A

Abstract (Of Title)
A summary of the public records relating to the title to a particular piece of land.

Acknowledgment
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

Accelerated Cost Recovery System
A tax calculation that provides greater depreciation in the early years of ownership of real estate or personal property.

Accelerated Depreciation
A bookkeeping method that depreciates property faster in the early years of ownership.

Acceleration Clause
Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.

Acceptance
A legal approval by the seller of the buyer’s offer.

Acre
A measurement of land equal to 43,560 square feet.

Agent
A person licensed by the state to conduct real estate transactions.

Agreement of Sale
A contract in which a seller agrees to sell and a buyer agrees to buy, under specific terms and conditions written down and signed by both parties.

Annual Percentage Rate (APR)
The cost of the loan expressed as a yearly rate on the balance of the loan.

Annual Mortgagor Statement
A yearly statement to borrowers that details the remaining principal and amounts paid for taxes and interest.

Amortization
A payment plan, which enables the borrowers to reduce their debt gradually through monthly payments of principal.

Assessment
The valuation of property for the purpose of levying a tax, or the amount of the tax levied.

B

Balloon Loan
A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. As a result, the final payment due is the lump sum of the remaining principal.

Balloon Payment
The final lump sum payment due at the end of a balloon mortgage.

Bill of Sale
An instrument used to transfer personal property.

Blanket Mortgage
A single mortgage or trust deed, which covers more than one piece of real estate.

Bond
An insurance agreement by which one party is insured against loss or default by a third party.

Breach
Violation of an obligation in a contract

Built-ins
Items that are framed into a home or permanently attached, like stove, microwave ovens, etc

Building Code
A set of stringent laws that controls the construction of buildings, design, materials and other similar factors.

Bundle of Rights
The various interests or rights an owner has in a property.

Buyer's Market
A slow real estate market where more homes are for sale than there are interested buyers.

C

Capital Gains
Gains realized from the sale of an asset less the purchase price and deductible expenses.

Capitalization
A mathematical formula that investors use to compute the value of a property based on net income.

Cash Flow
The owner's spendable income after deducting the operating expenses and debt services.

Chain of Title
A history of conveyances and encumbrances affecting the title as far back as records are available.

Closing
The final moment when all documents are executed and recorded and the sale is complete.

Certificate of Title
A certificate issued by a title company or a written opinion rendered by an attorney stating that the seller has good marketable and insurable title to the property, which he is offering for sale.

Closing Costs
Expenses incidental to the completion of a transaction in the transfer of ownership of real estate.

Closing Statement
A document which details the final financial settlement between a buyer and a seller and the costs paid by each party.

Cloud on Title
An outstanding claim or encumbrance, which adversely affects the marketability of a title.

Collateral Security
Additional security supplied by the borrower to obtain a loan.

Commission
Money paid to a real estate agent or broker by the seller as a compensation for finding a buyer and completing the sale.

Common Area
An area inside a housing development that is owned by all residents.

Community Property
Both real and personal property accumulated by a husband and his wife after marriage through joint efforts of both living together.

Condemnation
The process the government uses to take private property for public use without the consent of the owner.

Contingency
A condition upon which a valid contract is dependent.

Contract of Sale
The contract in which the seller agrees to convey ownership of the property and the buyer agrees to pay for it. The intentions of both buyer and seller must be definite, clear, and in writing.

Conveyance
The transfer of the title to land from one to another.

Covenants
Agreements/legal assurance written into deeds and other instruments.

D

Deed
A formal written instrument by which title to real property is transferred from one owner to another.

Default
The failure to fulfill a duty or promise or discharge an obligation, such as making monthly mortgage payments.

Depreciation
Decline in the value of a house.

Documentary Stamps
A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another.

Down Payment
The amount of money to be paid by the purchaser to the seller upon the signing of the agreement of sale.

E

Earnest Money
The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale.

Easement Rights
A right- of- way granted to a person or company authorizing access to or over the owner's land.

Economic Obsolescence
Loss of useful life and desirability of a property through economic forces, such as changes in zoning, changes in traffic flow, etc., rather than deterioration.

Encroachment
An obstruction, building, or part of a building that extends into the property of another owner.

Encumbrance
A legal right or interest in land that affects a good or clear title, and diminishes the land's value.

Escalation Clause
A clause in a lease providing for an increased rental rate at a future time.

Escheat
The reverting of property to the state in the absence of heirs.

Estate
The total assets of a person, including real property, at the time of death.

Equity
A determination of the value of a property after existing liens are deducted.

Escrow

Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual.

F

Fair Market Value
The price a property will bring given that both buyers and sellers are fully aware of market conditions and comparable properties.

Fee Simple
This type of ownership is the maximum interest a person can have in a piece of real estate.

Foreclosure
The legal process reserved by a lender to terminate the borrower's interest in a property after a loan has been defaulted.

Forfeiture
The relinquishing of property rights by a delinquent borrower.

Front Footage
The linear measurement along the front of a parcel.

Functional Obsolescence
Loss in value due to out-of-date or poorly designed equipment while newer equipment and structures have been invented since its construction.

G

General Warranty Deed
A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a “cloud” on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.

Good-faith Estimate
An estimate from an institutional lender that shows the costs a borrower will incur, including loan-processing charges and inspection fees.

Grade
The elevation of land above level ground.

Grantee
The buyer or recipient.

Grantor
The seller or giver.

Ground Lease
A lease of vacant land.

Ground rent
The amount of money paid for the use of a piece of property when it is a leasehold estate.

H

Hazard Insurance
Insurance that protects against damages caused to property by fire, windstorms, and other common hazards.

High Density
The concentration of housing units in a specific area or on a specific property.

Home Owners Association
An association of homeowners within a community formed to improve and maintain the quality of the community.

Homesteading
A document that protects some (or sum, please check) of a home's equity from lawsuits.

I

Index
Financial tables used by lenders to calculate interest rates on adjustable mortgages and on treasury bills.

Interest
A charge paid for borrowing money.

Intestate
A person who dies without making a will.

Investment Property
Real estate that generates income, such as an apartment building or a rental house.

Involuntary Lien
A lien, which attaches to property without the consent of the owner such as tax liens as opposed to voluntary liens (mortgages).

J

Joint Liability
The responsibility of two or more people to fulfill the terms of a home loan or debt.

Joint Tenancy
Joint ownership by two or more persons with right of survivorship.

Judicial Foreclosure
A procedure to handle foreclosure proceedings as civil matters.

K

L

Lease
A binding agreement that contains the terms and conditions of a renter's occupancy.

Lease with Option to Purchase
A lease where the lessee has the option to purchase the leased property.

Legal Description
The geographical identification of a parcel of land.

Lessee
One who contracts to rent property under a specified lease.

Lessor
An owner who contracts into a lease with a tenant (lessee).

Lien
A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

Life Estate
An estate in real property for the life of a person.

Listing
A contract between an owner and a broker to sell the owner's property.

M

Marketable Title
A title which enables an owner to sell his property freely to others and which others will accept without objection.

Mechanic's Lien
A lien created by statute on a specific property for labor or materials contributed to an improvement on that property.

Mortgage
A legal document specifying a certain amount of money to purchase a home at a certain interest rate, and using the property as collateral.

Mortgage Commitment
A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Mortgage Note
A written agreement to repay a loan.

Mortgagee
The lender in a mortgage agreement.

Mortgagor
The borrower in a mortgage agreement.

Multiple Listing

A listing taken by a member of an organization of brokers, whereby all members have an opportunity to find a buyer.

N

Net Lease
Lease in which tenant pays base plus some portion of the operating expenses of the property.

Net Worth
Value obtained by deducting total assets from total liabilities.

Non-liquid Asset
An asset such as a house that is not easily turned into cash.

Notary Public
One who is authorized by the government to attest authentic signatures and administer oaths.

Note
A written instrument acknowledging a debt and promising payment.

O

Offer
A presentation to form a contract or agreement.

Origination Fee
Application fee(s) for processing a proposed mortgage.

Operating Expenses
The necessary costs of maintaining an income property, including taxes, insurance, management fees, repairs, etc.

Option
A right given for consideration to purchase or lease property upon stipulated terms within a specific period of time.

P

Plat
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

PMI (Private Mortgage Insurance)
Insurance, which covers a portion of the first mortgage allowing the lender to offer more lenient terms to a borrower.

Point
Fees charged by lenders at the time a loan is originated. A point is equal to 1 percent of the total loan amount.

Prepayment
Payment of mortgage loan, or part of it, before due date.

Prepayment Penalty
A penalty imposed if the debt is paid in full before the end of its term.

Principal
The amount of money that the borrower owes on a mortgage.

Purchase Agreement
An agreement between a buyer and a seller denoting price and terms of the sale.

Q

Quieting title
The removal of a cloud on title by proper action in a court.

Quiet Enjoyment
Guarantees the tenant's right to use the premises without interference from the landlord.

Quit-claim Deed
A document that releases a party from any interest in a piece of real estate.

R

Real Estate Broker
A middleman or agent who buys and sells real estate for a company, firm, or individual on a commission basis

Realtor
A real estate broker holding membership in a real estate board affiliated with the National Association of Realtors.

Refinancing
The process of replacing an older loan with a new mortgage that has better terms.

Restrictive Covenants
Private restrictions limiting the use of real property.

Repayment plan
Plans negotiated by lenders, if the borrower falls behind in mortgage payments.

Renewal
Right of a tenant to renew a lease at a rent to be determined.

S

Seller's Market
A hot real estate market in which sellers have the advantage and multiple offers are common.

Special Assessments
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, streetlights, etc.

Special Lien
A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets.

Special Warranty Deed
A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property.

Survey
Measurement of land by a licensed surveyor.

T

Tax
An enforced charge imposed on persons, property or income, to be used to support the State.

Title
The actual legal document conferring ownership of a piece of real estate.

Title Insurance
A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property.

Title Search or Examination
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title.

Trustee
A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another.

U

Underwriting
The process that lenders go through to evaluate the risks posed by a particular borrower and to set appropriate conditions for the loan.

Unsecured Loan
A loan that is not backed by collateral.

V

Variable Interest Rate
A fluctuating interest rate, which can go up or down depending on the going market rates.

Voluntary Lien
A voluntary lien by the owner such as a mortgage, as opposed to involuntary liens (taxes).

W

Waiver
A voluntary relinquishing of certain rights or claims.

Warranty
A legally binding promise to do something in the future.

Will
Document that specifies the disposition of a person's estate in the event of death.

Wrap-Around Mortgage
A second mortgage, which is subordinate to but includes the face value of the first mortgage.

X

Y