Common Real Estate Terms

Acceleration Clause – A provision in a promissory note or security instrument allowing the lender to declare the entire debt due immediately if the borrower breaches one or more provisions of the loan agreement.

Acceptance – Agreeing to the terms of an offer to enter into a contract, thereby creating a binding contract.  ** Also, Taking delivery of a deed from the Grantor.

Accrued Items of Expense – Expenses that have been incurred but are not yet due or payable; in a settlement statement, the seller’s accrued expenses are credited to the buyer.

Acquisition Cost- The amount of money a buyer was required to expend in order to acquire title to a piece of property; in addition to the purchase price, this might include closing costs, legal fees, and other expenses.

Acre- an area of land equal to 43,560 square feet.

Adjacent- Nearby, next to, bordering, or neighboring; may or may not be in actual contact.

Adjustable-Rate Mortgage- A loan in which the interest rate is periodically increased or decreased to reflect changes in the cost of money.

Administrator- A person appointed by the probate court to manage and distribute the estate of a deceased person, when no executor is named in the will or there is no will.

Ad Valorem- a latin phrase that means according to value, used to refer to taxes that are assessed on the value of property.

Adverse Possession- Acquiring title to real property that belongs to someone else by taking possession of it without permission, in the manner and for the length of time prescribed by statute.

Agency- a relationship of trust created when one person (the principal) grants another (the agent) authority to represent the principal in dealings with third parties.

Agency, Dual- when an agent represents both parties to a transaction, as when a broker represents both the buyer and the seller.

Agent- A person authorized to represent another (the principal) in dealings with third parties.

Alienation- The transfer of ownership or an interest in property from one person to another, by any means.

Alienation Clause- A provision in a security instrument that gives the lender the right to declare the entire loan balance due immediately if the borrower sells or otherwise transfers the security property.  Also called a due-on-sale clause.

ALTA- American Land Title Association, a nationwide organization of the title insurance companies.  An extended coverage title policy is sometimes referred to as an ALTA policy.

Amenities- Features of a property that contribute to the pleasure or convenience of owning it, such as a fireplace, a beautiful view, or its proximity to a good school.

Amortization, Negative- When unpaid interest on a loan is added to the principal balance, increasing the amount owed.

Amortize- to gradually pay off a debt with installment payments that include both principal and interest.

Annexation- Attaching personal property to real property, so that it becomes part of the real property (a fixture) in the eyes of the law.

Annual Percentage Rate (APR)- All of the charges that the borrower will pay for the loan (including the interest, loan fee, discount points, and mortgage insurance costs), expressed as an annual percentage of the loan amount.

Anti-Deficiency Rules- Laws that prohibit a secured lender from suing the borrower for a deficiency judgment in certain circumstances (for example, after non-judicial foreclosure of a deed of trust).

Antitrust Laws- Laws that prohibit any agreement that has the effect of restraining trade, including conspiracies.

Apportionment- A division of property (as among tenants in common when the property is sold or partitioned) or liability (as when responsibility for closing costs is allocated between the buyer and seller) into proportionate, but not necessarily equal, parts.

Appraisal- An estimate or opinion of the value of a piece of property as of a particular date.  Also called valuation.

Appreciation- An increase in value; the opposite of depreciation.

Appurtenances- Rights that go along with ownership of a particular piece of property, such as air rights or mineral rights they are ordinarily transferred with the property, but may, in some cases, be sod separately.

Appurtenances, Intangible- Rights that go with ownership of a piece of property that do not involve physical objects or substances; for example, an access easement (as opposed to mineral rights).

Arm’s Length Transaction- 1. A transaction in which both parties are informed of the property’s merits and shortcomings, neither is acting under unusual pressure, and the property has been exposed on the open market for a reasonable length of time. 2. a transaction in which there is no pre-existing family or business relationship between the parties.

Assessment- The valuation of property for purposes of taxation.

Assessor- An official who determines the value of property for taxation.

Assign- To transfer rights (especially contract rights) or interests to another.

Assumption- When a buyer takes on personal liability for paying off the seller’s existing mortgage or deed of trust.

Balloon Payment- A payment on a loan (usually the final payment) that is significantly larger than the regular installment payments.

Bankruptcy-1. When the liabilities of an individual, corporation, or firm exceed the assets. 2. When a court declares an individual, corporation, or firm to be insolvent, so that the assets and debts will be administered under bankruptcy laws.

Basis- A figure used in calculating a gain on the sale of real estate for federal income tax purposes.  Also called cost basis.

Binder- 1. An instrument providing immediate insurance coverage until the regular policy is issued.  2. Any payment or preliminary written statement intended to make an agreement legally binding until a formal contract has been drawn up.

Boundary- the perimeter or border of a parcel of land; the dividing line between one piece of property and another.

Breach- Violation of an obligation, duty, or law; especially an unexcused failure to perform a contractual obligation.

Broker- One who is licensed to represent members of the public in real estate transactions for compensation; may be an individual, a corporation, or a partnership.

Brokerage Fee- the commission or other compensation charged for a real estate broker’s services.

Building Codes- Regulations that set minimum standards for construction methods and materials.

Bump Clause- A provision in the purchase and sale agreement that allows the seller to keep the property on the market while waiting for a contingency cause to be fulfilled; if the seer receives another good offer in the meantime, he or she can require the buyer to either waive the contingency clause or terminate the contract.

Buydown- When discount points are paid to a lender to reduce (buy down) the interest rate charged to the borrower; especially when a seller pays discount points to help the buyer/borrower qualify for financing.

Capital Gain- Profit realized from the sale of a capital asset.  If the asset was held for more than one year, it is a long-term capital gain; if the asset was held for one year or less, it is a short-term gain.

Capitalization Rate (Cap rate)-A percentage used in capitalization (Net Income=Capitalization Rate x Value) It is the rate believed to represent the proper relationship between the value of the property and the income it produces; the rate that would be a reasonable return on the investment of the type in question, or the yield necessary to attract investment of capital in property like the subject property.

CC&Rs- A declaration of covenants, conditions and restrictions; usually recorded by a developer to place restrictions on all lots within a new subdivision.

Certificate of Occupancy- a statement issued by a local government agency (such as the building department) verifying that a newly constructed building is in compliance with all codes and may be occupied.

Closing- The final stage in a real estate transaction, when the seller receives the purchase money, the buyer receives the deed, and title is transferred.  Also called settlement.

Closing Costs- Expenses incurred in the transfer of real estate in addition to the purchase price; for example, the appraisal fee, title insurance premium, broker’s commission, and excise tax.

Closing Date- The date on which all the terms of a purchase and sale agreement must be met, or the contract is terminated.

Cloud on Title- a claim, encumbrance, or apparent defect that makes the title to a property unmarketable.

Commission- 1. The compensation paid to a broker for services in connection with a real estate transaction (usually a percentage of the sales price). 2. A group of people organized for a particular purpose or function; usually a governmental body, such as the Real Estate Commission.

Commitment- In real estate finance, a lender’s promise to make a loan.  A loan commitment may be “firm” or “conditional”; a conditional commitment is contingent on something, such as a satisfactory credit report on the borrower.

Common Areas- 1. The land and improvements in a condominium, planned unit development, or other housing development that are owned and used collectively by all the residents, such as parking lots, hallways, and recreational facilities available for common use.  Also called common elements. 2. In a building with leased units or spaces, the areas that are available for use by all of the tenants.

Community Property- Property owned jointly by a married couple in Washington and other community property states, as distinguished from each spouse’s separate property; generally, any property acquired through the labor or skill of either spouse during marriage.

Competitive Market Analysis (CMA)- A comparison of homes that are similar in location, style, and amenities to the subject property, in order to set a realistic listing price.  Similar to the sales comparison approach to value.

Condominium- Property developed for concurrent ownership, where each co-owner has a separate interest in an individual unit, combined with an undivided interest in the common areas of the property.

Consideration- Anything of value given to induce another to enter into a contract such as money, goods, services, or a promise.  Sometimes called valuable consideration.

Contract- An agreement between two or more persons to do or not do a certain thing, for consideration.

Conveyance- the transfer of title to real property from one person to another by means of a written document, especially a deed.

Counteroffer- a response to a contract offer, changing some of the terms of the original offer; it operates as a rejection of the original offer (not as an acceptance). Also called qualified acceptance.

Covenant- 1. A contract. 2. A promise. 3. A guarantee (express or implied) in a document such as a deed or lease 4. A restrictive covenant.

CPM- Certified Property Manager; a property manager who has satisfied the requirements set by the Institute of Real Estate Management of the National Association of Realtors.

CRE- Counselor of Real Estate; a member of the American Society of Real Estate Counselors.

Cul-de-Sac- A dead end street, especially one with a semi-circular turnaround at the end.

Debtor- One who owes money to another.

Deed- An instrument which, when properly executed and delivered, conveys title to real property from the grantor to the grantee.

Deed, General Warranty- A deed in which the grantor warrants the title against defects that might have arisen before or during his or her period of ownership.

Deed, Gift- A deed that is not supported by valuable consideration; often lists for love and affection; as the consideration.

Deed, Quitclaim- A deed that conveys any interest in a property that the grantor has at the time the deed is executed, without warranties.

Deed, Sheriff’s- A deed delivered, on court order, to the holder of the certificate of sale when the redemption period after a mortgage foreclosure has expired.

Deed, Special Warranty- A deed in which the grantor warrants title only against defects that may have arisen during his or her period of ownership.

Deed, Statutory Warranty- A short form of the general warranty deed, in which the covenants are implied (by the use of language specified in the state statute) rather than spelled out.

Deed, Tax- A deed given to a purchaser of property at a tax foreclosure sale.

Deed, Trust- (Deed of Trust)- An instrument that creates a voluntary lien on real property to secure the repayment of a debt, and which includes a power of sale clause permitting nonjudicial foreclosure; the parties are the grantor or trustor (borrower), the beneficiary (the lender), and the trustee ( a neutral third party).

Deed, Trustee’s- A deed given to a purchaser of property at a trustee’s sale.

Deed, Warranty- 1. A general warranty deed. 2. any type of deed that carries warranties.

Deed in lieu of Foreclosure- A deed given by a borrower to the lender, relinquishing ownership of the security property, to satisfy the debt and avoid foreclosure.

Deed of Reconveyance- The instrument used to release the security property from the lien created by a deed of trust when the debt has been repaid.

Default- Failure to fulfill an obligation, duty, or promise, as when a borrower fails to make payments, or a tenant fails to pay rent.

Deferred Maintenance- Depreciation resulting from maintenance or repairs that were postponed, causing physical deterioration of the building.

Delivery- The legal transfer of a deed from the grantor to the grantee, which results in the transfer of title.

Deposit- Money offered as an indication of commitment or as a protection, and which may be refunded under certain circumstances, such as an earnest money deposit or a tenant’s security deposit

Depreciation-1. A loss in value (caused by deferred maintenance, functional obsolescence, or external obsolescence). 2. For the purposes of income tax deductions, apportioning the cost of an asset over a period of time.

Detached Residence- A home physically separated from the neighboring home(s), not connected by a common wall.

Developed Land- Land with man-made improvements, such as buildings or roads.

Devise-1. (noun) A gift of real property through a will. 2. (verb) To transfer real property by will. compare: Bequest; Bequeath; Legacy.

Discount Points- A percentage of the principal amount of a loan, collected by the lender at the time a loan is originated, to give the lender an additional yield.

Discount Rate- The interest rate charged when a member bank borrows money from the Federal Reserve Bank.

Down-payment- The part of the purchase price of property that the buyer is paying in cash; the difference between the purchase price and the financing.

Duplex- A structure that contains two separate housing units, with separate entrances, living areas, baths, and kitchens.

Dwelling- A building or a part of a building used or intended to be used as living quarters.

Earnest Money- A deposit that a prospective buyer gives the seller as evidence of his or her good faith intent to complete teh transaction.

Easement- An irrevocable right to use some part of another person’s real property for a particular purpose.

Egress- A means of exiting, a way to leave a property; the opposite of ingress.  The terms ingress and egress are most commonly used in reference to an access easement.

Encroachment- A physical intrusion onto neighboring property, usually due to a mistake regarding the location of the boundary.

Encumber- To place a lien or other encumbrance against the title to a property.

Encumbrance- A non-possessory interest in real property; a right or interest held by someone other than the property owner, which may be a lien, an easement, a profit, or a restrictive covenant.

Encumbrance, Financial- A lien.

Equity- 1. An owner’s unencumbered interest in his or her property; the difference between the value of the property and the liens against it. 2. A judge’s power to soften or set aside strict legal rules, to bring about a fair and just result in a particular case.

Escalation Clause- A cause in a contract or mortgage that provides for payment or interest adjustments (usually increases) if specified events occur, such as a change in the property taxes or in the prime interest rate. Also called an escalator clause.

Escrow- an arrangement in which something of value (such as money or a deed) is held on behalf of the parties to a transaction by a disinterested third party (an escrow agent) until specified conditions have been fulfilled.

Estate- 1. An interest in real property that is or may become possessory; either a freehold or a leasehold. 2. The property left by someone who has died.

Eviction- Dispossession or expulsion of someone from real property.

Execute- 1. To sign an instrument and take any other steps (such as acknowledgment) that may be necessary to its validity. 2. To perform or complete.

Executor-A person named in a will to carry out its provisions.

Express- Stated in words, whether spoken or written.

Fannie Mae- Popular name for the Federal National Mortgage Association (FNMA)

Feasibility Study- A cost-benefit analysis of a proposed project, often required by lenders before they make a loan commitment.

Fed- The Federal Reserve.

Fee Simple- The highest and most complete form of ownership, which is of potentially infinite duration. Also called a fee or a fee simple absolute.

FHA- Federal Housing Administration.

Fiduciary Relationship- A relationship of trust and confidence, where one party owes the other (or both parties owe each other) loyalty and a higher standard of good faith than is owed to third parties.  For example, an agent is a fiduciary in relation to the principal; husband and wife are fiduciaries in relation to one another.

Finance Charge- Any charge a borrower is assessed, directly or indirectly, in connection with a loan.

Financial Statement- a summary of facts showing the financial condition of an individual or a business, including a detailed list of assets and liabilities.

First Lien Position- The position held by a mortgage or deed of trust that has higher lien priority than any other mortgage or deed of trust against the property.

Fixture- An item that used to be personal property but has been attached to or closely associated with real property in such a way that it has legally become part of the real property.

Foreclosure- When a lien-holder causes property to e sold against the owner’s wishes, so that the unpaid lien can be satisfied from the sale proceeds.

Foreclosure, Judicial- 1. The sale of property pursuant to court order to satisfy a lien.  2. A lawsuit filed by a mortgagee or deed of trust beneficiary to foreclose on the security property when teh borrower has defaulted.

Foreclosure, Nonjudicial- foreclosure by a trustee under the power of sale clause in a deed of trust.

For Sale by Owner- A property that is being sold by the owner without the help of a real estate agent. Also called FSBO.

Freddie Mac- Popular name for the Federal Home Loan Mortgage Corporation (FHLMC)

Free and Clear-Ownership of real property completely free of any liens.

Gift Funds- Money that a relative (or other third party) gives to a buyer who otherwise would not have enough cash to close the transaction.

Ginnie Mae- The Government National Mortgage Association, GNMA

Grantee- One who receives a grant of real property.

Grantor- One who grants an interest in real property to another.

Homeowners Association- A nonprofit association made up of homeowners in a subdivision, responsible for enforcing the CC&Rs and managing other community affairs.

Homestead Law- a state law that provided limited protection against creditors’ claims for homestead property.

HUD- The U.S> Department of Housing and Urban Development

Implied- Not expressed in words, but understood from actions or circumstances.

Impound Account- A bank account maintained by a lender for payment of property taxes and insurance premiums on the security property; the lender requires the borrower to make regular deposits, and pays the expenses out of the account.  Also called a reserve account.

Improvements- Man-made additions to real property.

Income Ratio- A standard used in qualifying a buyer for a loan, to determine whether he or she has sufficient income’ the buyer’s debts and proposed housing expense should not exceed a specified percentage of his or her income.

Ingress- A means of entering a property; the opposite of egress.  The terms ingress and egress are most commonly used in reference to an access easement.

Instrument- A legal document, usually one that transfers title (such as a deed), creates a lien (such as a mortgage), or establishes a right to payment (such as a promissory note or contract).

Insurance, Hazard- Insurance against damage to real property caused by fire, flood, theft, or other mishap.  Also called casualty insurance.

Insurance, Homeowner’s- Insurance against damage to the real property and the homeowner’s personal property.

Insurance, Mortgage- Insurance that protects a lender against losses resulting from the borrower’s default.

Insurance, Private Mortgage (PMI)- Insurance provided by private companies to conventional lenders for loans with loan-to-value over 80%.

Insurance, Title- Insurance that protects against losses resulting from undiscovered title defects. An owner’s policy protects the buyer, while a mortgagee’s policy protects the lien position of the buyer’s lender.

Insurance, Title, Extended Coverage- Title insurance that covers problems that should be discovered by an inspection of the property (such as encroachments and adverse possession), in addition to the problems covered by standard coverage policies.  An extended coverage policy is sometimes referred to as a ALTA (American Land Title Association)policy.

Insurance, Title, Standard Coverage- Title insurance that protects against latent title defects (such as forged deeds) and undiscovered recorded encumbrances, but does not protect against problems that would only be discovered by an inspection of the property.

Interest- 1. A right or share in something 9such as a piece of real estate).  2. A charge a borrower pays to a lender for the use of the lender’s money.

Landlocked Property- A parcel of land without access to a road or highway.

Landlord- A landowner who has leased his or her property to another. also called a lessor.

Lease- A conveyance of a leasehold estate from the fee owner to a tenant; a contract in which one party pays the other rent n exchange for the possession of real estate.

Leasehold- A possessory interest in real property that has a limited duration, such as an estate for years or a periodic tenancy.

Legal Description- A precise description of a parcel of real property; may be a ot and block description, a metes and bounds description, or a government survey description.

Lender- A bank, savings and loan, or similar organization that invests other people’s funds in loans.

LID- Local Improvement District.

Lien- a non-possessory interest in real property, giving the lien-holder the right to foreclose if the owner doesn’t pay a debt owed to the lien-holder; a financial encumbrance on the owner’s title.

Lis Pendens- A recorded notice stating that there is a lawsuit pending that may affect title to the defendant’s real estate.

Listing- a written agency contract between a seller and real estate broker, stipulating that th ebroker will be paid a commission for finding (or attempting to find) a buyer for the seller’s property.  Also called a listing agreement.

Listing Broker- The broker who takes a listing, and thus represents the seller.

Listing, Exclusive- Either an exclusive agency listing or an exclusive right to sell listing.

Listing, Exclusive Agency- a listing agreement that entitles the broker to a commission if anyone other than the seller finds a buyer for the property during the listing term.

Listing, Exclusive Right to Sell- A listing agreement that entitles the broker to a commission if anyone-including the seller – finds a buyer for the property during the listing term.

Listing, Multiple- a listing (usually an exclusive right to sell listing) that includes a provision allowing the broker to submit the listing to his or her multiple listing service for dissemination to cooperating brokers.

Loan, Amortized- A oan that requires regular installment payments of both principal and interest (as opposed to an interest-only loan). It is fully amortized if the installment payments will pay off the full amount of the principal and all of the interest by the end of the repayment period.  It is partially amortized if the installment payments will cover only part of the principal, so that a balloon payment of the remaining principal balance is required at the end of the repayment period.

Loan, Conforming- A loan made in accordance with the standardized underwriting criteria of the major secondary market agencies, Fannie Mae and Freddie Mac, and which therefore can be sold to those agencies.

Loan, Construction- A loan to fiance the cost of constructing a building, usually providing that the loan funds will be advanced in installments as the work progresses.   Also called an interim loan.

Loan, Conventional- An institutional loan that is not insured or guaranteed by a government agency.

Loan, FHA- A loan made by an institutional lender and insured by the Federal Housing Administration, so that the FHA will reimburse the lender for losses that result if the borrower defaults.

Loan, Fixed-rate- A loan on which the interest rate will remain the same throughout the entire loan term.

Loan, Home Equity- A loan secured by the borrower’s equity in the home he or she already owns.

Loan, Interest-only- A loan that requires the borrower to pay only the interest during the loan term, with the principal due at the end of the term.

Loan, Purchase Money- 1. When the seller extends credit to a buyer to finance the purchase of the property, accepting a deed of trust or mortgage instead of cash.  Sometimes called a carry-back loan.  2. In a more general sense, any loan the borrower uses to buy the security property (as opposed to a loan secured by property the borrower already owns).

Loan, Seasoned- A loan with an established record of timely payment by the borrower.

Loan, VA- A home loan made by an institutional lender to an eligible veteran, where the Veterans Administration will reimburse the lender for losses if the veteran borrower defaults.

Loan Fee- A loan origination fee, an assumption fee, or discount points.

Loan-to-value Ratio (LTV)– The relationship between the loan amount and either the sales price or the appraised value of the property (whichever is less), expressed as a percentage.

Lock-in Clause- a cause iin a promissory note or land contract that prohibits prepayment before a specified date, or prohibits it altogether.

Lot- a parcel of and; especially, a parcel in a subdivision.

Market price- 1. The current price generally being charged for something in the marketplace.  2. The price actually paid for a property.

Maturity Date- The date by which a loan is supposed to be paid off in full.

MIP- Mortgage insurance premium

MLS- Multiple Listing Service

Mortgage- 1. An instrument that creates a voluntary lien on real property to secure repayment of a debt, and which ( unlike a deed of trust) of not include a power of sale, so it can only be foreclosed judicially; the parties are the mortgagor (borrower) and mortgagee (lender).  2. the term is often used more generally, to refer to either a mortgage or a deed of trust.  *** check under Loan

Mortgage, First- The mortgage on a property that has first lien position; the one with higher lien priority than any other mortgage against the property.

Mortgage, Junior- A mortgage that has lower lien priority than another mortgage against the same property.  Sometimes called a secondary mortgage.

Note- See note, promissory

Note, Demand- A promissory note that is due whenever the holder of the note demands payment.

Note, Promissory- a written promise to repay a debt; it may or may not be a negotiable instrument.

Notice of Default- A notice sent by a secured creditor to the debtor, informing the debtor that he or she has breached the loan agreement.

Notice of Sale- A notice stating that foreclosure proceedings have been commenced against a property.

Offer- When one person (the offeror) proposes a contract to another (the offeree); if the offeree accepts the offer, a binding contract is formed.

Offeree- One to whom a contract offer is made.

Offeror- One who makes a contract offer.

Option- A contract giving one party the right to do something, without obligating him or her to do it.

Option to Purchase- An option giving the optionee the right to buy property owned by the optionor at an agreed price during a specified period.

Origination Fee- A fee a lender charges a borrower upon making a new oan, intended to cover the administrative costs of making the loan.  Also called a loan fee.

Par- 1. The accepted standard of comparison; the average or typical rate or amount.  2. Face value; for example, a mortgage sold at the secondary market level for 97% of par has been sod for 3% less than its face value.

Parcel- A lot or piece of real estate, especially a specified part of a larger tract.

Planned Unit Development (PUD)- A development (usually residential) with small, clustered lots designed to leave more open space than traditional subdivisions have.

Plat- A detailed survey map of subdivision, recorded in the county where the land is located.  Subdivided property is often called platted property.

Point- One percent of the principal amount of the loan.

Portfolio- The mix of investments owned by an individual or company.

Possession- 1. The holding and enjoyment of property.  2. Actual physical occupation of real property.

Potable Water- Water that is safe to drink.

Power of Attorney- An instrument authorizing one person (the attorney in fact) to act as anothers agent, to the extent stated in the instrument.

Prepayment- Paying off part or all of a loan before payment is due.

Prepayment Penalty- A penalty charged to a borrower who prepays.

Prime Rate- The interest rate a bank charges its largest and most desirable customers.

Principal- 1. One who grants another person (an agent) authority to represent him or her in dealings with third parties.  2. One of the parties to a transaction (such as a buyer or seller), as opposed to those who are involved as agents or employees (such as a broker or escrow agent). 3. In regard to a loan, the amount originally borrowed, as opposed to the interest.

Principal Residence Property- Real property that is the owner’s home, his or her main dwelling.  Under the federal income tax laws, a person can only have one principal residence at a time.

Probate- A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; or, when there is no valid will, in which an administrator is appointed to distribute the estate to the heirs.

Property- 1. The rights of ownership in a thing, such as the right to use, possess, transfer, or encumber it.  2. Something that is owned.

Property Manager- A person hired by a property owner to administer, merchandise, and maintain property, especially rental property.

Proration- The process of dividing or allocating something (especially a sum of money or an expense) proportionately, according to time, interest, or benefit.

Public Record- The official collection of legal documents that individuals have filed with the county recorder in order to make the information contained in them public.

Purchase and Sale Agreement- A contract in which a seller promises to convey title to real property to a buyer in exchange for the purchase price.  Also called an earnest money agreement, deposit receipt, sales contract, or contract of sale.

Pure Competitive Market- A market in which prices rise and fall in response to supply and demand without outside restrictions.

Quiet Title Action- A lawsuit to determine who has title to a piece of property, or to remove a cloud from the title.

Real Estate Brokerage- A real estate broker’s business; the business of bringing a buyer and seller together and negotiating a sales contract between the two parties.

Real Estate Commission- A commission appointed by the Governor, consisting of the Director of the Department of Licensing and six commissioners; responsible for preparing and conducting the real estate licensing examinations.

Real Estate Contract- 1. A purchase and sale agreement.  2. A land contract.  3. Any contract having to do with real property.

Rea Estate Investment Trust (REIT)- A real estate investment business with at least 100 investors, organized as a trust.

Real Property- Land and everything attached to or appurtenant to it.  Also called realty or real estate.

Realtor- A real estate agent who is an active member of a state and local real estate board that is affiliated with the National Association of Realtors.

Reconveyance- Releasing the security property from the lien created by a deed of trust, by recording a deed of reconveyance.

Recording- Filing a document at the county recorder’s office, so that it will be placed in the public record.

Recording Numbers- The numbers stamped on documents when they’re recorded, used to identify and locate the documents in the public record.

Redemption- 1. When a defaulting borrower prevents foreclosure by paying the fu amount of the debt, plus costs.  2. When a mortgagor regains the property after foreclosure by paying whatever the foreclosure sale purchaser paid for it, plus interest and expenses.

Regulation Z- the Federal Reserve Board’s regulation that implements the Truth in Lending Act.

Rent- Compensation paid by a tenant to the landlord in exchange for the possession and use of the property.

Rent  Roll- A report on rent collections; a list of the total amount of rent earned, both collected and uncollected.

Rescission- When a contract is terminated and each party gives anything acquired under the contract back to the other party.

RESPA- Real Estate Settlement Procedures Act.

Right of Way-An easement that gives the holder the right to cross another person’s land.

Secondary Financing- Money borrowed to pay part of the required down-payment or closing costs for a first loan, when the second loan is secured by the same property that secures the first loan.

Security Deposit- Money a tenant gives a landlord at the beginning of the tenancy to protect the landlord in case the tenant defaults; the landlord may retain al or part of the deposit to cover unpaid rent or repair costs at the end of the tenancy.

Selling Broker- The broker responsible for procuring a buyer for real estate; may represent either the seller or the buyer.

Separate Property- Property owned by a married person that is not community property, includes property acquired before marriage or by gift or inheritance after marriage.

Settlement- 1. An agreement between the parties to a civil lawsuit, in which the plaintiff agrees to drop the suit in exchange for money or the defendant’s promise to do or refrain from doing something. 2. Closing.

Settlement Statement- A document that presents a final, detailed accounting for a real estate transaction, lising each party’s debits and credits and the amount each will receive or be required to pay at closing.  Also called a closing statement.

Short Plat- The subdivision of a parcel of land into four or fewer lots.

Special Assessment- A tax levied only against the properties that have benefited from a public improvement (such as a sewer or a street light), to cover the costs  of the improvement; creates a special assessment lien.

Subagent- A person that an agent has delegated authority to, so that the subagent can assist in carrying out the principal’s orders; the agent of a an agent.

Subdivision- 1. A piece of land divided into two or more parcels.  2. A residential development.

Subject to- When a purchaser takes property subject to a trust deed or mortgage, he or she is not personally liable for paying off the loan; in case of default, however, the property can still be foreclosed on.

Sublease- When a tenant grants someone else the right to possession of the leased property for part of the remainder of the lease term; as opposed to an assignment, where the tenant gives up possession for the entire remainder of the lease term.

Tax, Excise- A state tax levied on every sale of real estate, to be paid by the seller.

Tax, Property- 1. The general real estate tax.  2. Any ad valorem tax levied on real or personal property.

Tax, Credit- a credit that is subtracted directly from the amount of tax owed.

Tenancy- Lawful possession of real property; an estate.

Tenancy, Joint- A form of concurrent ownership in which the co-owners have unity of time, title, interest, and possession and the right of survivorship.

Tenant- Someone in lawful possession of real property; especially, someone who has leased property from the owner.

Tender- An unconditional offer by one of parties to a contract to perform him or her part of the agreement; made when the offeror believes the other party is breaching, it establishes the offeror’s right to sue if the other party doesn’t accept it.  Also called a tender offer.

Time is of the Essence- A clause in a contract that means performance on the exact dates specified is an essential element of the contract; failure to perform on time is a material breach.

Title- Lawful ownership of real property. Also, the deed or other document that is evidence of that ownership.

Title, Abstract of- A brief, chronological summary of the recorded documents affecting title to a particular piece of real property.

Title, Clear- A good title to property, free from encumbrances or defects; marketable title.

Title, Equitable- The vendee’s interest in property under a land contract.  Also called an equitable interest.

Title, Legal– The vendor’s interest in property under a land contract.

Title, Marketable- Title free and clear of objectionable liens, encumbrances, or defects, so that a reasonably prudent person with full knowledge of the facts would not hesitate to purchase the property.

Title Company- A title insurance company.

Title Report, Preliminary-A report issued by a title company, disclosing the condition of the title to a specific piece of property, before the actual title insurance policy is issue.

Title Search- An inspection of the public record to determine all rights and encumbrances affecting title to a piece of property.

Trust-A legal arrangement in which title to property (or funds) is vested in one or more trustees, who manage the property on behalf of the trust’s beneficiaries, in accordance with instructions set forth in the document establishing the trust.

Trustee- 1. A person appointed to manage a trust on behalf of the beneficiaries. 2. A neutral third party appointed in a deed of trust to handle the nonjudicial foreclosure process in case of default.

Trustee’s Sale- A nonjudicial foreclosure sale under a deed of trust.

Trustor- The borrower in a deed of trust. Also called the grantor.

Underwriting- In real estate lending, the process of evaluating a loan application to determine the probabilty that the applicant would repay the loan, and matching the risk to appropriate rate of return. Sometimes called a risk analysis.

Uniform Settlement Statement- A settlement statement required for any transaction involving a loan that is subject to the Real Estate Settlement Procedures Act (RESPA)

VA- Veterans Administration.

Value- The present worth of future benefits.

Value, Assessed- The value placed on property by the taxing authority (the county assessor, for example) for the purposes of taxation.

Value, Market- The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. (this is the definition from the Uniform Standards of Professional Appraisal Practice.) market value is also called fair market value, value in exchange, or objective value.

Variance- Permission (from the local zoning authority) to use property or build a structure in a way that violates the strict terms of the zoning ordinance.

Vested- A person who has a present, fixed right or interest in property has a vested right or interest, even though he or she may not have the right to possession until sometime in the future.

Void-Having no legal force or effect.

Yield- The return of profit to an investor on an investment, stated as a percentage of the amount invested.

Zone- An area of land set off for a particular use or uses, subject to certain restriction.

Zoning- Government regulation of the uses of property within specified areas.


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