Real Estate - Hagan Realty

Hagan Realty: Real Estate Glossary

Abandonment	The voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest).
Abatement	A reduction or decrease. Usually applies to a decrease of assessed valuation of ad valorem taxes after the assessment and levy. In commercial real estate, abatement refers to a period of time where rent is not charged, typically at the beginning of the lease period offered by the landlord as an inducement for a prospective tenant.
Abstract	(1) An abbreviation of the cardinal aspects of all recorded deeds, mortgages, leases, and other instruments affecting the title to a particular piece of land. Prepared by a licensed abstractor and in some states or areas reviewed by an attorney or other experienced title examiner to determine the status of title. Virtually every abstractor today provides actual copies of the records rather than an abstract of each document. (2) A summary.
Abstracting	The process of making and compiling an abstract.
Abstractor	The person or company engaged in making abstracts.
Abstract of Judgment	A summary of money judgment obtained in court. When this summary or abstract is recorded in the office of the county recorder, in some states the judgment becomes a lien on the debtor’s property, both presently owned or after-acquired.
Acceleration Clause	Clause in a deed of trust or mortgage, which accelerates or hastens the time when the indebtedness becomes due. For example, some deeds of trust contain a provision (an acceleration clause) stating that the note shall become due immediately upon the sale of the land or upon failure to pay interest or an installment of principal and interest.
Acknowledgment	A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own act and deed. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents, and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.
Addenda (plural of Addendum)	A list of items to be changed, added, or removed within a written contract.
Adjustable Rate Mortgage (ARM)	In contrast with a mortgage loan with a fixed rate of interest, the ARM interest rate will be periodically adjusted up or down from time to time following a formula agreed upon at the inception of the loan. Upon each adjustment, the new payment amount will be calculated by applying the new interest rate to the principal balance amortized over the remaining life of the loan. Typically, ARMs can’t change by more than two percentage points per year or six points above the starting rate.
Administrator	A person appointed by the probate court to carry out the administration of a decedent’s estate when the decedent has left no will.
Adverse Possession	The unauthorized occupation of land belonging to another, by a person who does not have the consent of the owner. Said occupier is said to hold possession adversely to the rights and interests of the owner. In most states, by operation of law, title to the land becomes vested in such occupier after a fixed number of years of peaceful occupancy.
Affidavit	A written statement or declaration, sworn to before an officer who has authority to administer an oath.
Agent	One who has authorization, either expressed or implied, to act for or represent another party’s interests and serve as intermediary, usually in business matters.
Aggregate Escrow Accounting	A required method of accounting for and reconciling the borrower’s escrow account. Limits the amount of excess or “cushion” the lender may retain or require in an escrow account.
Agreement of Sale	A written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) on an installment or deferred payment plan. It is also known as an agreement to convey, a long form Security Agreement or a real estate installment contract.
All-Inclusive Rate	This is a rate that includes the insurance premium, and at least some part of the cost of the title search, examination and the cost of conducting the closing/settlement.
ALTA	American Land Title Association, the national trade association for the title insurance industry composed of title insurance firms which sets standards for the industry, including title insurance policy forms used on a national basis. The ALTA Settlement Statement is a standardized form that provides an itemized breakdown of the fees that the homebuyer and seller must pay during the settlement process.
Amendment	A change either to alter, add to, or correct part of an agreement without changing the principal idea or essence.
Amortization	A method of equalizing the monthly mortgage payments over the life of the loan, even though the proportion of principal to interest changes over time. In the early part of the loan, principal repayment is very small and interest repayment very high; at the end of the loan, that relationship is reversed.
Amortized Loan	A loan that is paid off (both principal and interest) by regular payments that are equal or nearly equal.
Annual Percentage Rate (APR)	The total yearly cost of borrowing money, expressed as a percentage of the principal loan amount. The APR reflects the interest rate as well as any points and fees, so it is typically higher than the interest rate.
Application	The submission of a consumer’s financial information for the purposes of obtaining an extension of credit. Consists of the consumer’s name, income, social security number, property address, estimate of the value of the property, mortgage loan amount sought.
Appraisal	A written opinion of property value, as of a given date, by a licensed appraiser. Usually ordered and required by the Lender as a condition of loan approval. Appraisals, generally, are not professional statements of the property's condition and should not be relied upon as such.
Appraised Value	Estimated value of the property offered as security for a home loan.
Appraiser	Works on behalf of a lender and provides a market analysis of the property.
Approved Attorney	An attorney whose opinion is acceptable to a title company as the basis for issuance of a title insurance policy by the insurer. The insurer, rather than the attorney, executes the policy.
Assessed Value	Value placed on property by a municipality for purposes of levying taxes which may differ widely from appraised or market value.
Assignment of Funds	A direction to a third party to transfer funds from the sale or mortgage of one property directly to the Settlement Agent for the specified contract property.
Assumable Mortgage	Provisions in a mortgage loan that allow for the purchaser of a home to assume the balance of the mortgage and to take over the payments. Most fixed-rate mortgages are not assumable unless the prospective purchasers make application with and are approved by the holder of the existing loan.
Assumption of Mortgage	Buyer assumes liability for an existing mortgage note held by the Seller. This is subject to approval by the Lender, who must be willing to approve the Buyer and release the Seller from liability on the loan.
Attorney Opinion of Title / Attorney’s Opinion	The written statement of an attorney setting forth what they believe to be the condition of a real estate title.
Balloon Payment	A large principal payment due all at once at the end of some loan terms.
Bankruptcy	A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor’s creditors and the debtor.
Basic Rate	When referring to title insurance, the basic rate is the rate charged to a consumer who does not qualify for a reduced rate.
Beneficiary	The recipient of benefits, often from a deed of trust; usually the lender.
Blanket Mortgage	A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance from the blanket mortgage is ordinarily obtained.
Bona Fide Purchaser	One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.
Breach of Contract	Failure to perform a contract, in whole or part, without legal excuse.
Bridge Finance	A short-term loan, usually at a higher rate of interest than the longer-term mortgage, used by borrowers who have bought a house while waiting for theirs to be sold. May also refer to a second subordinate loan.
Broker	A real estate broker is someone who continues their education past the real estate agent level and successfully receives a state real estate broker license. Real estate brokers can work as independent agents or have other agents working for them. Generally, this is the legal representative or proprietor of the office.
Building Contract	An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure.
Buy-Down	An amount that is paid to the lender (from the seller, buyer, third party, or some combination of these), at the time of settlement, to reduce the borrower’s monthly payments. The funds are typically deposited with the lender and drawn from in monthly installments over a specified period of years (usually the first one to five years of the loan) and applied against what would otherwise be the full principal and interest payments on a loan. By applying the cash paid at settlement to the borrower’s monthly payments, the borrower may qualify for a higher loan amount.
Buyer’s Agent (or Selling Agent)	Works with the buyer to locate a suitable property and negotiate a successful home purchase.
Cap	Limit on how much the interest rate can change in an adjustable rate mortgage.
Caveat Emptor	Latin for “Let the buyer beware.” This puts the burden on the buyer to be satisfied with the item before purchasing the property. Many states have passed laws that require sellers to disclose any defects or problems with the property being sold.
Certificate of Title	In areas where attorneys examine abstracts or chains of title, a written opinion, executed by the examining attorney, stating that title is vested as stated in the abstract.
Chain of Title	Beginning with a conveyance out of an original source of title such as a government, each succeeding deed, will or other medium which conveys and transfers the title to succeeding owners constitutes a link in the chain of title. The chain of title is the composite of all such links.
Chattel	Items of personal property that are movable (e.g., clothing, furniture), as distinguished from real property (e.g., land, a house).
Claim	A right to assert, or the assertion of, a demand for payment of money due; or the surrender or delivery of possession of property or the recognition or some right. A demand for something as one’s rightful due.
Clear Title	Clear title is when the title company makes sure that the property is free and clear of any liens or judgments.
Close of Escrow	The date the documents are recorded and title passes from seller to buyer. On this date, the buyer becomes the legal owner, and title insurance becomes effective.
Closing Cost	The lender/broker estimates the amount of closing costs that the borrower/buyer will pay for the transaction. There are two types of closing costs. “Non-recurring closing costs” are paid once at the time of purchasing. The other type of closing costs are “Pre-Paid’s” which can recur, things such as taxes and homeowners insurance.
Closing Disclosure (CD)	A five-page form that is provided by the lender and contains final details about the mortgage loan that’s been selected. It includes the loan terms, projected monthly payments, and how much will be paid in fees and other costs in order to get the mortgage (closing costs).This form is given to the buyer (consumer) three business days before closing.
Closing Protection Letter (CPL)	A letter from a title insurance company, generally given to a lender for one or more closings, that indemnifies the lender for loss caused by the policy issuing agent’s or approved attorney’s failure to comply with the lender’s written closing instructions, or for certain kinds of misconduct committed by the issuing agent or approved attorney, if the failure or misconduct affects the title or the mortgage
Closing Statement	A summation, in the form of a balance sheet, made at a closing, showing the amounts of debits and credits to which each party to a real estate transaction is entitled.
Cloud on Title	An irregularity, possible claim, or encumbrance which, if valid, would adversely affect or impair the title.
Collateral	Property pledged to the lender to secure the repayment of the loan.
Commission	The amount due to a real estate professional as compensation for services provided. Usually a percentage of the purchase price.
Community Driveway	A driveway which is jointly owned, used, and maintained by two or more persons. Usually, a portion of each owner’s property is burdened by the driveway.
Community Property	Property acquired by husband, wife, or both during marriage which gives each spouse an interest in the property whether each appears in title or not.
Comparable Sales	Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps”
Condemnation	The taking of private property by the government for public use (as for a street or a storm drain) upon making just compensation to the owner. This right of government to take property for a necessary public use is called eminent domain.
Conditions	This refers to provisions in deeds and other real estate instruments that make a particular right contingent upon the occurrence of some future event.
Condominium (Condo)	Type of real estate ownership where the owner has title to a specific unit and shared interest in common areas.
Conservator	A person appointed by the court to care for the person and/or property of an incompetent adult or an adult unable to care for their person or property because of health.
Consummation	Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction.
Contingency	A condition in a contract that must be satisfied or removed for the contract to be binding.
Contract	An agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are “offer” and “acceptance” by “competent persons” having legal capacities, who exchange “consideration” to create “mutuality of obligation.”
Contract of Sale	Written agreement setting out the terms and conditions of a property sale.
Conversion Clause	A provision that allows an adjustable rate mortgage (ARM) to be changed to a fixed-rate loan after a specified interval and after all required conditions are met.
Covenant	(1) A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as the covenant of warranty in a warranty deed; (2) Agreements or promises contained in deeds and other instruments for performance or nonperformance of certain acts, or use or non-use of property in a certain manner.
Conventional Mortgage	A mortgage loan not insured by the United States Department of Housing and Urban Development or guaranteed by the Department of Veterans Affairs. It is subject to conditions established by the lending institution and state statutes. The mortgage rates may vary with different institutions and between states. (States have various interest limits.)
Conveyance	The transfer of ownership of property from one party to another using an instrument in writing, such as a deed or trust deed.
Credit Report	A report detailing a loan applicant’s credit history, used by a lender to determine creditworthiness.
Deed	Written legal document by which an estate or interest in real property is transferred from one person to another. The person who transfers the interest is called the grantor. The one who acquires the interest is called the grantee. Upon filing the Deed in the land records office, the record title to real estate is said to be “vested” in the new owner(s). The Deed is prepared by the settlement attorney. It will contain the names of the existing owners as “Grantors” and the new owners as “Grantees” and will describe the property conveyed.
Deed Book	A book among the public records in which deeds are recorded.
Deed of Trust	A deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan (debt) between a borrower and lender. It is used in many states in place of a mortgage. It is evidence of the lender’s lien on the property and acts as a foreclosure document in the event of default.
Deed Restrictions	Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.
Default	Failure to perform a promised task or to pay an obligation when due.
Defect	A blemish, imperfection, or deficiency. A defective title is one that is irregular and faulty.
Defective Title	(1) Title to a negotiable instrument obtained by fraud; (2) Title to real property which lacks some of the elements necessary to transfer good title.
Depreciation	Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
Description	The exact location of a piece of real property stated in terms of lot, block, tract, part lot, metes and bounds, recorded instruments, or US Government survey (sectionalized). This is also referred to as a legal description of property.
Disbursement Date	The date the amounts are to be disbursed to a buyer and seller in a purchase transaction or the date funds are to be paid to the borrower or a third party in a transaction that is not a purchase transaction.
Down Payment	Percentage of the purchase price which the Buyer must pay in cash and may not borrow from the lender.
Due on Sale Clause	A standard provision in a note which provides that the note will become due immediately (or may be “accelerated” by the lender) upon the transfer by borrower of any interest in the real estate pledged as collateral for the loan, unless written consent from the lender is obtained.
Earnest Money Deposit (EMD)	Deposit made by a buyer as evidence of intention to buy and as security against their performance of the contract. In most cases, when closing occurs the earnest money deposit is then applied towards the total purchase price.
Easement	A right, privilege, or interest held by one party to enjoy or make limited use of another’s real property. An example is an easement granted for an electric utility to run underground cables under land owned by another.
Egress	The right to a path or right-of-way over that a person may leave or go away from his own real estate.
Ejectment	(1) Eviction or dispossession. (2) A lawsuit to regain possession of real estate held by another.
Eminent Domain	The government's right to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value.
Encroachment	The extension of an improvement such as a building, wall, fence, or other fixture from the real estate to which it belongs across a boundary line and onto adjoining property.
Encumbrance	A right or claim upon real property held by one other than the property owner. Encumbrances are divided into two classes, as follows: (1) liens (mortgages, deeds of trust, mechanics’ liens, local taxes, assessments, judgments, attachments, etc.); and (2) encumbrances other than liens which are limitations on the ownership of the land (such as conditions, restrictions, reservations, easements, etc.)
Endorsement	Addition to or modification of a title insurance policy that expands or changes coverage of the policy, fulfilling specific requirements of the insured.
Equity	The value of the property actually owned by the homeowner; purchase price plus appreciation, plus improvements, less mortgages and liens.
Escheat	The reversion of property to the state when an owner dies leaving no legal heirs, devisees, or claimants.
Escrow	An arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfillment of contractually agreed conditions by the transacting parties.
Escrow Agreement	A written agreement, usually made between buyer, seller, and escrow agent, but sometimes only between one person and the escrow agent. It sets forth the conditions to be performed incident to the object deposited in escrow, and gives the escrow agent instructions with respect to the disposition of the deposited object.
Estate	(1) A sizable piece of rural land usually with a large house and other pretentious improvements. (2) The whole of one’s possessions, especially all of the property, assets, debts, and liabilities left by a deceased or bankrupt person. (3) The nature and extent of an owner’s rights in real estate.
Examination of Title	A review of the information obtained from a title search. Often this review is conducted by an attorney who conducts the closing or works for the title company. The examiner will peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.
Examiner	Usually referred to, in title industry terms, as title examiner. One who examines and determines the condition and status of real estate titles.
Exceptions	A list of items excluded from coverage in an Insurance policy. Items excluded from coverage can be found in section two of Schedule B of the policy.
Exclusions	Any item that is specifically not included in the sale (e.g., an aboveground pool or garden shed). These should be shown in the contract.
Executor	A person appointed in a will and affirmed by the probate court to cause a distribution of the decedent’s estate in accordance with the will.
Fannie Mae (FNMA, Federal National Mortgage Association)	Privately owned corporation created by Congress that buys mortgage notes from local lenders and is responsible for the guidelines a majority of lenders use to qualify borrowers.
Fee Simple	The highest degree of ownership that a person can have in real estate. An interest in real estate that gives the owner unqualified ownership and full power of disposition.
Finance Charge	The total cost, including all fees, points, and interest payments a borrower will pay over the term of a loan.
Fixed Rate Mortgage	A loan that carries an unchangeable interest rate over its entire term, typically a period of 15 to 30 years. Compare to “Adjustable Rate Mortgage”
Fixture	A recognizable object (such as a toilet bowl, kitchen cabinet, or lighting unit) that is permanently attached to the property and thus belongs to the property when it is sold.
First Mortgage	A mortgage having priority as a lien over any other mortgage or lien on the same property.
First Payment Letter	A statement showing the amount (interest, principal, taxes, and insurance) due as the first mortgage payment, when it’s due, and where to send payment.
Foreclosure	The process by which a lender, after a default by the borrower, sells the property used as security on the loan. The proceeds of the sale are applied to the balance due on the loan.
Forfeiture of Title	A common penalty for the violation of conditions or restrictions imposed by the seller upon the buyer in a deed or other proper document. For example, a deed may be granted upon the condition that if liquor is sold on the land, the title to the land will be forfeited (that is, lost) by the buyer (or some later owner) and will revert to the seller.
Freddie Mac (FHLMC, Federal Home Loan Mortgage Corporation)	Privately owned corporation created by Congress that buys mortgage notes from local lenders and is responsible for the guidelines a majority of lenders use to qualify borrowers.
Good Faith Estimate (GFE)	Provided by the lender to disclose to the borrower the estimated charges for closing. As of 2015 this form was replaced and is no longer used except for in the reverse mortgage industry.
Hazard Insurance	Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. The buyer often adds liability insurance and extended coverage for personal property.
Heir	A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.
Home Inspection Report	A written report of the physical condition of the premises, prepared by a professional inspector. Typically this inspection is ordered by the purchaser to be conducted within a specified time period following contract ratification.
Home Inspector	Provides an objective and independent comprehensive written report on a home’s condition, major systems, and components.
Homeowners Insurance	Protects the property and contents in case of damage or loss. Most lenders require that the insurance be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.
House Location Drawing	A drawing that shows the structures and improvements on a lot in relation to the platted boundary lines, building restriction lines, and easements. The drawing will also include a certification that the property is not within a special flood hazard zone.
HUD-1	A precise breakdown of closing costs for both Sellers and Buyers (also known as HUD-1 Settlement Statement) which was required by RESPA until October 3, 2015, then only in the following transactions – HELOCs, reverse mortgages, mobile homes, co-ops, consumer purpose loan secured by commercial real estate.
Impounds	A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security.
Inclusions	Any removable item that the seller has agreed will be included in the sale. (ex. Lights, curtains, blinds, ceiling fans, air-conditioning units, dishwasher, range hood, stove, etc.)
Indemnity	Insurance against possible loss or damage. A title insurance policy is a contract of indemnity.
Ingress	The right or permission to enter; also the means or place of entry such as a right-of-way across adjoining land.
Interest	The cost of borrowing money, usually expressed as a percentage over time.
Interest-Only Loan	Loan on which just the interest is paid periodically, and the principal is paid at the end of the term. Some loans may be interest-only for a certain period of time and then require that both principal and interest be paid in monthly installments.
Intestate	Dying without leaving a legal will.
Inventory	List of items included with a property for sale, usually including furniture, furnishings, and other removable items.
Investment	The purchase of an asset, such as real estate, with the goal of producing income, including capital gains, on the resale of the asset.
Joint Tenancy	Ownership taken by two or more persons at the same time in equal percentages with an undivided right to possession. If one owner dies, his or her interest automatically passes to the remaining owner(s) through a right of survivorship. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants.
Judgment	A ruling by a court of law that affects parties to a civil or criminal action. A judgment may include a requirement that a party pay money damages. A judgment may be recorded with the county land records and can become a lien on real property if not satisfied.
Judgment Lien	A lien against the property of a judgment debtor. An involuntary lien.
Lead-Based Paint & Lead-Based Paint Hazards	Houses and apartments built before 1978 may have paint that contains lead (called lead-based paint). Lead from paint, chips, and dust can pose serious health hazards to children and/or women of childbearing age, if not taken care of properly.
Lease	An agreement by which an owner of real property (lessor) gives the right of possession to another (lessee), for a specified period of time (term) and for a specified consideration (rent).
Legal Description	A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
Lender	Any person or entity advancing funds which are to be repaid. A general term encompassing all mortgagees and beneficiaries under deeds of trust.
Liabilities	Outstanding debts or what an individual owes.
Lien	A claim one person holds on the property of another as security for money owed. Such claims may include obligations not met, judgments, unpaid taxes, materials, and labor. Many times a property cannot be refinanced without paying the lien.
Lis Pendens	A pending lawsuit. A lis pendens notice is legal notice to the world that a lawsuit is pending.
Listing Agent	Through a broker, forms a legal relationship with the homeowner to sell the property.
Listing Contract	Agreement whereby an owner engages a real estate agent for a specified period to sell property, for which sale the agent receives a commission.
Loan Application Fee	Fee paid to the lender at the time of application. The amount varies by lender.
Loan Approval Letter	Letter from the lender telling a borrower that their loan has been approved on certain terms. It may be received prior to or at settlement. The letter will include the loan amount, interest rate, number of years of the loan, and any additional requirements that must be complied with prior to or at settlement
Loan Discount Fee / Loan Discount Point	A fee paid to the lender, at or before settlement, to secure a preferred rate of interest on a loan. This fee is generally referred to in terms of a percentage of the loan amount or “points.” Generally, the more discount points paid, the lower the interest rate.
Loan Estimate	A three-page form that the borrower receives from the lender after applying for a mortgage. The Loan Estimate provides important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. For most mortgages, the lender must provide a Loan Estimate within three business days of receiving the application.
Loan Officer	Representative of a bank or other financial institution, who helps customers identify their borrowing options and helps them understand and secure the terms of their loan.
Loan Origination Fee	A fee charged by a lender or mortgage broker to initiate the loan process. This fee is typically referred to in terms of a percentage of the loan amount or “points.”
Loan Policy	A policy of title insurance issued to the mortgage lender insuring against loss by defects in, liens against, or unmarketability of title.
Maintenance Fee	Periodic charge by a homeowners association as set out in the subdivision restrictions.
Marketable Title	A title is free of material defects and liens. Also known as a merchantable title.
Market Price	The actual price at which a property is sold.
Market Value	An average between the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing, but not compelled to sell, would accept.
Maturity Date	The last day of the term of the home loan agreement. The home loan must then be paid in full, or the home loan agreement must be renewed or refinanced.
Mechanic’s Lien	A lien on real estate, created by operation of law, which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
Metes and Bounds	Describing property boundaries by using courses, directions, distances, and monuments.
Mortgage	A pledge of real estate as security for the payment of a loan. A legal document that is recorded as a lien on the property until the loan is paid in full.
Mortgage Insurance Premium	The premium paid for insurance to protect the lender in the event of a foreclosure where the money collected from the sale of the real estate is insufficient to cover the outstanding balance and costs due to the lender. Mortgage insurance is usually required for conventional loans that exceed 80% of the appraised value of the property and for all Federal Housing Administration (FHA) loans.
Multiple Listing Service (MLS)	A database of homes for sale in a particular geographic region used by real estate agents and brokers to share information about properties for sale and find available listings for prospective buyers.
Negative Amortization	A method of calculating fixed monthly payments in combination with a variable interest rate. When monthly payments are not enough to cover interest costs, unpaid interest is added to the principal balance.
Note	A legal instrument constituting a promise to repay money borrowed from a lender. The Note is typically prepared by the lender and is signed by the borrower at closing. A Note will include the original principal amount of the loan, the initial rate of interest, the maturity date, and it will describe any contemplated changes to the interest rate or due date. The note will also describe the conditions of repayment and the penalties for failure to comply with its terms.
Offer to Purchase	A formal legal agreement that offers a specified price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply).
Option to Buy	Legal agreement giving the buyer the right to purchase property at a certain time and price. An option fee, usually a percentage of the price or fixed amount, is payable and may be forfeited if the buyer does not go through with the transaction. Option fee may be refunded if conditions are not met.
Owner’s Title Policy	A policy of title insurance usually insuring an owner of real estate against loss occasioned by defects in, liens against, or unmarketability of the owner’s title.
Parcel	Any area of land contained within a single description.
Party Wall	A wall generally erected on a property boundary or between two lots for the common benefit and use of the property owners on either side.
Permanent Change of Station (PCS)	The official relocation of an active duty military service member—along with any family members living with her or him—to a different duty location, such as a military base. A permanent change of station applies until mooted by another PCS order, completion of active duty service, or some other such preemptive event.
PITI	Abbreviation for Principal, Interest, Taxes and Insurance. This forms the basis for monthly mortgage payments.
Plat	A plan, map, or chart of a tract or town site dividing a parcel of land into lots.
Points	Common term used in the industry when referring to loan origination fees and discount fees. Each “point” represents one percent (1%) of the loan amount.
Power of Attorney (POA)	A legal document signed by the grantor that gives the named person the right to act on their behalf and in their place as their attorney-in-fact.
Preliminary Title Report	A report prepared prior to issuing a title insurance policy that shows the ownership of a specific parcel of land. It includes information about liens and encumbrances that will not be covered under a title insurance policy.
Premium	The amount payable for an insurance policy.
Prepayment Penalty	A fee paid by a borrower who pays off the loan before it is due according to the terms of the loan.
Prequalification	The process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them. Done before paying substantial loan application fees.
Principal	The actual amount of money that has been borrowed to buy a property.
Private Mortgage Insurance (PMI)	Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor). PMI is often required for larger loans.
Probate	A legal procedure in which the validity of a document, such as a will, is proven.
Prorate	Divide or assess proportionately.
Promissory Note	A written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.
Public Domain	Land owned by the government and belonging to the community at large.
Public Records	The transcriptions in a recorder’s office of instruments that have been recorded, including the indexes pertaining to them.
Quiet Title Suit	A lawsuit brought by an owner of real estate for the purpose of canceling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests that cloud the owner’s title.
Quit Claim Deed	A deed that does not imply the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.
Radon Gas	A naturally occurring emission of gas from the ground. Studies have shown that extended exposure to high levels of radon gas can adversely affect human health.
Ratified	To sign or give formal consent to a contract or agreement, making it officially valid.
Real Estate Agent	Individual licensed by the state to represent parties in the transfer of property. Every Realtor is a real estate agent, but not every real estate agent has the professional designation of a realtor.
Real Estate Owned (REO)	A class of property owned by a lender, typically a bank or government agency, after an unsuccessful sale at a foreclosure auction.
Real Property	Land, from the center of the earth and extending above the surface indefinitely, including all inherent natural attributes and any man-made improvements of a permanent nature place thereon. For example: minerals, trees, buildings, and appurtenant rights.
Realtor	A copyrighted trade name that can be legally used only by real estate agents belonging to the National Association of Realtors®. They also belong to the state and local Association of REALTORS.
Recording	The act of placing a deed, deed of trust, or mortgage among the public land records of the county in which the property is located. As part of this process, recording and transfer taxes, as well as recording fees, that are collected at settlement, are remitted to the appropriate county authorities.
Recording Fees	Charged by the county clerk to record documents in the public records.
Record Title	The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interests.
Reissue Rate	When referring to title insurance, the reissue rate is the reduced rate for an Owner’s Policy of title insurance issued on a property that was previously insured within some period of years. In some states, the term is also used for a refinance rate.
Restrictions	Often called restrictive covenants, these limit the way in which a property can be used or modified and are written into (or referred to in) the deed for the property. They are usually enforced by the developer or builder, the neighborhood, or the homeowners association. A certified copy of deed restrictions is usually required by the lender. Restrictions normally have a termination date, but may be renewed.
Right of Way	(1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads, or power lines are built.
Riparian Rights	The many rights of a person in, to, and over the banks, bed, shallows, shore, and water of a stream or body of water upon which their land borders.
Second Mortgage	A mortgage ranking in priority immediately below a first mortgage.
Separate Property	Real property owned by one spouse exclusive of any interest of the other spouse.
Settlement	Also called “closing”. The process of completing a real estate transaction during which deeds, mortgages, leases, and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.
Settlement Statement	Document providing a detailed breakdown of services and fees charged to the buyer and seller in a real estate transaction.
Short Sale	Sale of a home for less than the balance remaining on the mortgage to pay off all or a portion of the mortgage balance. Typically, the lender will decide if the debt is completely satisfied based on the financial situation of the borrower, as well as the real estate market conditions at the time of the sale.
Simultaneous Issue Rate	When referring to title insurance, the simultaneous issue rate is the reduced rate for a lender’s title policy or owner’s title policy issued on the same property or loan at the same time as another policy. The term usually refers to a loan policy issued at the same time as an owner’s policy when a property is purchased.
Sole Ownership	An undivided ownership interest by one person with no other party having a right to or interest in the property.
Special Warranty Deed	A deed that warrants the title only with respect to acts of the seller and the interests of anyone claiming by, through, or under them.
Squatter	One who settles upon unoccupied land without legal claim or authority. (See “Adverse Possession”)
Statute of Frauds	Requirements that certain kinds of contracts be memorialized and signed in writing with sufficient content to evidence the contract.
Subdivision	An area of land divided into lots, blocks, and building sites, and in which public facilities are laid out, such as streets, alleys, parks, and easements for public utilities.
Subordination Agreement	An agreement by which one encumbrance (for example, a mortgage) is made subject to another encumbrance (for example, a mortgage) is made subject to another encumbrance (perhaps a lease). To subordinate is to make subject to, or to make of lower priority.
Survey	The measurement by a surveyor of real property which delineates the boundaries of a parcel of land. Depending on the type of survey it may additionally delineate the exact location of all improvements, encroachments, easements, and other matters affecting the title to the property in question.
Tax Deed	A deed executed by the tax collector to the state, county, or city when no redemption is made from a tax sale.
Tax Lien	A lien that is imposed upon real estate by operation of law that secures the payment of real estate taxes.
Tax Proration	The seller and buyer split up property taxes based on the length each party has owned the home during the year.
Tax Sale	Property on which current county taxes have not been paid is sold to the state. No actual sale takes place. The title is transferred to the state and the owner may redeem it by paying taxes, penalties, and costs. If it has not been redeemed within five years, the property (referred to as “tax sold property”) is actually deeded to the state. (Similar sales to cities take place for unpaid city taxes.)
Tenancy	The legal term used to describe the form of co-ownership in which real estate title is held by more than one person. The tenancy of co-owners must be specified in the Deed. Joint Tenancy (with right of survivorship) is a form of co-ownership where, upon the death of any joint tenant, title to the property will, by operation of law, vest in the surviving joint tenant(s) (NOTE: each joint tenant must take title to an equal share of the property). Tenancy by the Entirety is a form of co-ownership between a husband and wife. Upon the death of either spouse, title to the property will, by operation of law, vest in the surviving spouse. Tenancy in Common is a form of ownership where, upon the death of any tenant in common, the share owned by the deceased does not automatically vest in the surviving tenant(s) in common, but rather is distributed as part of the estate of the deceased (i.e., as designated in the decedent’s will or through intestate succession if the deceased died without a will.)
Tenant	(1) Usually one who holds possession of real estate under a lease. (2) In a broader sense, one who holds or possesses land and tenements by any kind of title.
Tenants By the Entirety	Ownership of property between husband and wife. Together they hold title to the property with a right of survivorship. Upon the death of either, the survivor takes sole ownership of the entire property by operation of law.
Tenants in Common	Two or more persons have a divided and specific ownership in the property. The percentage of ownership need not be equal; each party has a right to sell their interest, and upon the death of that owner, their interest in the property passes to their heirs.
Termite Inspection	Purchaser or seller provides a report, from a licensed exterminator, indicating any evidence of infestation.
Third Party	A term usually applied to persons who are not principal parties to a contract or other instrument, but who have some right, interest, or duty that such contract or instrument affects. For example, where a sale contract between buyer and seller of real estate provides that the money and documents involved in the transaction will be deposited with a title company pending the closing of the deal, the title company becomes a third party to the transaction.
TILA-RESPA Integrated Disclosure (TRID)	A rule issued by the Consumer Financial Protection Bureau (CFPB) that combines and integrates the disclosures under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). Effective in October 2015.
Time is of the Essence	A legal concept that when applied makes a time frame absolute. Violation of a stated time frame under this theory is a breach of the contract term.
Title	Legal ownership and right to use and possession of a specific property.
Title Commitment	An offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions, and exceptions that will apply to that particular policy.
Title Covenants	Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as “common law covenants” includes: (a) covenants against encumbrances; (b) covenant for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); (c) covenant of good right and authority to convey; (d) covenant of quiet enjoyment; (e) covenant of seisin; (f) covenant of warranty.
Title Defect	(1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.
Title Examination	To peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.
Title Insurance	A type of insurance unique to real property that protects the purchaser and the lender against loss or damage resulting from defects of title or the enforcement of liens against real estate existing at the time of issuance. Potential defects covered will include matters that may not be discovered from a search of the public records, such as past frauds or forgeries. Title insurance requires a one-time premium paid at settlement which protects the purchaser for as long as they own the property.
Title Plant	(1) In many areas, synonymous with abstract plant. (2) A geographically filed assemblage of title information which is to help in expediting title examinations, such as copies of previous attorneys’ opinions, abstracts, tax searches, and copies or take-offs of the public records.
Title Search / Abstract	A comprehensive search of the land records in the county where the property is located. The purpose of a title search is to obtain all publicly recorded information about the property including deeds and the historical chain of ownership, mortgages and release documents, covenants, easements, and liens. An experienced title officer or attorney reviews and analyzes all material relating to the search and then determines the sufficiency and status of title for issuance of a title insurance policy.
Total Interest Percentage (TIP)	Total amount of interest paid over the life of the loan, expressed as a percentage of the amount borrowed.
Underwriter	A financial expert who evaluates a potential borrower's credit history, assets, the size of the loan requested, and how well they anticipate the borrower can pay back the loan. Based on this evaluation they assess how much risk a lender will take on if they decide to issue the loan.
Unreleased Trust	A mortgage or lien recorded in the court records that appears to be outstanding because no Certificate of Satisfaction/Deed of Release has been recorded.
Vendor’s Lien	An implied lien given by law to a vendor for the remaining unpaid and unsecured part of a purchase price.
Vesting	How ownership of title is taken. Common methods of holding title include sole ownership (such as a single man or woman) or co-ownership (such as community property, community property with right of survivorship, joint tenancy or tenancy in common). How title is vested has important legal consequences and tax consequences. The tax consequences may be different for same-sex legally related couples.
W9	IRS form to be signed by the seller(s), providing their social security number and new mailing address. At tax time, this form makes it possible for the lender to report the mortgage interest paid.
Waiver	The voluntary and intentional relinquishment of a known right, claim, or privilege.
Warranty Deed	A deed used in many states to convey title to real property. With a warranty deed the grantor guarantees that the property has no outstanding title problems and that they, the current owner, have the legal right to transfer the title.