Real Estate Terms & Definitions
Abstract of title – a recorded history of the events and instruments affecting a property title
Acceleration Clause – clause in a trust deed or mortgage giving lender the right to call all sums owed him immediately due and payable upon the borrower’s default
Acceptance – A buyer's or seller's agreement to enter into a contract and be bound by the terms of the offer.
Adjustable Rate Mortgage (ARM) – a mortgage loan where interest rates can change at specific points during the maturity of the loan, in line with the index
Agency – the legal relationship between an agent and client, where the agent is contracted to perform certain duties on the client’s behalf
Agent – one who acts as a negotiator for his principal when dealing with third parties on behalf of his clients
Amortization – a gradual paying off of a loan through periodic installments
Annual Percentage Rate (APR) – the nominal interest rate of a loan, plus charges for points, loan origination fees, finder’s fees, and insurance. This rate must be stated on loans covered by Regulation Z of the Truth in Lending Law.
Application fee – a cost to the borrower that covers the cost of the appraisal and the credit report
Appraisal – a written opinion of property value based on factual data, required for all purchases where mortgage financing in necessary
Appreciation – increase in property value
Assessment – either (1) an estimate by a government assessor of the value of property for the purpose of imposing taxes; (2) a fee imposed on property by a governmental authority, usually to pay for improvements such as streets and sewers; or (3) a fee charged by a community association of co-owners (eg., in a condominium community) to maintain or repair common areas of property.
Assessment Rolls - A public record of the assessed value of property in the taxing jurisdiction.
Attorney review – an attorney’s opinion, in written form that a real estate contract is good
Balance Sheet - A financial statement that shows an individual's assets, liabilities, and net worth as of a specific date.
Balloon mortgage – a mortgage where a loan payment is greater than preceding installments, and that payment completes the loan in full. The final installment that pays the loan in full is known as a balloon payment.
Basis point – one hundredth of one percent
Bill of sale – the legal document to transfer title to personal property
Bridge Loan - A type of mortgage financing between the termination of one loan and the start of another loan. For example, a mortgage secured by the borrower's present home (which is usually up for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as a "swing loan."
Broker – a state-licensed agent who acts for property sellers and owners in real estate transactions, for a fee
Buyer’s market – when buyers have a broad choice of properties and more price negotiating power
Buyer’s broker – an agent hired by a purchaser to locate and negotiate the best deal on property with the purchaser’s best interest in mind
Buydown - A temporary buydown gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buydown is paid the same way but reduces the interest rate over the entire life of a home loan.
Call Option - A provision in a loan that gives the lender the right to accelerate the debt, and require for full payment of the loan immediately, at the end of a specified period or for specified reason.
Cash Flow Basis - This calculation shows when your monthly payment savings exceed your estimated closing costs and discount points. It does not consider the tax impact or differences in principal balance reduction between your current loan and the refinance suggestions. You can use the Amortization Schedule Calculator to compare principal reduction.
Cash For Transaction - Enter the amount your want to use toward closing costs (discount points and fees) and/or to reduce your loan balance. In situations where your loan balance is above the conforming amount, reducing the principal may allow you to get a lower rate. Enter zero if you want a no-point loan and/or to finance the closing fees.
Cash-Out Refinance - A refinance transaction in which the new loan amount exceeds the total of the principal balance of the existing first mortgage and any secondary mortgages or liens, together with closing costs and points for the new loan. This excess is usually given to the borrower in cash and can often be used for debt consolidation, home improvement, or any other purpose. The borrower effectively borrows against the home equity.
Ceiling - The maximum interest rate that can accrue on a variable rate loan or adjustable rate mortgage (ARM). See lifetime rate cap.
Certificate of insurance – document verifying insurance coverage, issued by the insurance company
Certificate of title – an attorney opinion on the status of a title to a property after a review of public records to determine ownership and any encumbrances affecting the property
Clear Title - A title that is marketable and is free of liens or disputed legal questions as to ownership of the property.
Closing – the transfer of ownership from the seller to the buyer of property through a sales contract. When the mortgage loan documents are signed, money is disbursed, ownership of property is transferred to the buyer and the property is pledged as collateral for the loan.
Closing costs – the fees paid by the buyer and seller during closing, including application fee, points, one year’s premium for hazard insurance, tax and insurance escrow deposit, city revenue stamps, recording fees and attorney’s fees
Closing statement – a document detailing funds from a real estate sale, made to the buyer and seller, furnished by a broker
Commission – the amount earned by the broker for their services
Common elements – that part of real property in condominium ownership of shared elements, including walls, structural supports, stairwells, swimming pools, etc.
Comparative Market Analysis (CMA) – a written analysis of comparable houses in the area, being sold during the past 6 months, used as a tool for pricing a home appropriately
Condominium – a form of real estate ownership where the unit owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceiling) serve as its boundaries.
Condominium association – a group of people elected by unit owners who reside in the condos that are responsible for decisions regarding the well being of the condominium building
Condominium declaration – legal document describing the condominium and outlining the property uses, individual ownership units, descriptions of common elements, and amendment procedures
Conforming loan – a mortgage loan that the FNMA (Freddie Mac) or FHLMC (Fannie Mae) can purchase
Contingency – a condition that must be satisfied before a contract is made binding. For example, a sales contract may be contingent on a buyer securing financing.
Contract – an agreement negotiated and entered into by two or more parties who exchange mutual promises to perform certain acts in accordance with the wishes of both parties
Conventional mortgage – any mortgage that is not government insured is considered to be “conventional mortgage”
Cooperative (Co-op) – a form of multiple ownership in which a corporation or business trust entity holds title to property and grants occupancy rights to shareholders (unit owners) by means of proprietary leases or similar arrangements
Cooperating broker – a broker who splits commission with another broker, usually in the case of a listing broker and the selling broker
Co-signer – one who accepts equal obligation for the performance of a contract, note or other act by affixing his or her name to the documents involved
Credit Report - A detailed account of the credit, employment and residence history of an individual used by a prospective lender to help determine creditworthiness. Credit reports also list any judgments, tax liens, bankruptcies or similar matters of public record entered against the individual.
Curtailment - A payment that reduces the principal balance of a loan.
Deed – a written and signed document to the property title
Deed-In-Lieu - A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."
Deed Of Trust - The document used in some states instead of a mortgage; title is vested in a trustee to secure repayment of the loan.
Delinquency - Failure to make mortgage payments when due.
Disclosure statement – a statement required by the law where the seller must share certain information to the buyer of property
Discount points – amount paid by the seller to the lender at the beginning of a loan that accounts for the difference between the market interest rate and lower interest rate that is given
Down payment – a portion of the purchase price for a property which is paid by the buyer in cash, as opposed to the portion of the purchase price which is either (1) advanced by a lender, (2) assumed by the buyer under the seller’s existing mortgage, or (3) financed by the seller
Dual agency – when the agent represents both the seller and buyer of a property transaction
Earnest money – an initial good faith deposit put down by the buyer at the time of the contract signing that is credited to the down payment at the closing
Easement – the right, privilege, or interest of one party in the land of another
Encumbrance – any interest in or right to land that affects its value, including deed restrictions, outstanding mortgage loans, easements, or unpaid taxes
Equity – the value the owner has in real estate arrived at by deducting any liens from the market value of the property
Escrow – when both the seller and buyer agree to provide certain property components to a third party for safekeeping until fulfillments of certain conditions
Escrow account (also referred to as a reserve account) – An account where funds are held to pay the borrower’s real estate taxes, insurance or other escrow funds
Estate – the degree of interest a person has in property
Executed contract – when all terms of a contract have been completely fulfilled
Fannie Mae – nickname for the Federal National Mortgage Association (FNMA), a corporation specialized in buying mortgaged loans from mortgage bankers
Freddie Mac – nickname for the Federal Home Loan Mortgage Corporation (FHLMC), an organization that purchases mortgage loans from savings and loan associations
Fee simple – absolute ownership of real property with unconditional power of disposition
Federal Housing Administration (FHA) – an agency within the US Department of Housing and Urban development that administers loan programs, designed to make housing more affordable
Fiduciary – one who acts in the best interest of others, with a financial role
Financing – borrowing money for the purchase of property
Fixed-rate mortgage – a property loan with a fixed interest rate for the life of the loan
Fixtures – improvements that have been made to the property that become a part of the real estate (such as a lighting fixture)
Float – difference between a variable interest rate and the index
General warranty deed – a deed in which the seller certifies the title is fee from claims which may have arisen before or during the time he owned the property
Ginnie Mae – nickname for Government National Mortgage Association (GNMA), a government organization that assists in housing finance
Good and marketable title – a title to real estate showing the owner of record and that the piece of real estate is free of claims or liens, which would impair its marketability
Good Faith Estimate - A document provided when you apply for a loan. It provides estimates of all costs associated with obtaining and closing a mortgage loan.
Grace period – the time period that a buyer has to perform without being considered in default
Grantee – the buyer; someone receiving title to real property
Grantor – the seller; someone giving a deed
Habendum clause – a clause defining the quantity of real estate within the deed
Hazard insurance – insurance protection against certain risks, such as storms or fires
Holdback – money not paid until certain actions have occurred
Home equity loan – a loan secured by a second mortgage on one’s primary residence, most often used for non-housing expenditures
Home inspector – someone hired to evaluate the structural and mechanical condition of a home prior to sale
Homeowners’ association – an organization of homeowners that enforce deed restrictions and manage common elements for all residents of a condominium, townhome, or subdivision community
Homeowner’s policy – insurance coverage designed to protect a homeowner against certain liabilities, theft, and common disasters
Homeowners’ warranty program – an insurance program designed for homeowners to protect them against any builder faults in a newly constructed home, if the builder is in participation with the program
HUD (Department of Housing and Urban Development) – federal agency that protects Americans against housing discrimination, and housing that may not be safe, decent, or sanitary
HUD-1 Form – form prepared by the person who handles the closing for federally related mortgages that must contain relevant closing information and must be given to the buyer and seller
HVAC – Heat, Ventilation, and Air-Conditioning, climate control system in a building
Implied contract – agreement created by actions but not necessarily written or spoken
Improved land – land that has been made better in some way, including land that has been partially or fully developed for use
Improvements – additions to raw land, which increases the value of that land, such as buildings, streets and sewers
Income property – real estate that generates rental income
Independent contractor – self-employed contractor
Index – a statistic indicating a current economic or financial condition that affects interest rates
Indexed loan – a long-term loan in which the term, payment, interest rate, or principal amount may adjust periodically depending on a specific index, as stated in the loan contract
Inspection – a physical review of property for purposes of building code compliance, sale condition requirements, or legal review of documents such as mortgages
Instrument – a written legal document establishing the rights and liabilities of each party
Insurable title – a title that can be insured by a title insurance company
Interest – the cost for use of money, which compensates the lender for inflation administrative handling, and risk
Interest-only loan – a loan where the borrower must pay the interest in regular intervals until the loan matures, at which time the full loan amount is due
Interest rate – the percent of money either charged for its use or returned on an investment
Implied contract – agreement created by actions but not necessarily written or spoken
Improved land – land that has been made better in some way, including land that has been partially or fully developed for use
Improvements – additions to raw land, which increases the value of that land, such as buildings, streets and sewers
Income property – real estate that generates rental income
Independent contractor – self-employed contractor
Index – a statistic indicating a current economic or financial condition that affects interest rates
Indexed loan – a long-term loan in which the term, payment, interest rate, or principal amount may adjust periodically depending on a specific index, as stated in the loan contract
Inspection – a physical review of property for purposes of building code compliance, sale condition requirements, or legal review of documents such as mortgages
Instrument – a written legal document establishing the rights and liabilities of each party
Insurable title – a title that can be insured by a title insurance company
Interest – the cost for use of money, which compensates the lender for inflation administrative handling, and risk
Interest-only loan – a loan where the borrower must pay the interest in regular intervals until the loan matures, at which time the full loan amount is due
Interest rate – the percent of money either charged for its use or returned on an investment
No K's
Landlord – also know as a lessor, someone who rents property to another
Lease – a contract between the landlord (lessor) and the tenant (lessee) where the landlord transfers his property rights to the tenant for a specified period of time in exchange for rent
Lease with option to buy – a lease that gives the tenant the right to purchase the property at an agreed-upon price and certain conditions
Legal description – a description of property which can be recognized by law and by which the property in question can be definitely located by reference to recorded maps
Legal notice – legal notification to others involved using required legal methods
Lessee – the tenant; person to whom property is rented under a lease
Lessor – the landlord; person who rents property to another under a lease
Letter of commitment – official document notifying the borrower of the lender’s intent to grant a loan
Liability insurance – insurance designed to protect the property owner from any claims arising from injuries or damage to other people or property
LIBOR (London Interbank Offered Rate) – the rate international banks charge each other for large loans, in Eurodollars
Lien – a charge against property as security for payment of a debt, judgment, mortgage, or taxes as a type of encumbrance
Line of credit – an agreement outlining the maximum amount that a financial institution will grant to a borrower
Listing – a written contract between an agent and principal that authorizes the agent perform services for the principal involving his property; a record of property for sale by an authorized broker
Listing agreement – an agreement between a real estate broker and the owner of property which authorizes the broker to assist in the sale of the property, as by advertising it and showing it to prospective buyers
Listing broker/agent – the licensed broker/agent who secures the listing of the property
Loan application – the document necessary for a lender before issuing a loan commitment and usually including the borrower’s name, amount and terms of the loan, description of the property to be mortgaged, and the borrower’s financial and employment data
Loan commitment – an agreement to lend a specified amount of money at specified terms at some time in the future
Loan origination fee – the charges to a borrower to cover the costs to issue the loan, such as credit checks, appraisal, and title expenses
Loan-to-value ratio (LTV) – the amount borrowed compared to the cost or value of the purchased property
Maintenance fee – the assessment to pay operating costs for common elements by a homeowners’ or condominium owners’ association
Management fee – professional property management costs, set at a fixed percentage of total rental income generated by the managed property
Margin – the constant amount added to the value of index in order to adjust the interest rate on an adjustable rate mortgage
Marketable title – a title free from defect so much so that a court will enforce the acceptance of the title by a purchaser
Market price – the actual price paid in a market transaction
Market value – the highest price that would be paid by the buyer and the lowest price that would be accepted by the seller, both being willing but not compelled to buy or sell
Maturity – the loan due date
Mechanic’s lien – a lien given by law upon a building or improvement upon land, and upon the land itself, as security for payment of the labor performed and materials furnished
Meeting of the minds – an agreement to all terms of the contract by all involved parties
Mortgage – a written instrument that creates a lien upon real estate as security for payment of a specified debt
Mortgage banker – the person in charge of originating, selling, and servicing mortgage loans that are insured by a government agency or private mortgage insurer
Mortgage broker – the person who, for a fee, places loans with investors but does not service them
Mortgage commitment – an agreement between the lender and borrower to lend money at a future date, subject the conditions in the agreement
Mortgagee – the lender in a mortgage agreement
Mortgage insurance – protection for the lender in case of default, which covers the top 25% of the amount borrowed; a policy that guarantees repayment of a mortgage loan in case of death or disability of the mortgagor
Mortgagor – the one who takes a mortgage; the borrower
Multifamily housing – a residential structure with more than one dwelling unit in the same building
Multiple listing service (MLS) – an association of real estate brokers agreeing to share listings with each other, with the listing and selling brokers sharing the commission
National Association of Realtors (NAR) – an organization of Realtors® who devote themselves to real estate professionalism and are required to abide by the NAR Code of Ethics
Negative Amortization - An increase in the outstanding balance of a mortgage that occurs when the monthly payment is not large enough to cover the interest due. The amount of the shortfall is added to the remaining balance to create "negative" amortization.
Net income – the amount remaining after all expenses have been met
Net lease – a lease that includes expenses such as taxes, maintenance, or insurance costs in addition to the rent that the tenant pays
Net worth – amount of equity; assets minus liabilities
Nonconforming use – a use that violates a zoning regulation but was started before the regulation was enacted, so it is allowed to stay
Note – a written instrument that acknowledges and promises to pay a debt
Obsolescence – depreciation in value of a building due to reduced desirability and usefulness usually because it is outdated in design or construction, rendering it obsolete
Offer – a expression of willingness to buy property at a specific price
Offer and acceptance – an agreement of sale, in which the buyer agrees to buy a particular piece of property and seller agrees to sell the property according to agreement terms
Open house – showing a home for sale by leaving the home open for interested people to walk through and inspect the home
Open listing – a listing given to multiple brokers without liability to compensate any broker except the one who secures a ready, willing, and able buyer or secures the seller’s acceptance of another offer
Open space – purposely undeveloped land, within a developed area, that acts as an amenity to area occupants
Oral contract – verbal agreement for sale of real estate, generally not able to be legally enforced
Origination fees – charges to a borrower that cover expenses of issuing the loan, such as credit checks, appraisal, and title expenses
Owner occupant – a person who owns a residence and is also the tenant
Owner of record – the owner of a particular property, according to public records
Parcel – a piece of property under one ownership; a subdivision lot
Partially amortized loan – a loan where some payments are made toward principal but does not fully retire the debt, therefore requiring a balloon payment
Participation mortgage – a mortgage that allows the lender to share part of the resale proceeds or income
Party wall – a wall built to divide two properties that is partly on each parcel, where both owners have use of the wall and an easement over the adjoining owner’s land covered by the wall
Payment cap – a contractual limit on the percentage amount of adjustment allowed in the monthly payment for an adjustable rate mortgage at any one adjustment period
Performance – the completion of all duties and obligations in a contract
Permit – governmental document that allows the bearer to take specified action
Personal property – moveable property not permanently affixed to land or buildings
Personal residence – the primary home and legal residence of a person used for voting, tax, and legal purposes
Piggyback - A combination of two loans. Example: A loan is made for 90% of the home price. 80% of the purchase price is supplied by a 1st mortgage and 10% by a 2nd mortgage. The 2nd mortgage is piggybacked on the 1st.
PITI - An abbreviation for the parts of a typical monthly mortgage payment. PITI stands for principal-Interest-Taxes-Insurance. See principal, interest, taxes, and insurance.
Planned Unit Development (PUD) – a zoning classification that allows flexibility in the design of a subdivision and generally sets an overall density limit for the entire subdivision, allowing the dwelling units to be clustered to provide for common open space
PMI - Stands for Private Mortgage Insurance. PMI is an insurance policy the borrower buys to protect the lender from non-payment of the loan. PMI policies are usually required if you make a down payment that is below 20% of the sales price of the home.
Points – fees paid to encourage to lenders to make mortgage loans. One point equals one percent of the principal amount of the loan. Points are paid to “buy down” the interest rate on a loan.
Power of attorney – an instrument that gives authorization to another to act as that person’s agent
Prepayment clause – a mortgage clause that gives the borrower the option to pay off the full mortgage amount before it is due, sometimes with penalties for the interest that is not yet due
Prepayment Penalty - A fee that may be charged to a borrower who pays off a loan before it is due. Generally, a prepayment penalty is added to a loan in exchange for a discounted rate.
Presales – sales of property before construction begins
Pretax income – the investment amount earned before income taxes are deducted
Primary mortgage market – the portion of the credit market that originates mortgage loans, and includes institutional lenders such as savings and loan associations, banks, mortgage bankers and brokers
Prime rate – the lowest commercial interest rate charged to a bank’s most credit-worthy customers on short-term loans. This is not the same as long-term mortgage rates or consumer loan rates which are generally higher.
Principal – the owner or user of a property
Principal and interest (P & I) – the periodic/monthly payment of interest charges for the period plus an amortization amount of the principal balance
Principal, interest, taxes and insurance payment (PITI) – the periodic/monthly payment required by an amortizing loan that includes a principal and interest payment and an escrow deposit to pay insurance premiums and property taxes on the mortgaged property
Private mortgage insurance (PMI) – default insurance on conventional loans by private insurance companies
Procuring cause – a legal term meaning the cause resulting in accomplishing a goal, specifically that which determines whether a broker is entitled to a commission
Property management – the operation of property as a business including rental, rent collection, and maintenance
Property report – report required by the Interstate Land Sale Act for the sale of subdivisions of 50 lots or more, if they are not exempt
Property tax – also known as real estate tax or valorem tax, a government charge based on the market value of privately owned property
Pro rata – an equal amount consistent with the fraction held by each
Prorate – to distribute the proportionate share of a commitment paid or due between the buyer and seller; for example, to divide the proportion of real estate tax owed by each party for that particular piece of property
Public Auction - A meeting in an announced public location to sell property to repay a mortgage that is in default.
Punch list – a list of items to be fixed prior to the sale
Purchase agreement – a contract of sale; a written agreement between buyer and seller where the purchaser agrees to buy and the seller agrees to sell real estate upon terms of agreement
Purchase money mortgage – a mortgage given to the seller by the buyer as partial payment of the purchase price of real estate
Quiet enjoyment – the right to use the property without interference, as the owner or person legally entitled to possession of the property
Quiet title (action) – the court action to settle a title dispute
Quit Claim Deed - A deed that transfers, without warranty of ownership, whatever interest or title a grantor may have at the time the conveyance is made.
Ready, willing and able – capable and prepared to act
Real estate –related to law, real estate is land and everything more or less attached to it; in regards to business, real estate is the activities involved with ownership and the transfer of use for physical property
Real property – the rights to use real estate
Realtor® – a real estate professional who abides by a strict Code of Ethics as a member local and state boards of the National Association of Realtors®
Realty – real estate
Reassessment – revising or updating the value estimate of property for ad valorem tax purposes
Reciprocity – a mutual agreement for a state to accept as valid the license one has received in a different state
Recording – entering instruments affecting the title to real property into a public records book
Redlining – an illegal act of refusing to originating mortgage loans in certain neighborhoods based on race or ethnicity
Refinance – the act of replacing old loans with new loans
Regulation Z – a federal regulation that requires creditors to provide full disclosure of all terms of a loan and is necessary for anyone who arranges credit for more than 5 sales of residential real estate in a year. Terms must be disclosed, and interest rate stated as an annual percentage rate
Relocation network – a group of independent real estate brokerage companies from different areas that share potential customer information with each other
Rent – charge for the use of space
Reserve fund – an account used to provide funds for anticipated building maintenance costs
Restrictive covenant – a covenant or deed restriction that limits an owner’s property rights
Reverse annuity mortgage – a mortgage designed for elderly homeowners with considerable equity where the lender pays periodic payments to the borrower, causing the loan balance to increase with interest and periodic payments and resulting in negative amortization
Right of first refusal – the opportunity for someone to match a terms of a proposed contract before the contract is executed. In most condominiums, when a unit owner decides to sell his unit, the association has the ability to decline the buyer. If it does so, the association must buy the unit at the same price the declined buyer offered. This is an extremely rare occurrence.
Right of survivorship – the right of a surviving joint tenant to receive the interest of the deceased joint owner
Row house – single-family dwellings sharing common attached walls and generally with a common facade
Run with the land – an expression indicating a right or restriction that will affect all current and future owners of the property, most often in how the land can be used
R value – a measure of the heat conductivity of material to indicate the amount of insulation from heat transfer, generally referred to in insulation materials
Sales contract – a contract between the buyer and seller agreeing to certain terms
Sale-leaseback – the purchase of property and lease back to the seller at the same time, where the seller then becomes the tenant
Salesperson – someone who is licensed to deal in real estate or who is supervised by a state licensed broker while performing acts falling under real estate law
Sales price – the amount to be paid or previously paid for real estate according to a contract
Savings and Loan Associations (S&Ls) – depository institutions specializing in originating, servicing, and holding mortgage loans on residential, owner-occupied property
Secondary mortgage market – mechanisms used to buy and sell mortgages, primarily residential first mortgages
Second home – a residence that does not serve as that person’s principal residence
Second mortgage – a subordinated lien over the amount of the first mortgage used at purchase to reduce the cash down payment, or used during a refinance to raise cash for any purpose
Secured Loan - A loan that is backed by collateral. If the borrower defaults, the lender can sell the collateral to satisfy the debt.
Security – property that serves as collateral for a debt or a document that serves as evidence of ownership
Security deposit – a payment by a tenant to landlord that is held for the term of a lease to cover any damages to the property by the tenant
Self-amortizing mortgage – a mortgage that will retire itself through regular principal and interest payments
Seller financing – a debt instrument taken back by the seller as part of the purchase price for the property. Used as inducement to a sale when normal third-party financing is expensive or unavailable and when the existing, first-lien loan may be assumed by the buyer but the difference between the existing debt and sales price exceeds the cash resources of the buyer.
Seller’s market – a market that economically favors the seller due to rising prices and high market activity
Servicing – billing, collecting payment, and filing reports for a mortgage loan, as well as loan analysis, default follow up, and management of tax and insurance escrow accounts, all by a mortgage banker
Setback – the distance from the curb or other established line where no buildings may be constructed
Settlement – closing; the transfer of ownership from the seller to the buyer of property
Severalty – the ownership of real property by an individual as an individual without partners
Single-family home – a residential structure that includes only one dwelling. Any attached units would have separate outdoor access, plumbing and heating
Special assessment – a tax made against a property to pay for public improvement that will ultimately benefit the assessed property
Speculative building – construction or land development with no formal commitment from the end users of the finished product, and is put on the market because the builder anticipates that a demand for it exists or will form
Statute of Frauds – a state law that requires contracts such as deeds or mortgages be in writing in order to be enforceable
Subdivision – land divided into lots suitable for homebuilding purposes
Sublease – a lease from one lessee to another lessee
Subordination clause – a clause that allows a mortgage recorded at a later date to take priority over an existing mortgage
Survey – the measurement process of a parcel of land to determine its area; or the plan showing the land measurements, boundaries, area, and contours
Tax and insurance escrow – an account required by a mortgage lender to fund annual property tax assessments and hazard insurance premiums for the mortgaged property, funded through monthly contributions by the mortgagor
Tax base – the value of all activities subject to a tax; for property, the total assessed value of all taxable property less exemptions
Tax bracket – the percentage of each additional dollar of income required to be paid as income taxes
Tax deductible – an expense that can be used to reduce taxable income
Tax foreclosure – the enforcement of a lien for failure to pay property taxes
Tax lien – the debt attached against property for failure to pay taxes
Tax rate – the ratio of tax assessment to the taxed amount
Tax sale – the sale of property after tax nonpayment period
Teaser rate – the contract interest rate charged on an adjustable rate mortgage for the initial adjustment interval that is considerably lower than the current fully indexed rate and which acts as an incentive to encourage borrowers to accept adjustable-rate mortgage loans
Tenancy – the right of possession of real property
Tenancy by the entirety – an estate of a husband and wife with equal right of possession and survivorship
Tenancy in common – real estate ownership by more than one person with undivided interest and without right of survivorship. Upon death of one of the owners, their ownership share is inherited by the parties designated in their will.
Tenancy in severalty – property ownership by one person or corporation
Term – the time period that something is in effect
Term amortization – the time period principal and interest payments are made to fulfill a loan
Term loan – a loan with a set date of maturity and without amortization
Time is of the essence – a contract phrase implying that all dates and times noted in the contract are to be strictly adhered to
Title – evidence of ownership
Title company – company that examines real estate titles and issues title insurance
Title insurance – designed to protect the holder from loss due to defects in the title
Title report – a document describing the current state of the title, such as easements, covenants, liens, and any defects
Title search – a public record examination to determine ownership and encumbrances affecting real property
Town house – a dwelling unit with more than one floor and attached to other similar units by a party wall
Transaction costs – the costs involved with buying and selling real estate
Transfer tax – the tax involved in a title transfer to property or to a valuable interest
Trust – when property is transferred to a trusted third party by the trustor to be held for the beneficiary
Truth in lending - Regulation Z, requires lenders to provide all terms of a loan
Underwriter – One who analyzes mortgage loans to determine the risk involved with granting the loan based on past credit history, the ability to repay the loan, income, assets, liabilities and collateral
Unencumbered property – real estate with free and clear title
Unimproved property – land that has not been developed, received site preparation or construction
Unit – a residence for one tenant in multifamily residential property, generally characterized by a private entrance and some method of individuality from other units in the building
Unrecorded deed – an instrument that transfers title from the grantor to the grantee without any public notice of ownership change
Usury – charging over the state allowed interest rate
Utilities – services that are necessary to operate a building such as water, sewage, electricity, gas, or telephone
Vacancy rate – the percentage of unoccupied units or space
Vacant land – unused land
VA Loan – a loan that assures lender restitution in the event of default, guaranteed by the U.S. Veterans Administration under the Serviceman’s Readjustment Act of 1944 and later
Variance – permission by the zoning authority for an owner to violate a zoning requirement, generally granted when compliance with the requirement is impossible without rendering the property virtually unusable
Veterans Administration (VA) – a branch of the Federal Government authorized to administer a variety of benefits to the veterans of the United States Armed Forces. Benefits of the program include long-term, low down payment financing to eligible veterans.
Voluntary lien – a debt, generally a mortgage, that a property owner agrees to have recorded
Waiver – voluntary renunciation, abandonment, or surrender of a claim, right, or privilege
Walk-through inspection – a buyer inspection before closing
Warehousing – the packaging of a several mortgage loans for sale in the secondary mortgage market by the originator of the loans, usually a financial institution or mortgage banker
Warranty – a contract promise
Warranty deed – a deed that contains a covenant, usually assuring good title, freedom from encumbrances, and quiet enjoyment, that states that the grantor will protect the grantee against any and all claims
Wetlands – water saturated land such as marsh or swamp
Written commitment – once the borrower has applied for a loan and all the documentation required has been received, the loan will be approved by an underwriter, at which time a written commitment will be issued, committing the funds required to purchase the property to the borrower
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Yield – a measurement of the rate of earnings from an investment
Zero lot line – a form of cluster housing development where individual dwelling units are placed on separately mapped lots, and are either attached to one another or not
Zoning – a legal mechanism for local governments to regulate the use of privately owned real estate to prevent conflicting land use and promote orderly development
Zoning ordinance – act of city, county, or other authorities specifying designated uses of property in specific areas
