Glossary

A clause that is sometimes used in the transfer of property. It means that the present property is being transferred with no guarantee or warranty provided by the seller.

A summary; an abridgment. Before the use of photo static copying public records were kept by abstracts of recorded documents.

A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurance title.

Provision in a mortgage document stating that if a payment is missed or any other provision is violated the whole debt becomes immediately due and payable.

Formal declaration before a public official that one has signed a document. Prior to recording real estate legal documents, such as grant deeds and deeds of trust, a Notary Public acknowledges the person's signature on the document.

A contract by which the agent undertakes to represent the principal in business transactions, using some degree of discretion.

Person authorized to act on behalf of another in dealings with third parties.

An agreement between parties for the sale of real estate. It is synonymous with a Contract of Sale, Purchase Agreement, Sales Agreement, or Land Contract.

Provision in a mortgage document stating that the loan must be paid in full if ownership is transferred.

The qualities and state of being pleasant and agreeable. In appraising, those qualities that attach to property in the benefits derived from other than monetary. Satisfactions of possession and use arising from architectural excellence, scenic beauty and social environment.

Gradual payment of a debt through regular installments that cover both interest and principal.

These fees are generally collected by the lender and paid to outside companies performing the services.

Estimate of real estate value, presumably by an expert. An appraisal evaluates the property at a given time based on facts regarding the location, improvements, neighborhood and comparable sales. Generally, the value is based on three approaches: cost, market and income. Commonly known as a Valuation Report.

An expert option of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings. Commonly known as a Valuation.

Increase in value or worth of property.

Payment made after it is due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.

Value placed on real estate by governmental assessors as a basis for levying property taxes; not identical with appraised or market value.

Transfer of a contract from one party to another.

A home that has one or more common walls adjoining another home. Town Houses are attached homes.

Mortgage in which the remaining principal balance becomes fully due and payable at a predetermined time. Most of the time, balloon loans have level payments until the note becomes due and payable.

The final payment of a mortgage which is larger than the regular payment; it usually extinguishes the debt.

A court action to restructure debt.

Original cost of property plus value of any improvements put on by the seller minus the depreciation taken by the seller.

The lender named on the mortgage note. One entitled to the proceeds of property held in trust; also proceeds of wills, insurance policies, or trusts.

A debt instrument in the capital markets. The Australian government, corporations and municipalities use bonds to raise money. Bonds can also be backed by real estate loans and the payments from mortgages.

A form of an interim loan, generally made between a short term loan and a long term loan when the borrower needs additional time before obtaining permanent financing.

A person that represents another for a fee in real estate transactions. Mortgage Brokers help consumers locate suitable finance products and are paid a service by by the lending institutions for their referrals. Real Estate brokers help consumers locate suitable real estate and are paid a fee for their services.

Government regulations specifying minimum construction standards.

Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leased, by building codes, or by zoning ordinances.

An interest rate buy down is the temporary reduction of the note rate and resulting monthly payments a borrower pays to the lender. The shortfall between the rate on the note and initial payment made by the borrower is usually paid by a third party such as a seller or builder.

Agent who takes the buyer as a client, and is obligated to represent their interest above all others, and owes specific fiduciary duties to the buyer.

An agreement written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating certain uses or non users of the property.

A new offer made as a result of another offer, which cancels the original offer

The full purchase price as stated in the contract.

A purchase transaction in which the buyer receives possession of the property, but the seller retains title.

Condition which must be satisfied before the buyer can consummate the purchase of a property. Contingencies are generally outlined in the purchase contract between the buyer and seller.

Short-term financing for real estate construction. Generally followed by long term financing loan issued upon completion of construction.

Anything of value given to induce another to enter into a contract. Sales deposit on a sales contract is consideration.

The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.

Properties which are similar in value to a particular property and are used as comparisons to determine the fair market value of a specified property.

Fee paid to a broker or other entity for services rendered. Real estate brokers and mortgage brokers receive a commission for the services they provide; a real estate broker secures a buyer for a property that is for sale and a mortgage broker secures a mortgage loan for the buyer to finance the purchase of a property. Commissions are generally paid as a percentage of the sales price in a real estate transaction or the loan amount in a mortgage transaction.

Property intended for use by all types of retail and wholesale stores, office buildings, hotels and service establishments.

Person who employs the agent. Typically the seller is a client. The buyer can be a client (buyer's agent) or customer (real estate agent).

The chronological order of conveyance of a parcel of land from the original owner to the present owner.

A true copy, attested to be true by the officer holding the original.

A legal term meaning "let buyer beware".

Taxable profit on the sale of an appreciated asset.

Accumulated wealth. A portion of wealth which is set aside for the production of additional wealth; specifically, the funds belonging to the partners or shareholders of a business, invested with the expressed intention of their remaining permanently in the business.

Cash to be paid by the buyer at closing to consummate a real estate transaction. Down payment is the difference between the sales price and the mortgage amount.. Buyer cash required at closing includes the down payment, closing costs and prepaid expenses.

Payments made during the course of an escrow or at closing.

A loan funded below par (100%). Lenders or investors will fund loans at a discount in order increase the overall yield on the note.

An amortized mortgage in which principal and interest are computed on the remaining balance.

Decrease in value to real property improvements due to wear and tear, adverse changes in the neighborhood, or any other reason.

The deposit is money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the down payment. If the sale does not go through, the earnest money deposit will be forfeited to the seller unless the purchase contract expressly provides conditions for its return to the buyer.

Failure to make mortgage payments or violations other provisions of the mortgage note.

Listing agreement under which the owner promises to pay a commission if the property is sold during the listing period by anyone, even the owner.

Listing agreement in which only the listing office may sell the property and earn the commission.

The statement which lists the financial settlement between buyer and seller and the costs each must pay.

The deposit of instruments and/or funds into the care of a neutral third party with instructions to carry out the provisions of an agreement or contract once all instruments and/or funds have been deposited. Many closings are handled by escrow agents. In this situation, the seller deposits the deed and the buyer deposits the funds necessary with the escrow agent. Once all requirements of the purchase contract are in the control of the escrow agent, the money and deed are distributed accordingly.

The market value of the property less the homeowner's unpaid mortgage balance and any outstanding liens or other debts against the property.

A legal right or interest in land that affects a good or clear title and may diminish the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent the transfer of real property.

Unauthorized intrusion of a building or improvement such as a wall, fence, etc. onto another's land.

A right-of-way created by grant, reservation, agreement, prescription or necessary implication which one has in land owned by another.

Revealing all known facts which may affect the decision of a buyer or tenant.

A proceeding in or out of court to extinguish all rights, title and interest of the owner (s) of a property in order to sell the property and satisfy a lien against it.

Personal property affixed to structures or land, usually in such manner that they cannot be independently moved without damage to themselves or the property housing, supporting, or pertinent to them.

Mortgage holding priority over the claims of subsequent lenders against the same property.

Banks, savings and loans or credit unions.

A person in a position of trust or responsibility with specific duties to act in the best interest of a client. Real estate brokers and mortgage brokers are fiduciaries.

One who guarantees an obligation (Such as a home loan) and has a legal duty to fulfill it should the borrower default.

The clause in a law permitting the continuation of a use, business, etc., which was permissible but because of a change in the law is now no longer permissible.

A lien such as a tax lien or judgment lien, which attaches to all property of the debtor rather than the lien of, for example, a trust deed, which attaches only to a specific property.

Tract of land occupied as a family home.

One who might inherit or succeed to an interest in a property under the rules of law applicable when a property owner dies.

A property that is not occupied by the owner and in most cases produces income or is held for gains from appreciation.

Someone who has died without leaving a valid will.

The percentage of an amount of money which is paid for its use for a specified time.

A mortgage insured against loss to the mortgagee (lender) in the event of default and failure of the mortgaged property to satisfy the balance owing plus cost of foreclosure.

A published rate or benchmark measure of current interest rate levels used to calculate periodic changes in rates charged on adjustable rate mortgages.

Other costs that are incurred when a real estate loan is closed.

Valuable additions to property which raise the value of the property.

The decision of a court of law. Money judgments, when recorded, become a lien on real property of the defendant.

An undivided interest in property taken by two or more joint tenants. The interests must equal, accruing under the same conveyance and beginning at the same time. Upon death of a joint tenant, the interest passes to the surviving joint tenants rather than to the heirs of the deceased.

A liability which allows the creditor to sue any one of the debtors or sue all together.

Amount paid by a lessee as deposit on a leased property.

The ratio of the mortgage loan amount to the property's appraised value or selling price, whichever is less.

The function of collecting loan payments, managing the property tax and insurance escrows, foreclosing on defaulted loans and remitting payments to the investor/beneficiary.

The amount of a loan to the value or selling price of real property.

The cost to obtain a loan that is paid to the originating lender or broker.

Agreement between a property owner and a real estate broker, authorizing the broker to find a buyer for the property. If the sale is consummated, the listing broker will be paid a fee.

A record of property for sale by a broker who has been authorized by the owner to sell. Also used to denote the property so listed.

A public notice that litigation is pending on a property.

An encumbrance against property for the payment of debt; a lien may be a mechanic's lien, mortgage, unpaid taxes or judgment.

A formal method of stating that a prospective developer, buyer or lessee is interested in property.

One who holds title to and conveys the right to use and occupy a property under lease agreement.

One who possesses the right to use or occupy a property under lease agreement.

A document that lenders prepare for the closing agent that outlines the requirements for loan closing.

A general term encompassing all mortgages, and beneficiaries under deeds of trust.

A lease under which the lessee has the right to purchase the property. The option may run for the length of the lease or only for a portion of the lease period.

Hidden structural defect.

A penalty for failure to pay an installment on time.

In a legal sense, the solid part of the surface of the earth, as distinguished from water; any ground, soil or earth whatsoever regarded as the subject of ownership and everything annexed to it, whether by nature, e.g., trees and everything in or on it, such as minerals and running water, or annexed to it by man; e.g., buildings, fences, etc. In an economic sense, land consists of all those elements in the wealth of a nation which is supposed to be furnished by nature as distinguished from those improvements which owe their value to the labor and organizing power of man.

The borrower of money or the giver of the mortgage document.

Insurance required for a loan-to-value ratio above 80.01%.

The lender of money or the receiver of the mortgage document.

A professional that helps consumers through the loan selection, processing and closing of a mortgage loan. Most mortgage brokers have access to a wide range of mortgage products through many mortgage lenders. Mortgage brokers are paid a fee by the borrower when a suitable mortgage is found and closed.

A lien or claim against real property given as security for a loan. It is a two party agreement as apposed to the three-party agreement of a deed of trust.

False statement made to or concealment of knowledge from another party with the intent to provoke action from that party.

The price paid for a property; the amount of money that must be given or which can be obtained at the market in exchange under the immediate conditions existing at a certain date. To be distinguished from market value.

The management process through which efforts to conceive, develop and deliver goods and services are integrated to satisfy the needs and wants of selected customers as a means of achieving company objectives.

The most likely price a given property will bring if widely exposed on the market, assuming fully informed buyer and seller.

The number of percentage points the lender adds to the index rate to calculate the adjustable rate mortgage variable interest rate.

A written promise to repay a certain sum of money on specified terms.

Loans that are outside of the lending criteria specified by the major lending institutions.

An increase in principal balance which occurs when the monthly payments do not cover all of the interest cost. The interest cost which is not covered by the payment is added to the unpaid principal balance

The right to possess and use property to the exclusion of others.

A fee or charge for work involved in the evaluation, preparation and submission of a proposed mortgage loan.

An authorization given by a property owner to a real estate Broker wherein said Broker is given the nonexclusive right to secure a purchaser; open listings may be given to any number of Brokers without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.

A promise by one party to do a specified deed as the other party in turn performs a specific deed.

The rights of ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is generally classified into two groups, personal property and real property.

Charges for the lender's services associated with making the loan.

The outstanding balance of a loan.

A party to a real estate transaction.

The head of a real estate firm.

Considered the permanent location of residency.

Charge levied by the lender for paying off a mortgage loan before its maturity date.

Full payment of the principal before the due date; occurs when a property is sold or the borrower refinances the existing loan.

Prepaid interest is the interest charged to borrowers at loan closing to pay for the cost of borrowing for a partial month. For example, if a loan closes on the 15th of the month and the first payment is due 45 days later, the lender will charge 15 days of prepaid interest.

A written instrument authorizing a person to act as the agent of the person granting it, and a general power authorizing the agent to act generally in behalf of the principle. A special power limits the agent to a particular or specific act as: a landowner may grant an agent special power of attorney to convey a single and specific parcel of property. Under the provisions of a general power of attorney, the agent having the power may convey any or all property of the principal granting the general power of attorney..

Origination fees charged by the originating lender or broker and/or discount fees charge by lenders to increase the overall yield. A point is equal to one percent of the principal amount of your mortgage.

Issued four times a year, generally in spring, summer, fall, and winter.

Pertaining to the banks of a river, stream, waterway, etc.

A special program for the elderly that provides income until death. Payment requirements are arranged through the increase in the principal amount of the loan.

The repayment of a debt from the proceeds of a new loan using the same property as security.

The right of the holder of a note secured by a mortgage or deed of trust to look personally to the borrower or endorser for payment.

A synonym for real estate.

A middle man or broker who buys and sells real estate for a company, firm, or individual on a commission basis. The broker does not have title to the property, but generally represents the owner.

Land and anything permanently affixed to the land and those things attached to the building.

Equity created by the labor of the purchaser or borrower that increases the value of the property.

Map or plat made by a licensed surveyor who measures land and charts its boundaries, improvements, and relationship to the property surrounding it. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.

A document which is recorded to change the trustee under the deed of trust.

Lawsuit requesting that a contract be exactly carried out, usually asking that the seller be ordered to convey the property as previously agreed.

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

A residential home that is not attached physically to another home.

Regulates the distance from the lot line to the point where improvements may be constructed.

An Underground tank in which sewage from the house is reduced to liquid by bacterial action and drained off.

Agent who takes the seller as a client, is legally obligated to a set of fiduciary duties and is required to put the seller's interests above all other's.

Real or personal property pledged by a borrower as additional protection for the lender's interest.

The buying and selling of first mortgages of trust deeds by banks, insurance companies, government agencies, and other mortgagers.

The buying and selling of mortgage notes between sophisticated investors such as super funds, commercial banks, savings and loans and ASX firms.

A loan secured by a mortgage or trust deed, which lien is junior to another mortgage or trust deed.

Commonly known as a vacation home. This home is not rented and is occupied occasionally by the owners.

A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law.

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

Often used interchangeably with the word ownership. It indicates the accumulation of all rights in property by the owner and others.

Having made a will before death.

Any person in possession of real property with the permission of the owner.

A holding, as of land, by any kind of title, occupancy of land, a house or the like under a lease or on payment of rent or tenure.

Tax as applied to real estate is an enforced charge imposed on persons, property, or income to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.

Asset or property that is free from debt, and clear of any legal defect in its title and, therefore, can be easily sold or mortgaged.

The process where an urban neighborhood or area is improved and rehabilitated. The renewal process can include demolishing old or run-down buildings, constructing new, up-to-date housing, or adding in features like a theater or stadium. Urban renewal is usually undergone for the purposes of persuading wealthier individuals to come live in that area. Urban renewal is often part of the gentrification process.

On a loan, claiming a rate of interest greater than permitted by law.

Percentage of all rentable units or space remaining unoccupied.

The act or process of estimating value; the amount of estimated value.

Stretching across a room, or covering the entire floor area.

Two to usually not more than four story building without an elevator.

The interest earned by an investor on his investment (or bank on the money it has lent). Also called Return.

Legislative process that divides privately-owned urban areas into different zones (such as residential, commercial, industrial) according to the specified land use. Each zone is regulated as to the density, location, size, and type of buildings permitted therein.