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AB Test
The notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property. The title agency produces a binder from the information in the abstract. |
Abstract
The notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property. The title agency produces a binder from the information in the abstract. |
Acceleration Clause
A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as the sale of the property, or a delinquency in the repayment of the note. |
Accretion sany
The buildup of land from natural forces such as wind or water |
Acknowledgement
As a verb, the confirmation by a party executing a legal document that this is his signature and voluntary act. This confirmation is made to an authorized officer of the Court or notary public who signs a statement also called an acknowledgment. |
Acre
43,560 square feet of land. |
Adjustment Interval
On an adjustable rate mortgage, the time between changes in the interest rate and/or monthly payment, typically one, three or five years, depending on the index. |
Administrator
A person appointed by the Court to settle the estate of a person who dies without a will. The feminine form is Administratrix |
Adverse Possession
A claim made against land titled to another person based on open, notorious and hostile possession and use of the land to the exclusion of the titled owner. |
Agency
A relationship in which the agent is given the authority to act on behalf of another person (Principal). |
Agreement
A meeting of minds. A change to the correct or alteration to the original document/agreement without changing its principal essence. |
Amortization
The periodic principal pay down of a loan. |
Amortized Loan
A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity. |
Annual Percentage Rate (A.P.R.)
Is an interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit costs. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan. |
Appraisal
An estimate of the value of property, made by a qualified professional called an "appraiser." Most states require licenses. Various lenders have their own lists of approved appraisers. |
Approved Attorney
An attorney authorized by a title insurance company to handle closings and render title opinions |
Appurtenance
Anything attached to the land or used with it passing to the new owner. |
Assessment
A local tax levied against a property for a specific purpose, such as a sewer or street lights. |
Assign
To transfer interest. |
Assignee
One who receives an assignment or transfer of rights. An assignment of a contract transfers the right to buy property. |
Assignor
The one who assigns to another person. |
Assumption
The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing costs and new, possibly higher, market-rate interest charges will apply. |
Attachment
Seizure of property through Court process to repay a debt. |
Attorney In Fact
A type of agency relationship where one person holds a power of attorney allowing him to execute legal documents on behalf of another. Decisions made by the attorney in fact are binding on the principal |
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Balloon (payment) Mortgage
Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract. |
Bankruptcy
A provision of Federal Law whereby a debtor surrenders his assets to the Bankruptcy Court and is relieved of the future obligation to repay his unsecured debts. A Trustee in Bankruptcy administers the assets, selling them to pay as much of the debt as possible. If your seller is in bankruptcy, the Trustee in Bankruptcy owns the property and is the party to sign the contract and make decisions. After bankruptcy, the debtor is discharged and his unsecured creditors may not pursue further collection efforts against him. Secured creditors, those holding deeds of trust or judgment liens, continue to be secured by the property but they may not take other action to collect from the debtor. |
Benchmark
A permanent reference mark for surveyors. |
Beneficiary
A person named to receive a benefit from a trust. A contingent beneficiary has conditions attached to his rights, usually someone else must die first. |
Bid
An offer. |
Binder
A title insurance binder is the written commitment of a title insurance company to insure title to the property subject to the conditions and exclusions shown on the binder. |
Blanket Mortgage
A mortgage covering at least two pieces of real estate as security for the same mortgage. This sort of loan is more common for commercial property or "special case" loans. |
Bond
An amount of money, often posted with the Court, to guarantee against loss as a result of a possible claim. For example, if there is a lien against the property, the owner may post a bond and the lien is removed from the property and the parties argue over the money rather than the property. |
Breach Of Contract
Failure to perform provisions of a contract. |
Broker
An individual in the business of assisting in arranging funding or negotiating contracts for a client buy who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services. |
Building Restriction Line
A required set-back a certain distance from the road within which no building may take place. This restriction may appear in the original plat of subdivision, restrictive covenants or by building codes and zoning ordinances. |
Buy-Down
When the lender and/or the home builder subsidized the mortgage by lowering the interest rate during the first few years of the loan. While the payments are initially low, they will increase when the subsidy expires. These are sometimes used to qualify borrowers for a loan amount that they would not otherwise qualify for but will be able to pay in subsequent years as their income increases. |
By-Laws
Rules and regulations governing an association or corporation. |
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Capital Gains
Profit earned from a sale of real estate |
Capitalization
A method used to estimate value of a property based on the rate of return on investment. |
Cashflow
The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income-producing property (mortgage payment, maintenance, utilities, etc.). |
Caveat Emptor
Buyer beware. The buyer must inspect the property and satisfy himself that it is adequate for his needs. The seller is under no obligation to disclose defects but may not actively conceal a known defect or lie if asked. |
CC&R's (Covenants, Conditions, and Restrictions)
The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners. |
Certificate Of Eligibility
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility). |
Certificate Of Occupancy
A certificate issued by a local governmental body stating that the building is in a condition to be occupied. |
Certificate Of Satisfaction
A document signed by the Noteholder and recorded in the land records evidencing release of a deed of trust, mortgage or other lien on the property. |
Certificate Of Title
A written opinion by an attorney setting forth the status of title to the property as shown on the public records. The certificate does not certify as to matters not of record and affords no protection unless the author was negligent. |
Chain Of Title
The series of transactions from GRANTOR to GRANTEE as evidenced in the land records. |
Chattel
Personal property. |
Class Action
A claim brought up on behalf of a group of people. |
Closing
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report and notary fees. |
Cloud On Title
An evidence of encumbrances |
Coinsurance
When more than one insurance company shares the risk of a particular transaction or series of transactions. Lenders may require co-insurance on large commercial projects. |
Collateral
Property pledged to secure a loan. |
Condemnation
A judicial proceeding through which a governmental body takes a private property for a public use. |
Condominium
A system of individual fee simple ownership of portions (units) in a multi-unit structure, combined with joint ownership of common areas. Each individual may sell or encumber his own unit. |
Conservator
Also called a Committee or Guardian, a person designated by the Court to protect and preserve the property of someone who is not able to manage their own affairs. Examples include the mentally incompetent, minors and incarcerated persons. |
Construction Loan
A short-term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses. These are generally done by lenders with offices local to the site of the construction. This enables the lender or their agent to monitor the progress of the construction. |
Contract
A legally enforceable agreement between two parties. |
Contract For Deed
Also known as a Land Contract or Land Installment Contract. A method of financing where title remains in the Seller's name until the Buyer has paid the full purchase price. A Contract for Deed will normally trigger the Due On Sale Clause in a Deed Of Trust or Mortgage but Veterans Administration regulations specifically allow Contracts for Deed without invoking the Due On Sale Clause. |
Conventional Loan
A mortgage not insured by FHA or guaranteed by the VA. |
Cooperative
A system of individual ownership of stock in a corporation that. in turn, owns the structure. Each owner has an exclusive right to use his individual unit and must pay his portion of the debt encumbering the entire building. |
Cost Approach
A method used by an appraiser to estimate replacement costs of improvements less depreciation. |
Cotenancy
Ownership in the same land by more than one person. See, Tenants In Common, Joint Tenants, Tenants By The Entirety. |
Covenant
A written agreement or restriction on the use of land or promising certain acts. Homeowner Associations often enforce restrictive covenants governing architectural controls and maintenance responsibilities. However, land could be subject to restrictive covenants even if there is no homeowner's association. |
Credit Report
A report documenting the credit history and current status of a borrower's credit standing. |
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Debt-To-Income Ratio
The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income. See housing expenses-to-income ratio. |
Deed
The written document conveying real property. The Deed must be executed (signed), Acknowledged, and Delivered to the Grantee. Once recorded at the Courthouse, the original piece of paper is not needed to convey title in the future. |
Default
Failure to meet legal obligations in a contract, specifically, failure to make the monthly payments on a mortgage. |
Deferred Interest
When a mortgage is written with a monthly payment that is less than required to satisfy the note rate, the unpaid interest is deferred by adding it to the loan balance. See negative amortization |
Deficiency Judgment
If the foreclosure sale does not bring sufficient proceeds to pay the costs of sale and the note in full, the holder of the note may obtain a judgment against the maker for the difference. |
Delivery
The final, unconditional and absolute transfer of a Deed to the Grantee so that the Grantor may not revoke it. A Deed, signed but held by the Grantor, does not pass title. |
Dower
A spouse's interest in the property of a deceased spouse. |
Down Payment
Money paid to make up the difference between the purchase price and the mortgage amount. |
Dual Agency
Representation of opposing parties (buyer and seller) at the same time in the same transaction. This situation most often refers to cases where the Realtor is the agent for both parties. |
Due On Sale Clause
A clause in the MORTGAGE that makes the loan non-assumable by providing the noteholder may call the loan immediately due and payable upon a sale or conveyance of an interest in the property. The FNMA/FHLMC form provides that a lease of more than three years or a lease with an option to buy also triggers this provision. |
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Earnest Money
A good faith deposit. |
Easement
The right to use the land of another for a specific limited purpose. Examples include utility lines, driveways, and Ingress And Egress. Easements can be temporary or permanent. |
Eminent Domain
The power of the state to take private property for public use upon payment of just compensation. |
Encroachment
The physical intrusion of a structure or improvement on the land of another. Examples include a fence or driveway over the property line. |
Encumbrance
Any lien, liability or charge against a property. |
Equity
The difference between the fair market value and current indebtedness, also referred to as the owner's interest. The value an owner has in real estate over and above the obligation against the property. |
Equity Sharing
A form of joint ownership between an owner/occupant and an owner/investor. The investor takes depreciation deductions for his share of the ownership. The occupant receives a portion of the tax write-offs for interest and taxes and a part of his monthly payment is treated as rent. The co-owners divide the profit upon sale of the property. |
Escheat
Property that reverts to the state when an individual dies without heirs and without a will. |
Escrow
A disinterested third party holds funds or documents on behalf of others and subject to their instructions. |
Executor
A person named in a will to carry out its terms and administer the estate. The feminine form is Executrix. |
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Fee Simple
The absolute total interest in real property. Compare, Life Estate, Reversion. |
