Complete real estate dictionary and glossary of words you may encounter in buying, selling or leasing a home or property.

We understand that sometimes there can be a few misunderstandings in the process of managing the sell or purchase of a property. We have collected a few of the key words that often are referenced during the process in attempt to provide our clients with a better understanding and clarity.

If the term you are searching for is not here, or you have any questions or concerns, please feel free to contact us for more information.

• Abstract of titleA condensed history or summary of all transactions affecting a particular parcel of real estate, including the original grant, all conveyances and encumbrances affecting the property, and the abstractor's certification of the history's accuracy
• Acceleration clauseA clause in a mortgage that gives the lender the right to require payment of the entire principal balance if the borrower defaults on an installment payment or other covenant
• AcceptanceAn offeree's consent to enter into, and be bound by the terms of, a contract
• AccessThe right to enter and exit a parcel of land from a public way, including the right to enter and exit via land belonging to others
• AcknowledgmentThe confirmation by which a party executing a legal document confirms his signature and voluntary agreement with the terms of the document, made before an authorized officer of the Court or notary public
• Acre43,560 square feet of land
• Adjustable-rate mortgage (ARM)A mortgage with interest rates that may fluctuate based on market conditions; the lender is permitted to adjust the mortgage's interest rate periodically, though most ARM's are limited in the amount that the interest rates can vary
• Adjusted basisThe total of the original cost of a property and the value of any capital expenditures for improvements done to it, minus any depreciation taken
• Adjustment dateThe date on which the interest rate changes for an adjustable-rate mortgage (ARM)
• Adjustment periodThe period of time between the adjustment dates for an adjustable-rate mortgage (ARM)
• AdministratorA person appointed by a probate court to administer the estate of an individual who has died without a will
• Adverse PossessionA claim made against the land titled to another person, by virtue of open and hostile possession and use of the land to the exclusion of the titled owner
• Affidavit of titleA sworn statement that is made in writing under oath by a seller of real property, and certified by a notary public, in which the seller identifies himself or herself, indicates marital status, certifies that no defects have occurred in the title since the examination of the title on the date of the contract, and confirms that he or she is in possession of the property (if applicable)
• AgencyThe relationship between two or more persons wherein the agent is authorized to act on behalf of another person (or principal) in certain transactions
• AgentA person or company that acts on behalf of another to transact business, generally in exchange for payment. In real estate, it is a person or company with a real estate license working under the authority of a real estate broker
• AlienationThe act of transferring property to another, either voluntarily (via a sale), or involuntarily (via adverse possession)
• Alienation clauseThe clause in a mortgage or deed of trust which asserts the lender's option to require that the balance of the secured debt becomes immediately due and payable if the property is sold by the borrower, preventing the borrower from assigning the debt without the lender's approval
• ALTAAmerican Land Title Association, the national association of title insurance companies, abstractors and attorneys specializing in real property law, headquartered in Washington, D.C.
• AmenityA natural or manmade feature of real property that enhances its value and attractiveness, though it is not essential to the property's use
• AmortizationThe process of payment of a debt or mortgage loan over time by installments
• Amortization scheduleA timetable for repayment of a debt or mortgage loan, showing the amount of each payment, what portion is applied to interest and principal, and the remaining balance
• Amortization termThe amount of time required to repay the mortgage loan, expressed in number of months
• AmortizeTo pay off a loan or mortgage with periodic payments that cover both principal and interest
• Amortized loanA loan in which both the principal and interest are payable in monthly or other periodic installments over the term of the loan, with no balloon payment prior to maturity
• Annual mortgagor statementAn annual report sent to the borrower (mortgagor) each year, showing the amount paid in taxes and interest during the year, as well as the remaining mortgage loan balance
• Annual percentage rate (APR)The overall cost of a mortgage, including interest, mortgage insurance, and loan origination fee (points), stated as a yearly percentage, thus allowing buyers to compare different types of mortgages based on the associated annual finance charges; the APR must be disclosed to borrowers by lenders, per the Truth-in-Lending Act
• AnnuityThe return, including interest, from an investment of capital, paid in a series of regular payments
• AppraisalA written estimate of the value of an asset or property prepared by a qualified, independent party, through which the asset or property value is determined
• Appraised valueThe estimate of a property's fair market value, based on an appraiser's analysis of the property
• AppraiserAn individual educated to estimate the value of real property and personal property
• AppreciationAn increase in the worth of a property due to changes in economic conditions or other causes; the opposite of depreciation
• AppurtenanceAnything attached to, or used with, a parcel of land that will go to the new owner on conveyance of the land
• ARMAdjustable-rate Mortgage. Also see "Variable Rate Mortgage"
• AssessmentA tax, charge or levy against a property made by the government, based on its value, and levied for a specific purpose, such as to finance sidewalks, a sewer, etc.
• Assessment rollsThe public record of taxable property
• AssessorA public official who evaluates the value of a property for taxation purposes
• AssetAnything of monetary value owned by an individual, including real property, personal property, and enforceable claims against others (bank accounts, stocks, mutual funds, etc.)
• AssignTo transfer interest
• AssigneeOne who receives an assignment or transfer of rights
• AssignorOne who makes an assignment or transfer of rights to another
• Assumable mortgageA mortgage that allows a new owner to take over its obligations
• Assumption clauseThe provision in an assumable mortgage that allows a buyer to take responsibility for that mortgage from the seller
• AttachmentSeizure of property through Court process to force payment of a debt
• Attorney-in-factOne who holds a power of attorney from another to execute legal documents on behalf of the grantor of the power
• Back ratioThe ratio of monthly housing costs (principal, insurance, taxes, and interest) plus regular monthly payments to gross monthly income, used by the lender to evaluate an applicant's qualification for a loan; typical back ratios are between 32 - 45 percent
• Balloon mortgageA mortgage with level monthly payments over a stated term, but which requires a lump sum payment in full due at the end of an earlier specified term
• Balloon paymentThe final lump sum payment that is made at the maturity date of a balloon mortgage, which is larger than preceding regular payments
• BankruptcyA legal proceeding in a federal court in which a debtor who owes more than the total of his or her assets can surrender those assets to the Bankruptcy Court, thereby being relieved of the future obligation to repay his or her unsecured debts; a Trustee in Bankruptcy administers the assets, selling them to pay as much of the debt as possible
• Bargain and sale deedA deed that carries with it no warranties against liens or other encumbrances, but which implies that the grantor has the right to convey title
• BasisThe financial interest an owner of an investment property has, as determined by the Internal Revenue Service, in order to determine annual depreciation and gain or loss on the sale of the asset Adjusted Basis: When property is purchased, the owner's basis is calculated to be the property cost plus the value of any capital expenditures for improvements made, minus any depreciation taken
• BenchmarkA permanent reference mark made on a piece of property for the sake of surveyors
• BeneficiaryThe person named to receive income from a trust, an estate, or a deed of trust
• BequeathTo gift or transfer personal property to another party, executed via a will
• BettermentAn improvement to property that increases its value, as opposed to repairs or changes that maintain its value only
• BidA financial offer to purchase a property
• BinderA preliminary agreement for the purchase of real estate, secured by the payment of an earnest money deposit which evidences the purchaser's good faith and intent to complete the purchase
• Blanket loanA mortgage covering more than one parcel of real estate, which provides for each individual parcel's partial release from the mortgage upon repayment of a portion of the debt
• BondA written financial obligation, usually secured by a mortgage or a deed of trust, and often posted with the Court, to guarantee against loss incurred with a potential claim
• BreachFailure to follow through on a contractual promise or legal obligation
• Bridge loanA form of second trust, collateral for which is the borrower's present home, usually taken on to allow the proceeds from the sale of the borrower's present home to be used to close on a new home, before the previous home is sold
• BrokerAn intermediary who assists in negotiating contracts between two or more parties, for a fee; in real estate, a broker is licensed to assist in the purchase, selling, rental or managing of real estate; the broker's services will vary, depending on whether he or she is employed by the seller or the buyer
• Building codeAn ordinance that specifies minimal standards for construction, alteration, or demolition of a building, set for the sake of safety
• Building Restriction Line (or "Set-back")The minimal distance from the road where a building may be positioned, which appears in the original plat of subdivision, restrictive covenants, or in zoning ordinances and building codes
• Bureau of Land ManagementThe branch of government responsible for the surveying and management of public lands
• Buy-back agreementA written agreement which specifies the conditions under which the seller is allowed to repurchase the property, usually restricted to a certain period of time and to a price stated in the agreement
• BuydownWhen the lender or home builder lowers the interest rate on initial payments on a loan, often for the first few years, allowing a borrower whose income is expected to increase in subsequent years to qualify for a loan they otherwise are currently not qualified for
• Buyer-agency agreementWhen the broker is the agent for the buyer and is financially obliged to the buyer
• Buyer's marketWhen the real estate buyer is at advantage because there is more supply of houses or real estate available for sale than there is demand, thus lowering prices
• Call optionA provision of a mortgage that allows the mortgagee, or lender, to require the mortgage to be due and payable for any reason at the end of a specified period of time
• CapA limit placed on an adjustable-rate mortgage (ARM) as to how much the interest rate or mortgage payments may increase or decrease
• Capital expenditureThe expense incurred making an improvement to a property in order to extend it useful life or to add to its value
• Capital gainProfit earned from the sale of an asset
• CapitalizationA mathematical formula that estimates the value of a property, utilizing the rate of return on the investment and the annual net operating income expected
• Capitalization rateThe rate of return a property will produce on the owner's investment
• Cash-out refinanceA loan for refinancing a property which offers cash over and above what is needed to repay the first mortgage, closing costs, points and any other mortgage liens due. The additional cash can be used for any purpose
• Caveat EmptorTranslation: "buyer beware", meaning that the buyer is responsible for inspecting any real estate or property before purchase for defects, as the seller is not required to disclose any problems to the buyer, though if asked outright, cannot conceal any defects
• CC & R ' sCovenants, Conditions and Restrictions; or the rights and obligations of individual owners of real property within a subdivision (or other tract of land where there is more than one owner of property) in relation to other owners, or to the organized association of owners, within the same subdivision, relative to the use and maintenance of the property commonly owned among them
• Certificate of depositA document provided by a bank or financial institution that is proof of a deposit of funds with that bank or institution, also promising to return the deposit plus earnings at a specified interest rate within a specified time period
• Certificate of EligibilityA document issued by the U.S. government certifying a veteran's eligibility for a VA guaranteed loan for a home or business
• Certificate of occupancyA city or county document certifying that a building is approved for occupancy, often required by insurance companies to insure the property
• Certificate of Reasonable Value (CRV)A document issued by the Department of Veterans Affairs (VA) establishing the maximum loan amount for a VA mortgage
• Certificate of SatisfactionA document recorded with land records and signed by the Noteholder of a property, showing release of a mortgage, deed of trust, or lien on that property
• Certificate of titleA statement of opinion provided by a title company or attorney, based on examining public records, stating that the title to a piece of real estate is legally held by the current owner; because this certification does not cover matters not of record, it is no longer commonly used
• ChainA unit for measuring land equaling 66 feet in length
• ChattelPersonal property
• Clear titleA document establishing ownership of a property that is free of any legal questions or controversies as to the current ownership
• ClosingAlso known as "escrow" or "settlement". The process of finalizing the sale of a property via a meeting of the buyer, seller and lender, at which legally binding documents are executed, money is dispersed, the deed is prepared, and ownership is formally transferred from the seller to the buyer
• Closing costsExpenses over and above the price of the property that are incurred by the buyers and sellers in transferring ownership of property, usually including property insurance, taxes, attorney's fees, an origination fee, an amount placed in escrow, title insurance, the mortgage insurance premium, points, and filing fees
• Closing statementA summary financial accounting of a real estate transaction disclosing all cash incoming, outgoing, and any charges or credits made
• Clouded Title, or Cloud on TitleAny conditions revealed by a title search, usually during the sale of the property, that make the title to a piece of real estate controversial; can only be removed by a quitclaim deed, release, or court action
• CoinsuranceA sharing of insurance risk between the insurer and the insured, and it depends on the amount of the policy and the actual value of the property insured at the time of the loss
• ContingencyA condition that must be met before a contract is legally binding, or where one event or agreement is dependent on the fulfillment or completion of another event
• DeedA written document that conveys the ownership of real estate from one person or party to another
• Deed of trustA written document that grants a trustee, in the event of foreclosure, the full power to sell, mortgage and subdivide the property in question
• Deed RestrictionA clause in a Deed that limits the uses of the property (e.g., types or quantities of structures permitted)
• Deed-in-lieu, or Deed-in-lieu of foreclosureA deed given by a mortgagor to the mortgagee when the mortgage is in default, to avoid foreclosure
• DefaultThe failure to meet the legal obligations in a contract; in real estate, failure to pay mortgage payments as scheduled or to comply with other stipulations of the mortgage
• Deferred interestInterest on a mortgage which is delayed because the monthly payment of the mortgage is not large enough to cover the entire principal and interest due, and therefore is added to the loan balance See "negative amortization"
• Deficiency judgmentA claim made by the holder of a note against the maker, in the event that a foreclosure sale does not bring in enough proceeds to fully cover the note and the costs of sale, for the difference
• DeliveryThe final, unconditional and absolute transfer of a Deed from seller to buyer, such that the seller cannot revoke the transfer of ownership; the Deed itself does not pass title until the seller delivers it to the buyer
• Department of Veterans Affairs (VA)A federal agency that insures residential mortgages made to eligible military veterans, which thereby encourages loans being made to veterans
• DepreciationA decline in the value of property, due to any cause; the opposite of appreciation Also an expense deduction taken for tax purposes over the period of owning income property
• DeviseTo dispose or convey ownership of real property via a will
• DisclosureA statement of facts made by the buyer about the condition of a property being sold and its surrounding area, required by law in most US states
• Discount pointA unit of measurement used for loan charges, with one point equaling 1 percent of the value of the loan
• DowerThe rights of a spouse to the property of their deceased spouse
• Down paymentThe amount of the purchase price of a property paid in cash (i.e. not financed with a mortgage) that is required to secure the property; typically 20%
• Dual agencyRepresentation of opposing parties in a transaction (e.g. when a realtor is the agent for both buyer and seller); requires consent of both parties to be allowed, and is illegal in some US states
• Due-on-sale clauseA provision in a mortgage allowing the lender to demand payment of the entire balance of the note if the mortgagor sells or otherwise transfers the property
• Earnest moneyA deposit made of a portion of the purchase price by the buyer to demonstrate his or her serious intent to purchase the property, usually accompanied by an agreement outlining the terms and conditions of the sale
• EasementThe permanent or temporary right to use the property of another for a specific purpose -- e.g. for access over the property, putting up utility lines, etc.
• EquityThe owner's financial interest in a property, over and above any indebtedness for that property; or the difference between the fair market value of the property, and the amount still owed on its mortgage
• EscrowA deed, contract, or something of value deposited with a disinterested third party, to be delivered upon the performance of certain conditions by the parties involved; e.g., an attorney or escrow agent taking custody of funds and documents upon the closing of a sale of real estate
• Extended MortgageA mortgage in which the due date of payment is extended, and is usually charged at a higher interest rate than the original mortgage
• Fair market valueThe highest price that a buyer, who is willing but not required to buy, would pay for a piece of property or home, and the lowest price that a seller, who is willing but not required to sell, would accept
• Federal Housing Administration (FHA)An agency of the U.S. Department of Housing and Urban Development (HUD), whose function is the insuring of residential mortgage loans made by private lenders; while setting standards for construction and underwriting, the FHA itself does not lend money, or construct housing
• FHA loanA loan insured by the Federal Housing Administration, and made by an approved lender in accordance with the FHA's regulations
• Fiduciary relationshipA relationship of trust and confidence, as between principal and agent, trustee and beneficiary, attorney and client
• Fixed-rate mortgage (FRM)A mortgage in which the interest rate remains fixed over the duration of the term of the loan
• ForeclosureA legal proceeding usually initiated by the lender or creditors, involving a forced sale of a property owned by a borrower who has defaulted on payment of, or on the terms of, a loan on said property, and whereby the borrower is deprived of his or her interest in the property
• General warranty deedA deed in which the grantor warrants title against all claims, offering the greatest guarantee of protection of any type of deed, and which is used in most real estate deed transfers of title
• Ginnie MaeThe Government National Mortgage Association (GNMA), a United States corporation that guarantees privately issued securities backed by pools of mortgages insured by the Federal Housing Administration, the Farmers Home Administration, or the Veterans Administration
• Graduated-payment mortgage (GPM)A flexible-payment mortgage with monthly principal and interest payments that increase by a certain percentage each year for a certain number of years, and then level off for the remainder of the term
• GranteeThe person who, by written document, receives title or an interest in real property from a grantor
• GrantorThe person who, by written document, transfers title to or an interest in real property to a grantee
• Gross LeaseThe most common of residential leases, whereby the landlord pays for all property expenses incurred through ownership, such as taxes, insurance, repairs, etc.
• Ground LeaseA long-term lease of land (usually 99 years) that allows the lessee to build and use the land as agreed in the lease, at the end of which, the land and any improvements revert to the owner
• Ground rentThe payment made for the use of land when the title to the property is of a leasehold estate, rather than as a fee simple estate
• Growing-equity mortgage (GEM)A fixed-rate loan for which the monthly payments increase over a designated period of time, with the increased amount of the monthly payment being applied directly to the principal balance, thereby shortening the term of the loan
• Guarantee mortgage, or Insured mortgageA mortgage that is guaranteed against default by a third party (such as the FHA), and for which the borrower must pay an insurance premium
• GuardianAn individual designated by the Court to protect and preserve the property of someone who is not able to manage his or her own affairs
• Hazard insuranceInsurance protection for specified losses due to natural causes, such as fire, floods, earthquake, tornadoes, and other "acts of God"
• HeirAn individual who will potentially inherit an interest in land from someone who dies
• HiatusA gap or space between two parcels of lands that is not included in the legal description of either parcel
• Home equity line of credit, or Home equity loanA mortgage loan (usually not the primary mortgage) or line of credit which gives the property owner the option to obtain cash advances from the loan proceeds, using his or her residence as collateral, but which is not to exceed a pre-arranged amount of the owner's total equity in the property
• Homeowners' associationA nonprofit association of individual owners of units in a multi-unit structure (either a planned unit development, or a condominium) that manages the common areas of that structure. In a planned unit development (PUD) project, the association holds title to the common elements, whereas in a condominium project, it holds no title to the common elements
• Homeowner's insuranceAn insurance policy available to residential real estate owners that protects homeowners against financial loss from fire, theft, public liability, and other risks
• HomesteadReal estate that is owned and utilized as the primary family residence, protected in some states as exempt from the claims of creditors
• Homestead deedA document filed in the land records asserting a homestead exemption, protecting a variable amount of his assets (depending on which state) against the claims of creditors
• Housing ratio, or Debt-to-income ratioThe percentage that results from dividing a borrower's housing expenses by his/her gross monthly income, used by the lender to evaluate an applicant's qualification for a loan
• HUD-1 statementThe document used in closing a real estate transaction (also known as a "closing statement" or a "settlement sheet") which itemizes the funds that are payable at closing, including broker commissions, loan costs, and escrow amounts, and which provides a summary of the seller's net proceeds and the buyer's net payment at closing. It is required by the US Department of Housing and Urban Development (HUD) whenever federally-related mortgages are being made on residential properties
• Impound, or ReservesThe portion of a borrower's monthly payments held by the lender to pay for taxes, hazard and mortgage insurance, lease payments, and other items that will come due
• In testateThe condition of dying without leaving a will. The description of an estate without a will
• Income approachThe method of estimating the value of a property by calculating its generated income
• Income propertyReal estate developed for the purpose of generating income
• IndemnifyTo provide for compensation in the case of loss or damage to property
• IndemnityThe statement of terms under which loss or damage to property will be compensated
• IndexA published interest rate used by lenders to compare the interest rate for an adjustable-rate mortgage (ARM) with that earned by other investments (e.g., the yield on Treasury bills, interest rate on loans from savings and loans institution, etc.), as a result of which the ARM interest rate is adjusted
• IngressThe right to enter on or over a piece of property
• Installment contract, or Contract for deedA contract for the sale of real estate whereby the buyer is in possession of the property while paying off the purchase price in periodic installments, despite the title being retained by the seller until the future date of final payment
• Insurable TitleA property title which an insurance company is willing to insure against possible claim
• Insured closing letterAn indemnity provided by a title insurance company to a lender, whereby the title insurance company assumes responsibility in the case that the closing agent does not fulfill the terms of the loan, or misappropriates the loan proceeds
• Insured mortgageA mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (MI) so that if the borrower defaults on the loan, the insurer compensates the lender the lesser of the loss incurred or the actual insured amount
• Interest rate buydown planAn arrangement made for the initial years of a mortgage whereby the seller (or any other party) deposits money into an account that is then released toward the monthly payments on the mortgage, thereby bringing the mortgagor's interest rate down below the actual interest rate
• Interest rate ceilingThe maximum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage note
• Interest rate floorThe minimum interest rate for an adjustable-rate mortgage (ARM), as specified in the mortgage note
• Interim financingA temporary or short-term loan, often made during the construction phase of a building project, and usually replaced by a permanent long-term mortgage
• Joint Ownership AgreementAn agreement made between two or more owners of the same property, defining their rights and responsibilities (e.g. recommended in the case of married owners of property)
• Joint tenancy, or Tenants by the entiretyOwnership of real estate by two or more parties held jointly for life; if one of the owners dies, the survivor(s) inherit the property without reference to the deceased's will
• JudgmentA decision or decree made by a court of law
• Judgment lienA claim against the real property of a debtor, as decreed by the court
• Jumbo loan, or Non-conforming loanA loan amount that exceeds the limits set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation; because such loan cannot be funded by these two agencies, it carries a higher interest rate
• Junior mortgage, or Secondary mortgageA mortgage whose claim to repayment is of lesser priority than another, previously recorded mortgage
• LeaseA written agreement between the property owner and a tenant that stipulates rent to be paid, as well as the terms under which the tenant may reside in the real estate for a designated period of time
• Lease optionA lease that gives the tenant the right to purchase the property, either during the lease term or at its end
• Leasehold estateThe tenant's right to title to a property for a specific period of time whereby the tenant does not actually own the property but has a long-term lease on it
• Lender's Title InsuranceAn insurance policy covering a lender for the loan amount, whereby the coverage declines in amount as the loan is paid off, to the point where there coverage ends when the loan is paid completely
• LesseeThe individual or party who takes property upon a lease
• LessorThe individual or party who grants property upon a lease
• LiabilitiesAn individual's financial obligations
• LienA legal claim or charge allowed to a creditor against a debtor's property that must be paid when the property is sold to transfer title
• Life estateThe right to use, occupy and own, for the duration of the life of the individual
• Lifetime payment cap, or Lifetime rate capThe limit on the amount that payments can increase or decrease over the term of an adjustable-rate mortgage (ARM)
• Liquid assetCash, or an asset that can be readily converted into cash
• Liquidated damagesThe compensation predetermined by both parties to a contract to be paid to the injured party, should the other party breach the contract
• Lis pendensA legal document filed in either a federal or state court indicating that a suit is pending against property located in the county where the notice is recorded
• Listing agreementA contract by which a broker is employed by the seller to find a buyer for the seller's real estate, according to the seller's terms, and for which service, the broker is paid a commission
• Listing brokerA broker whose office initiates the property listing (as opposed to the cooperating broker, whose office negotiates the sale); the listing broker and the cooperating broker may be the same person
• Loan originationThe process by which a lender sets up a mortgage loan secured by real property
• Loan origination feeThe fee charged by the lender to the borrower for setting up a mortgage loan, usually computed as a percentage of the total mortgage amount
• Loan-to-value (LTV) percentageThe proportion of the amount of the mortgage loan against the appraised value or sales price of the piece of property being pledged as collateral; e.g., a home with appraised value of $100,000 but with a $90,000 mortgage has a LTC of 90 percent
• Lock-inA guaranteed interest rate established at the time of closing which is honored if the mortgage closes within a certain period of time, also usually establishing the number of points to be paid at closing as well
• Lock-in periodThe time period during which the set interest rate is guaranteed to the borrower
• Loss Payable ClauseA provision in an insurance policy that provides payment for any loss to two or more parties, as their interest so justifies, the two parties typically being the owner and the lender
• LotA parcel of land with fixed boundaries as determined by a survey
• MajorityThe age at which an individual is legally entitled to handle his or her own affairs
• MarginThe amount added to the index on an adjustable-rate mortgage (ARM) that establishes the adjusted interest rate at a given time
• Market value, or Fair market valueThe most likely price that a piece of property or home can realistically be sold for, and is dependent on the selling price of similar real estate in the area
• Marketable titleA clear, unencumbered title, reasonably acceptable without the threat of the risk of litigation
• MaturityThe date on which the principal balance of a loan, bond, or other financial commitment is due and payable
• Mechanic's lienA lien created by statute to allow unpaid contractors, laborers or suppliers who have performed work on or furnished materials for the construction of a building to recover the value of their work
• Metes and BoundsMeans for describing property by a set of directions and distances, when there isn't identification based on a surveyed lot number
• MinorAn individual below the age at which he or she is legally entitled to handle his or her own affairs
• Monument of SurveyThe indications made on natural or man-made objects that indicate the boundaries of a survey
• MortgageA legal document that pledges a property to the lender as security for the payment of a loan or debt
• Mortgage brokerAn individual or company that acts as an agent between borrowers and lenders for the purpose of arranging and negotiating mortgage contracts; who is paid a fee for such service
• Mortgage insuranceA contract that guarantees the lender against loss caused by a mortgagor's default on a government or conventional mortgage; such insurance can be issued by a private company or by a government agency, and covers either only a percentage, or the total, of the mortgage loan
• MortgageeThe lender in a mortgage transaction
• MortgagorThe borrower in a mortgage transaction
• Multiple-listing service (MLS)An organization of brokers who share their listing agreements with one another in order to find buyers for their properties more effectively than they could individually
• National Association of Realtors® (NAR)A real estate trade organization that sets the standards for integrity and honesty within the real estate profession nationwide
• Negative amortizationA gradual increase in the balance of a loan or mortgage which occurs because the monthly payments made are too small to cover the entire principal and interest charges; this shortfall amount is added to the remaining balance, resulting in negative amortization
• Net listingThe advertisement of the price of property for sale in terms of the net price the seller will receive, once the property is sold, a type of listing which is illegal in many states
• Net worthThe total value of all of an individual's assets, minus all liabilities or debts
• No cash-out refinanceA transaction for refinancing a mortgage in which the new mortgage amount is limited to the sum total of the remaining balance of the first mortgage, points, closing costs, whatever is required to satisfy any liens that are more than one year old and other funds for the borrower's use (as long as the amount is one percent or less of the principal amount of the new mortgage)
• NotaryAn individual authorized by law to certify documents and signatures
• NoteA legal document that obligates a borrower to repay a loan or owed sum of money at a stated interest rate over a designated period of time
• Open listingA contract under which the broker is commissioned to find a buyer before the property is sold by the seller or another competing broker
• OptionThe agreement to keep an offer to purchase or lease open for a specific period of time
• Option listingAn agreement by which the broker advertising the property has the right to purchase the listed property himself
• Origination feeA fee paid to the lender for processing a loan application
• Owner financingA property transaction for which the seller provides all or part of the financing to the buyer
• Owner's Title InsuranceA policy insuring the full purchase price of a piece of property for the buyer, usually including adjustments for inflation each year up to a maximum of 150% of the original policy amount, the premium for which is payable at the time of closing
• P.M.I, or Private Mortgage InsuranceAcronym for Private Mortgage Insurance, see below
• Partial paymentA payment that is less than the agreed upon monthly payment on a loan
• PartitionThe forced dividing of real estate among parties who were previously its co-owners
• PatentA first in a series of documents by which the federal or state government transfers ownership of public lands to an individual
• Pay-off amountThe total balance on an existing loan or mortgage
• Percolation testA testing of the soil on a property to evaluate if its absorption and drainage capacity will allow installation of a septic system
• Personal propertyProperty that does not qualify as real property
• PITIAcronym for principal, interest, taxes and insurance, the four components of a monthly mortgage payment, which are taken into account when a lender is evaluating a borrower's financial qualifications for a loan
• Plat, or PlotA map showing a piece of land subdivided into lots, streets and common area, if applicable
• PointA one-time fee charged by the lender for originating a loan, one point being equal to one percent of the amount of the mortgage
• Power of attorneyA written legal document authorizing a person to act as agent for another, to the extent outlined in the document
• Power of SaleA provision in a will, mortgage or trust agreement authorizing the sale or transfer of land in accordance with the terms of the provision
• Power of SaleA provision in a will, mortgage or trust agreement authorizing the sale or transfer of land in accordance with the terms of the provision
• Pre-ApprovalA commitment from a lender to loan a certain amount of money to a buyer at a designated interest rate and for a specified period of time, which gives the buyer an advantage in competing to purchase real estate or a home
• Pre-ApprovalA commitment from a lender to loan a certain amount of money to a buyer at a designated interest rate and for a specified period of time, which gives the buyer an advantage in competing to purchase real estate or a home
• Preforeclosure saleThe sale of a property by a mortgagor for less than the amount owed to the lender of the mortgage for the property, thereby allowing the mortgagor to avoid foreclosure, and done with the approval of the lender
• Prepayment penaltyA fee that is charged by the lender to a borrower who pays off a loan earlier than the due date, thereby costing the lender interest and other income from charges
• Pre-qualificationThe process by which the amount of loan a prospective buyer will be eligible to borrow is determined, based on his or her income and expenses, which can be used to demonstrate the buyer's financial capability to the seller
• Prime rateThe most favorable interest rate that banks charge, usually to their preferred customers
• PrincipalThe amount borrowed, not including interest or other charges
• Principal balanceThe portion of the original amount borrowed that is due on a loan or mortgage at any point in time
• Private mortgage insurance, or P.M.I.A policy that insures that the lender will recover a specific percentage of the loan amount from the insurance company in the event that the borrower defaults; is not backed by any government agency; is usually required when a down payment of less than 20% is put on real estate or a home purchased
• ProbateThe court proceedings to prove that a will is valid
• Procuring causeThe action or person who brings about the desired result; e.g., under an open listing, the broker who brings in the buyer who actually purchases the property
• Promissory noteA written promise to pay a specified amount of money in a designated period of time, which is also transferable to a third party
• ProrateTo divide the proportionate share of existing expenses on a piece of property between the seller and buyer, e.g., taxes owed at the time of a transfer of title from the seller to the buyer
• Purchase and sale agreementA written contract signed by the buyer and seller that states the conditions under which a property will be transferred or sold
• Purchase money mortgageAn agreement whereby financing provided by the seller is included in the purchase price
• Quiet titleA court action to remove a claims or objections of other parties on a title
• Quitclaim deedA deed that releases whatever interest or title a grantor may hold in a property, without claiming any obligations or warranties
• Tax saleA sale of real property ordered by the court in order to raise money to cover delinquent taxes
• Tenancy in commonA version of joint tenancy of a property, but without any right of succession by survivorship among the owners
• TestateTo die having prepared and left a valid will
• TestatorThe individual who makes out a last will and testament
• Time is of the essenceA condition in a contract requiring the completion of a certain act within a designated period of time
• Time-shareA form of ownership interest which allows use of the property only for a fixed or variable period of time
• TitleA legal document that evidences a person's ownership of and right to possess a property
• Title insuranceInsurance that protects the owner or mortgagee against loss arising from disputes over or defects in the title to a parcel of real estate that arise after ownership has been transferred
• Title searchResearch into public title records to determine the current status of ownership of a piece of property; a licensed attorney must provide any legal interpretation of the records found
• Torrens TitleNow a dated system (only used in a few US states) whereby the court issues a certificate establishing the extent of an individual's estate, including any exceptions noted
• TownshipA division of land that is six miles square, containing 36 square-mile sections
• TractA specific parcel of land
• Transfer of ownershipAny circumstance in which the ownership of a property changes hands, e.g., via outright, titled purchase, or the assumption of an existing on a property, or possession of the property via a land sales trust, even any transfer of a beneficial interest in the trust
• Transfer taxState or local taxes imposed on a transfer of ownership of real property
• TrustA right to a piece of property that is held for the benefit of another
• Trust deed, or a Deed of trustA written document that grants the trustee the title to a piece of property for the benefit of another, and which gives the trustee the power to sell, mortgage or subdivide the property
• TrusteeA party who holds property for the benefit of another
• TrustorThe borrower in a trust loan transaction
• Two-step mortgageAn adjustable-rate mortgage that charges a below-market interest rate for a designated number of years (usually 5 or 7) after which the interest rate is adjusted to the current market conditions
• UnderwritingThe process of analyzing a borrower's capability to honor repayment of a loan (evaluating his or her credit, assets, employment) along with the value of the property being purchased, to help minimize the risk involved for the party lending the purchase money
• Unilateral contractA one-sided contract in which only one party is legally under obligation by the terms of the contract; one party promises an action to the second party, who is not legally required to respond, but if the second part does comply, then the first party is obligated to honor the promise made
• Unsecured loanA loan that is not guaranteed by collateral
• UsuryThe act of charging more than the maximum rate of interest permitted by law
• VA guaranteeAn insurance contract for which the Veterans Administration (VA) guarantees the lender's recovery of a designated percentage of the loan amount from the insurer in the event that the borrower defaults on the loan
• VA loan, or Government mortgageA mortgage loan available to qualified military veterans which is guaranteed by the Department of Veteran Affairs, usually offering either no down payment or a low down payment
• ValuationThe estimated of value of a property
• Variable rate mortgage, or Adjusted rate mortgageA mortgage with interest rates that may fluctuate based on market conditions
• Verification of DepositA statement signed by the borrower's financial institution that verifies the current balances in the borrower's accounts
• Verification of EmploymentA statement signed by the borrower's employer that verifies the borrower's current position and salary
• VestTo pass an immediate right on to a person
• VestedHaving the right to withdraw a percentage of a fund before its agreed-upon maturity date; e.g., the percentage vested to individuals with retirement funds differs; if someone is 80% vested, that means they can only withdraw 80% of the funds set aside for them until its maturity
• WaiverThe relinquishing of a right
• WarrantyA guarantee provided to the purchases regarding the quality of appliances or fixtures sold Also a promise by the grantor of a piece of property that he or she is responsible to the buyer if the title of ownership is defect in any way
• Warranty deedA document conveying ownership of a property that guarantees a clear, clean title
• WillA written document stating how an individual chooses to have his or her property distributed after his or her death
• Wraparound loan or Wraparound mortgageA method of refinancing which covers the remaining balance on an existing first mortgage as well as the additional amount of loan being requested by the mortgagor; full payments covering both mortgages are made to the Wraparound mortgagee, who then forwards on the portion of payment due to the first mortgagee
• ZoningThe regulation by local government of the use and development of private land