower is given a limit up
to which he may borrow, with any incremental advances of money up to but not
exceeding the original borrowing limit to be secured by the same mortgage.
Option - An agreement to keep open, over a set period, an offer to sell
or purchase property.
Origination Fee - The finance fee charged by a lender for placing a
mortgage, which covers initial costs such as preparation of documents and
credit, inspection and appraisal fees.
Planned Unit Developments (PUD) - A subdivision of five or more
individually owned lots with one or more other parcels owned in common or with
reciprocal rights in one or more other parcels.
Parcel - A piece of real property described in legal terms, numbered for
Parcel Map - A map of a given area, designed, drawn, and labeled for the
purposes of identifying parcels and distinguishing them from one another in a
Percent Improvement - The amount of a structure assessed, typically by
the county's assessing agency.
PITI - Principal, interest, taxes and insurance-the components of a
monthly mortgage payment.
Plat Book - Shows the location of all land in county by section /
township / range numbers and in towns and cities by lot and block numbers, with
name of owner and the road and school district in which located, number of acres
or dimensions of tract or lot, and survey number.
Point of beginning - The origination and destination of a Metes & Bounds
Points - Charges levied by the mortgage lender and usually payable at
closing. One point represents 1% of the face value of the mortgage loan.
Possession - The act of either actually or constructively possessing or
Power of Attorney - A written instrument authorizing a person the
attorney-in-fact) to act as the agent on behalf of another to the extent
indicated in the instrument.
Power of Sale - A clause written into a mortgage authorizing the
mortgagee to sell the property in the event of default.
Premises - The subject property, such as the property which is deeded or
the unit that is leased.
Prepaids - Those expenses of property which are paid in advance of their
due date and will usually be prorated upon sale, such as taxes, insurance, rent,
Prepaid Interest - The paying of interest before it is due.
Prepayment Penalty - A charge imposed by a mortgage lender on a borrower
who wants to pay off part or all of a mortgage loan in advance of schedule.
Principal - Amount of debt, not including interest. The face value of a
note or mortgage.
Principal Meridian - Longitudinal starting line from which range is
measured to the East and West.
Probate - The formal judicial proceeding to prove or confirm the validity
of a will. The will is presented to the probate court, and creditors and
interested parties are notified to present their claims or to show cause why the
provisions of the will should not be enforced by the court.
Promissory Note - An unconditional written promise of one person to pay a
certain sum of money to another, or order, or bearer, at a future specified
Property - The rights or interests a person has in the thing owned; not,
in the technical sense, the thing itself. These rights include the right to
possess, to use, to encumber, to transfer and to exclude, commonly called the
"bundle of rights."
Purchase Money Mortgage - A mortgage given to the seller as part of the
buyer's consideration for the purchase of real property, and delivered at the
same time that the real property is transferred as a simultaneous part of the
Quiet Title Action - A circuit court action intended to establish or
settle the title to a property, especially when there is a cloud on the title.
Qualifying Ratios - The ratio of your fixed monthly expenses to your
gross monthly income, used to determine how much you can afford to borrow. The
fixed monthly expenses would include PITI along with other obligations such as
student loans, car loans, or credit card payments.
Quarter - Containing 160 acres, this is one-fourth the size of a Section
of land. See also: Section.
Quitclaim Deed - A deed of conveyance which operates, in effect, as a
release of whatever interest the grantor has in the property; sometimes called a
Real Estate - The physical land and appurtenances, including any
structures; for all practical purposes synonymous with real property.
Range - A column of land running North and South, usually measured six
miles wide, beginning at the Principal Meridian and moving outward. Used to
create coordinates identifying Townships.
Real Property - All land and appurtenances to land, including buildings,
structures, fixtures, fences, and improvements erected upon or affixed to the
same; excluding, however, growing crops.
Rebate - Compensation received from a wholesale lender, which can be used
to cover closing costs, or as a refund to the borrower. Loans with rebates often
carry higher interest rates than loans with "points" (see above).
Receiver - An independent party appointed by a court to impartially
receive, preserve and manage property which is involved in litigation, pending
final disposition of the matter before the court.
Recording - The act of entering into the book of public records the
written instruments affecting the title to real property, such as deeds,
mortgages, contracts of sale, options, assignments, and the like. Proper
recordation imparts constructive notice to all the world of the existence of the
recorded document and its contents.
Redemption, Equitable Rights - The right of a mortgagor who has defaulted
on the mortgage note to redeem or get back his title to the property by paying
off the entire mortgage note prior to the foreclosure sale.
Refinancing - The process of paying off one loan with the proceeds from a
new loan using the same property as security.
Reformation - A legal action to correct or modify a contract or deed
which has not accurately reflected the intentions of the parties due to some
mechanical error, such as a typo graphical error in the legal description.
Release - The discharge or relinquishment of a right, claim or privilege.
Releases involving real property transactions should be acknowledged and
Re-recording - The recording of a deed for the second time to correct an
error contained in the deed when originally recorded. Also called Confirmation
Deed, Correction Deed, or Reformation Deed.
Rescission - The legal remedy of canceling, terminating or annulling a
contract and restoring the parties to their original positions; a return to the
Residential Mortgage Credit Report (RMCR) - A report requested by your
lender that utilizes information from at least two of the three national credit
bureaus and information provided on your loan application.
Retaliatory Eviction - An act whereby a landlord evicts the tenant in
response to some complaint made by the tenant.
Reversion - A future estate in real property created by operation of law
when a grantor conveys a lesser estate than he has. The residue left in the
grantor is called a reversion which commences in possession in the future upon
the end of a particular estate granted or devised, whether it be freehold or
Right of Survivorship - The distinctive characteristic of a joint tenancy
(also tenancy by entirety) by which the surviving joint tenant(s) succeeds to
all right, title and interest of the deceased joint tenant without the need for
Rod - A unit of measurement.
Survey - A print showing the measurements of the boundaries of a parcel
of land, together with the location of all improvements on the land and
sometimes its area and topography.
Sectional Land Descriptions - Land descriptions showing the Section,
Township, and Range that a piece of real property is located in. Also referred
to as Acreage.
Sheriffs Deed - A deed sold by sheriff at public auction, showing date
and place of sale, description and location of property, consideration, grantee,
and parties to execution, acknowledgement, date filed, and certificate of
Site Address - The location of a property with a structure, independent
of a Legal Description. Vacant land does not have a Site Address unless it
possessed structure in the past.
Site City/State/Site Zip - Part of the Site Address.
Square Feet - The area of floor space of a structure, usually measured by
footprints of buildings which do not take into consideration the thickness of
Subordination Agreement - An agreement between two entities describing
which is inferior and which superior to the other in lien position. The
subordinate lien is sometimes referred to as being "second place" or "second
position". Most commonly used when two mortgages are on a single property.
Surveyors Map - A map drawn for the uses of initially or subsequently
defining boundaries of properties. From which Sections, Townships, Blocks, Lots,
and Parcels shall be distinguished and be identified.
Title - The evidence one has of right to possession of land.
Tax Amount - The amount of property taxes to be paid by the property
owners. Determined by the county assessor's office.
Title Insurance - Insurance against loss resulting from defects of title
to a specifically described parcel of real property.
Title Search - An investigation into the history of ownership of a
property to check for liens, unpaid claims, restrictions or problems, to prove
that the seller can transfer free and clear ownership.
Topographical Map - A map drawn for the purposes of indicating the
contour of land, such as flat, rolling, mountainous, etc.
Topographical Survey - A survey showing the differences in grade of a
parcel of land. Grades are measured in relation to sea level.
Total Debt Ratio - Monthly debt and housing payments divided by gross
monthly income. Also known as Obligations-to-Income Ratio or Back-End Ratio.
Township - A strip of land running East and West, usually measured six
miles wide, beginning at the Base Line and moving outward. Used to create
coordinates identifying Townships.
- The last date available that a transfer of ownership occurred for a particular
property - only applies with change of ownership, and will not include some
Transfer Value - The last amount available of record indicating the sale
price of a property.
Tract - A
parcel of land. In some states, synonymous with a subdivision.
Trustee - One who holds title to real property under the terms of a deed
Truth-in-Lending Act - A federal law requiring a disclosure of credit
terms using a standard format. This is intended to facilitate comparisons
between the lending terms of different financial institutions.
U.C.C. - Uniform Commercial Code - A secure financial transaction to
include other related statements filed in the Secretary of State's office and
the County Clerk's office. Copies obtained may need to be stamped "Official
Copy" or similar to have official bearing.
Warranty Deed - A deed used in many states to convey fee title to real
property. The grantor warrants that title is not defective.
Will - An instrument created by an individual prior to their death
instructing an individual or group of individuals (called Executors) how they
wish to have their possessions and estate divided among other parties after
their death. Typically filed with the Probate Court or County Recorder.