Abstract of Title
A condensed version of the history
of title to land as such title is recorded in the county
clerk's records.
Abutting
The joining, reaching, or touching
of adjoining land. Abutting pieces of land have a common
boundary.
Acceleration Clause
A provision in a written mortgage,
note, bond or conditional sales contract that, in the
event of default, the whole amount of principal and
interest may be declared to be due and payable at
once.
Accretion
An addition to land through natural
causes.
Acknowledgment
A declaration made by a person to a
notary public, or other public official authorized to
take acknowledgements, that the instrument was executed
by him and that it was his free and voluntary
act.
Acre
A measure of land equal to 43,560
square feet.
Adjustable Rate
Mortgage
A mortgage loan whose interest rate
fluctuates according to the movements of an assigned
index.
Adjustments
Money that the buyer and sellers
credit each other at the time of closing. Often includes
taxes and down payment.
Administrator/Administratrix
A man/woman appointed by a court to
settle the estate of a deceased person when there is no
will.
Ad Valorem
Designates an assessment of taxes
against property. Literally, according to
value.
Adverse Possession
The right of an occupant of land to
acquire title against the real owner, where possession
has been actual, continuous, hostile, visible, and
distinct for the statutory period.
Affidavit
Written statement signed and sworn
to before some person authorized to take an
oath.
Agency
The legal relationship between a
principal and an agent. In real estate transactions,
usually the seller is the principal, and the broker is
the agent: however, a buyer represented by a broker
(i.e., buyer as principal is a growing trend. In an
agency relationship, the principal delegates to the agent
the right to act on his or her behalf in business
transactions and to exercise some discretion while so
acting. The agent has a fiduciary relationship with the
principal and owes to that principal the duties of
accounting, care, loyalty, and obedience.
Agent
A licensed representative who
assists the buyer or seller with advice, information
about current market conditions, and helps to negotiate
the sale.
Alienation Clause
A clause in a mortgage which gives
the lender the right to call the entire loan balance due
if the property is sold; due-on-sale clause.
Amenities
Non monetary benefits and
satisfactions derived from property ownership, such as a
pleasant view, pride in home ownership, etc.
Amortization
The operation of paying off
indebtedness, such as a mortgage, by
installments.
Amortized Mortgage
A mortgage which requires periodic
payments which include both interest and
principal.
Annual Membership
The amount that is charged annually
for having a line of credit available. Often charged
regardless of whether or not you use the
line.
Antitrust Laws
Feder a property.
Appraised Value
An estimate of the present
worth.
Appreciation
An increase in value or worth of
property. Opposite of depreciation.
Asking (list) price
The price placed on property for
sale.
Assessor
A local government official who
determines the value of the property for taxation
purposes.
Assignment
D>An estimate of the present
worth.
Appreciation
An increase in value or worth of
property. Opposite of depreciation.
Asking (list) price
The price placed on property for
sale.
Assessor
A local government official who
determines the value of the property for taxation
purposes.
Assignment
Transfer of one's rights to
another.
Assumable Mortgage
An existing mortgage that can be
taken over by the buyer on the same terms given to the
original borrower.
Assumption of Mortgage
The transfer of title to property to
a grantee wherein he assumes liability for payment of an
existing note secured by a mortgage against the property;
should the mortgage be foreclosed and the property sold
for a lesser amount than that due, the grantee-purchaser
who has assumed and agreed to pay the debt secured by the
mortgage is personally liable for the deficiency. Before
a seller may be relieved of liability under the existing
mortgage, the lender must accept the transfer of
liability for payment of the note. Also known as simple
assumption.
Attachment
Method by which a debtor's property
is placed in the custody of the law and held as security
pending outcome of a creditor's suit.
Auction
A public sale of property to the
highest bidder.
Balloon Mortgage
A mortgage where the final payment
is considerably larger than the preceding
payments.
Balloon Payment
A lump sum payment for the unpaid
balance of the loan.
Bill of Sale
A written instrument given to pass
title to personal property.
Blanket Mortgage
One mortgage on a number of parcels
of real property.
Blockbusting
The illegal practice of inducing
panic selling in a neighborhood by making representations
of the entry, or prospective entry, of members of a
minority group.
Breach of Contract
Failure, without legal excuse, of
one of the parties to a contract to perform according to
the contract.
Brokerage
For a commission or fee, bringing
together parties interested in buying, selling,
exchanging, or leasing real property.
Building Line
A line fixed at a certain distance
from the front and/or sides of a lot beyond which no
structure can project.
Bundle of Rights
Ownership in real property implies a
group of rights, such as the right of occupancy, use and
enjoyment, the right to sell in whole or in part, the
right to control the use, the right to bequeath, the
right to lease any or all of the rights, the right to the
benefits derived by occupancy and use of the property,
etc.
Buy Down
A cash payment, usually measured in
points, to a lender in order to reduce the interest rate
a borrower must pay.
Buyer's Broker
A licensee who has declared to
represent only the buyer in a transaction, regardless of
whether compensation is paid by the buyer or the listing
broker through a commission split. Some brokers conduct
their business by representing buyers only.
Calendar Year
A year which uses the actual number
of days in each month for a total of 365 days in a year
(366 days in a leap year).
Cap
The maximum allowable increase, for
either payment or interest rate, for a specified amount
of time on an adjustable rate mortgage.
Capitalization
The estimation of the value of
income producing property by dividing the annual net
income by the Capitalization Rate.
Capitalization Rate
The rate of expected return on
investment property. A ratio of income to
value.
Ceiling
The maximum allowable interest rate
over the life of the loan of an adjustable rate
mortgage.
Chain of Title
A history of conveyances and
encumbrances of a property from some starting point,
whereby the present owner derives title.
Chattel
Personal property.
Clear Title
A land title that doesn't have any
liens (including a mortgage) against it.
Closing
The conclusion of the sales
transaction when the seller transfers title to the buyer
in exchange for consideration.
Closing Costs
Extra expenses beyond the purchase
price that are paid at closing. This includes legal fees
and mortgage fees.
Closing Statement
A detailed written summary of the
financial settlement of a real estate transaction,
showing all charges and credits made, and all cash
received and paid out.
Cloud on Title
A claim or encumbrance that may
effect title to land.
Collateral
Something of value deposited with a
lender as a pledge to secure repayment of a
loan.
Commingling
The illegal practice of combining or
mixing clients' funds with the agent's own
funds.
Commission
The compensation paid to a licensed
real estate broker or by the broker to the salesman for
services rendered. Usually a percentage of the selling
price of the property.
Community Reinvestment
Act
The federal law which requires
federally regulated lenders to describe the geographical
market area they serve. Deposits from that area are to be
reinvested in that area whenever practical.
Comparables
Properties which are similar to a
particular property and are used to compare and establish
a value for that property.
Condemnation
The act of taking private property
for public use, through due process under the right of
eminent domain, with compensation to the
owner.
Condominium
A form of real estate, usually a
dwelling with individual ownership of separate portions
of the building plus shared ownership of the common
areas.
Consideration
The price or subject matter which
induces a contract; may be in money, commodity, exchange,
or a transfer of personal effort.
Contract
A legally enforceable agreement to
do, or not to do, a particular thing for a
consideration.
Contract for Deed
A contract for the sale of real
estate where the deed (title) of the property is
transferred only after all the payments have been made.
Also known as a land contract, agreement of sale,
conditional sales contract, or installment
contract.
Contract for Exchange of Real
Estate
A contract for the sale of real
estate in which the consideration is paid wholly or
partly in real property instead of cash.
Contract of Sale
The agreement between the buyer and
seller on the purchase price, terms, and conditions
necessary to both parties to convey the title to the
buyer.
Conventional Loan
A real estate loan which is not
insured by the FHA or guaranteed by the VA.
Conveyance
Written instrument, such as a deed
or lease, that evidences transfer of some ownership
interest in real property from one person to
another.
Cost Approach to Value
An estimate of value based on
current construction costs, less depreciation, plus land
value
Counter Offer
An offer made in response to a
previous bid.
Credit Limit
The maximum amount that you can
borrow under a home equity plan.
Cul-de-Sac
A dead end street which widens
sufficiently at the end to permit an automobile to make a
"U" turn.
Debenture
Bonds issued without
security.
Debt Service
The total amount of credit card,
auto, mortgage or other debt upon which you must
pay.
Debt-Service Ratio
The measurement of debt payments to
gross household income which may include, in addition to
the main wage earner's salary, salaries of other wage
earners, commissions, bonuses, overtime,
etc.
Deceptive Trade Practices
Act
Part of the federal Consumer
Protection Act originally passed in 1973 and made
specifically applicable to real estate in 1975,
specifically prohibiting a lengthy number of false,
misleading and deceptive acts or practices.
Deed
A written instrument by which title
to land is conveyed.
Deed of Trust
The legal instrument used in lieu of
a mortgage, in which the property is conveyed in trust to
a trustee to be held as security for a loan.
Default
Non-performance of a duty arising
under a contract or otherwise.
Defeasanse
A provision or condition in a deed
or in a separate instrument which, being performed,
renders the instrument void.
Delivery
The actual transfer of the deed, or
an act of a seller showing intent to make a deed
effective, without which, there is no transfer of title
to the property.
Depreciation
A loss in value.
Descent
Acquisition of property through
inheritance laws when there is no will.
Devise
A transfer of real estate by will or
last testament.
Discount Points (or
Points)
The amount paid either to maintain
or lower the interest rate charged. Each point is equal
to one percent (1%) of the loan amount.
Discount Rate
(1) The rate charged member banks
who borrow from the Federal Reserve System.
(2) The rate used to convert future
income into present value.
Dispossess
To oust from land by legal
process.
Down Payment
An amount of money the buyer pays
which is the difference between the purchase price and
the mortgage amount.
Dual Agency
Representing the buyer and the
seller in the same transaction by the same agent. Since
there is an inherent conflict in fiduciary obligations to
two different principals, dual agency, at best, is a
risky undertaking.
Due on Sale
A clause in a mortgage agreement
providing that, if the mortgagor (the borrower) sells,
transfers, or, in some instances, encumbers the property,
the mortgagee (the lender) has the right to demand the
outstanding balance in full.
Duress
Forcing action or inaction against a
person's will.
Earnest Money
A deposit made by the buyer as
evidence of good faith in offering to purchase real
estate and to secure performance of the contract. Earnest
money is typically held by a title company, in an escrow
account, during the period between acceptance of the
contract and the closing.
Easement
The right to use the land of another
for a specific purpose, such as a right of way for
utilities.
Economic Obsolescence
Loss of value of real property due
to external forces or events; i.e.., a sewer plant is
built next door to the subject property.
Effective Interest Rate
The cost of credit on a yearly basis
expressed as a percentage. Includes up-front costs paid
to obtain the loan, and is, therefore, usually a higher
amount than the interest rate stipulated in the mortgage
note. Useful in comparing loan programs with different
rates and points.
Emblements
Annual crops produced by
cultivation. They are deemed to be personal
property.
Eminent Domain
The right of government to take
private property for public use, through court action
known as condemnation.
Encroachment
A fixture, or structure, such as a
wall or fence, which invades a portion of a property
belonging to another.
Encumbrance
A cloud against clear, free title to
the property which does not prevent conveyance, such as
unpaid taxes, easements, deed restrictions, mortgage
loans, etc.
Endorsement
Writing one's name, either with or
without additional words, on a negotiable instrument, or
on a paper attached to it.
Equal Credit Opportunity
Act
The 1974 federal law (Title VII of
the Consumer Credit Protection Act) which requires
fairness and impartiality without discrimination on the
basis of race, color, religion, national origin, sex or
marital status, or receipt of income from public
assistance programs in the extension of credit, and good
faith exercises of any right under the Consumer Credit
Protection Act (i.e.. the creditor must state reasons for
denial of credit).
Equity
The difference in dollars between a
house's value and the mortgage amount.
Escalator Clause
The clause in a contract permitting
adjustments of the payments.
Escheat
The reversion of property to the
state in the event the owner thereof dies without leaving
a will and has no hiers to whom the property may pass by
lawful.
Escrow
A trust arrangement by which none or
more parties deposit things of value with an authorized
escrow agent in accordance with the terms of a real
estate agreement.
Escrow Account
A third party account that holds
money safely while a sale is in progress.
Estimate of Value
An appraisal; the appraised
value.
Et Ux
Abbreviation for "et uxor", meaning
"and wife".
Exception
As used in the conveyance of real
estate, an exception is the exclusion of some part of the
property conveyed, with title of that excepted part
remaining with the grantor. For example, in most
subdivision developments, mineral rights are not conveyed
to the purchaser of a lot, but remain the property of the
developer.
Exclusive Agency
A listing agreement which gives the
listing agent the right to sell the property for a
specified time. The owner reserves the right to sell the
property himself without paying a commission to the
agent. Brokers run the risk of investing their time,
effort, and money in a listing that, even if sold through
their marketing efforts, does not produce a
commission.
Exclusive Right to Sell
A listing agreement which gives the
listing agent the right to sell the property for a
specified time, with the right to collect a commission if
the property is sold by anyone, including the owner,
during the listing period.
Executor/Executrix
The man/woman appointed in a will to
carry out the requests of the will.
Fair Housing Laws
Federal, state, and local laws,
particularly Title VIII of the 1968 Civil Rights Act,
Title VI of the Civil Rights Act of 1964, and the Civil
Rights Act of 1866, which forbid discrimination because
of race, sex, color, religion, or national origin, in the
selling or renting of homes or apartments, and in other
specified transactions. These laws have been recently
been expanded to include familial status (having
children) and disabilities (Americans with Disabilities
Act).
Fee Simple Estate
The most complete form of ownership
of real property; absolute ownership. Commonly used to to
denote a property where the owner has undivided title to
the land on which the property is situated.
FHA
The Federal Housing Administration
which insures mortgage loans made by approved lenders, in
accordance with FHA regulations.
Fiduciary
The relationship of trust, honesty
and confidence between agent and principal; the faithful
relationship owed by an agent to the
principal.
First Mortgage
A mortgage which is in first lien
position, taking priority over all other liens (which are
financial encumbrances).
Fixed Rate Mortgage
A mortgage with an interest rate and
monthly payment that doesn't vary for the term of the
loan.
Fixture
Personal property which has been
attached to real estate so as to become part of the real
property. The article must meet at least one of three
conditions:
1. Attached in a permanent
manner.
2. Specially adapted to the
property. or
3. Intentionally made part of the
real property.
Foreclosure
A legal process instituted by a
mortgagee or lien creditor after the debtor's
default.
Fraud
A misstatement of a material fact
made with intent to deceive or made with reckless
disregard of the truth, and which actually does
deceive.
Front Foot
One linear foot (12 inches) along
the street side of a lot.
Functional Obsolescence
Loss of value of real property
caused by modernization or changing tastes or standards;
i.e.. single bath, inadequate closet space,
etc.
General Lien
A lien that includes all the
property owned by a debtor, rather than a specific
property.
General Warranty Deed
A deed in which the grantor fully
warrants good and clear title to the property. A general
warranty deed offers the most protection of any
deed.
Good Faith Estimate
A written estimate of closing costs
which a lender must provide you within three days of
submitting an application.
Government Survey
Method
A system of land description which
uses meridians (north and south lines) and base lines
(east and west lines). Areas include quadrangles (24
miles on each side), townships (6 miles on each side),
and sections (1 mile on each side). Also known as the
Rectangular Survey Method.
Grace Period
A period of time during which a loan
payment may be paid after its due date but not incur a
late penalty. Such late payments may be reported on your
credit report.
Grantee
A person to whom real estate is
conveyed; the buyer.
Grantor
A person conveying real estate by
deed; the seller.
Gross debt service
The amount of money needed to pay
principal, interest and taxes, and sometimes energy
costs. If the dwelling unit is a condominium, all or a
portion of common fees are excluded, depending on what
expenses are covered.
Gross Income
For qualifying purposes, the income
of the borrower before taxes or expenses are
deducted.
Gross Lease
A lease of property where the
landlord pays charges regularly incurred in ownership,
such as taxes, insurance, utilities, and
repairs.
Habendum Clause
The "to have and hold" clause which
defines or limits the quantity of the estate granted in
the premises of the deed.
Hazard Insurance
A contract between purchaser and an
insurer, to compensate the insured for loss of property
due to hazards (fire, hail damage, etc.), for a
premium.
Hereditaments
Property, personal and real, capable
of being inherited.
Highest and Best Use
The particular use of a real
property which will produce the greatest financial
return. The optimum use of a site as used in
appraisal.
Home Equity Loan
A fixed or adjustable rate loan
obtained for a variety of purposes, secured by the equity
in your home. Interest paid is usually tax-deductible.
Often used for home improvement or freeing of equity for
investment in other real estate or investment.
Recommended by many to replace or substitute for consumer
loans whose interest is not tax-deductible, such as auto
or boat loans, credit card debt, medical debt, and
education loans.
Homestead
Land, and the improvements thereon,
designated by the owner as his homestead and, therefore,
protested by state law from forced sale by certain
creditors of the owner.
Improvements
Valuable additions to the land, such
as buildings, fences, roads, etc., which increase the
value of the property.
Income Approach to
Value
An estimate of value based on the
monetary returns that a property can be expected to
generate; capitalization.
Index
A number, usually a percentage, upon
which future interest rates for adjustable rate mortgages
are based.
Inspection Clause
A stipulation in an offer to
purchase that makes the sale contingent on the findings
of a home inspector.
Insurable Title
A title which a title company will
insure.
Interest
(1) The sum paid in return for the
use of money; could be considered rent for the use of
money. (2) The type and extent of ownership in
property.
Interest Rate
The periodic charge, expressed as a
percentage, for use of credit.
Intestate Legal designation of a
person who has died without leaving a valid will.
Intimidation As defined in the fair housing laws, it is
the illegal act of coercing, intimidating, threatening,
or interfering with a person in exercising or enjoying
any right granted or protected by federal, state or local
fair housing laws.
Joint Tenancy
A type of ownership in which two ore
more people have an undivided interest in a property,
with the right of survivorship. Upon the death of one
owner, his/her interest passes to the remaining owners
and not to the heirs or the devises of the
deceased.
Judgment
The official and authentic decision
of a court of justice concerning the respective rights
and claims of the parties to an action or
suit.
Laches
Delay or negligence in asserting
one's rights.
Latent Defect
Hidden structural defects and
flaws.
Lease
A contract between a landlord and a
tenant conveying the use and/or occupation of the
landlord's property.
Legal Description
A description of a specific parcel
of real estate which is acceptable to the courts in that
state, and which will allows an independent surveyor to
locate and identify it.
Less Favorable
Treatment
Any time a person is treated
differently on the basis of race, sex, religion, color,
familial status, disability, or national origin, either
by action or inaction, in the selling or leasing of real
property, it is a violation of the Fair Housing Laws.
Also known as unequal treatment or different
treatment.
Lessee
Tenant leasing
property.
Lessor
One who leases property to a
tenant.
Leverage
The use of borrowed funds to finance
an investment and to magnify the rate of
return.
Licensee
A person licensed by the Real Estate
Commission to engage in real estate brokerage, either as
a broker or as a salesman.
Lien
A monetary claim against a property.
These should be settled before the sale is
finalized.
Lien Theory State
States where legal title of
mortgaged property resides with the mortgagor (borrower),
with the mortgage as a lien against the
property.
Life Estate
An interest in property only for the
duration of someone's life.
Lis Pendens
A notice indicating that legal
action is pending on a property.
Listing Agreement
The legal agreement between the
listing agent/broker and the vendor, setting out the
services to be rendered, describing the property for
sale, and stating the terms of payment.
Lock or Lock In
A commitment you obtain from a
lender assuring you a particular interest rate or feature
or a definite time period. Provides protection should
interest rates rise between the time you apply for a
loan, acquire loan approval, and, subsequently, close the
loan and receive the funds you have
borrowed.
Margin
An amount, usually a percentage,
which is added to the index to determine the interest
rate for adjustable rate mortgages.
Marginal Land
Property which is barely profitable
to use.
Market Approach to
Value
An estimate of value based on the
actual sales prices of comparable
properties.
Market Value
The price that a willing buyer and a
willing seller, both given full information, and neither
under pressure to act, would agree upon. Also known as
Fair Market Value.
Mechanic's Lien
Claim for purpose of securing
priority payment for work and/or materials furnished in
erecting or repairing a building.
Metes and Bounds
A system of land description using
distance (metes) and angles/compass directions (bounds),
beginning and ending at the same point.
Minimum Payment
The minimum amount that you must
pay, usually monthly, on a home equity loan or line of
credit. In some plans, the minimum payment may be
"interest only," (simple interest). In other plans, the
minimum payment may include principal and interest
(amortized).
Minority
As defined in the Civil Rights Act
of 1968 as part of the Fair Housing Laws "'minority'
means any group, or any member of a group, that can be
identified either: (1) by race, color, religion, sex,
disability, or national origin; or (2) by any other
characteristic (such as familial status) on the basis of
which discrimination is prohibited by a federal, state,
or local fair housing law.
Misrepresentation
A false statement, or concealment,
of material fact with the intention of inducing action of
another.
Monument
A fixed object or point, either
natural or man-made, used in making a
survey.
Mortgage
A contract providing security for
the repayment of a loan, registered against property,
with stated rights and remedies in the event of default.
Lenders consider both the property (security) and
financial worth of the borrower (covenant) in deciding on
a mortgage loan.
Mortgage Banker
Originates mortgage loans, loaning
you their funds and closing the loan in their
name.
Mortgage Broker
A person or company having contacts
with financial institutions or individuals wishing to
invest in mortgages.
Mortgage Loan
A loan which utilizes real estate as
security or collateral to provide for repayment should
you default on the terms of your loan.
Mortgagee
The lender in a mortgage loan
transaction.
Mortgagor
The borrower in a mortgage loan
transaction.
Multiple Listing
Service
A system by which a number of real
estate firms share information about homes that are for
sale.
Negative Amortization
Amortization in which the payment
made is insufficient to fund complete repayment of the
loan at its termination. Usually occurs when the increase
in the monthly payment is limited by a ceiling. The
portion of the payment which should be paid is added to
the remaining balance owed. i.e balance owed may
increase, rather than decrease over the life of the
loan.
Net Lease
A lease in which the tenant pays
such expenses as taxes, insurance, repairs, utilities,
etc.
Net Listing
A price, which must be expressly
agreed upon, below which the owner will not sell the
property and at which the broker will not receive a
commission; the broker receives the excess over and above
the net listing price as commission. The broker in this
type of listing will have a very hard time maintaining
his fiduciary responsibilities to his seller since his
interests are potentially at odds with the interests of
the seller.
Note
A written instrument of credit
attesting to a debt and promise to pay.
Obsolescence
A loss in value of real property
caused by changes either internal or external to the
property.
Open House
An opportunity for prospective
buyers to view a house in a low pressure
environment.
Open Listing
A listing under which the principal
(owner) reserves the right to list his property with
other brokers.
Option
The right to purchase property
within a definite time at a specified price. There is no
obligation to purchase, but the seller is obligated to
sell if the option holder exercise the right to purchase.
For the option to be valid, it must include
consideration.
Origination Fee
A fee charged by lenders, in
addition to interest, for services in connection with
granting of a loan. Usually a percentage of the loan
amount.
Panic Peddling
The illegal practice of inducing
panic selling in a neighborhood by making representations
of the entry, or prospective entry, of members of a
minority group.
Party Wall
Wall erected on line between
adjoining properties for the use of both
properties.
Percentage Lease
Lease in which all or part of rental
is a specified percentage of gross income from total
sales made upon the premises.
Person
An individual, a partnership, or a
corporation, foreign or domestic.
Personal Property
Property which is tangible, movable,
and not fixed to the land. Also called chattel and
personalty.
Personalty
Personal property;
chattel.
Physical Deterioration
The loss of value to real property
from all causes due to the action of the elements and old
age. Physical deterioration can be either curable or
incurable.
PITI
Principal, Interest,Taxes and
Insurance.
Plat Book
A record of recorded subdivisions of
land.
Police Power
The authority of a government to
adopt and enforce law governing the use of real estate
based on the need to promote public safety, health, and
general welfare.
Power of Attorney
A written authorization by a person
to another person to act for him on his
behalf.
Prepayment
Paying off all or part of the
mortgage before the scheduled date.
Prepayment Clause in a
Mortgage
Statement of the terms upon which
the mortgagor (borrower) may pay the entire or stated
amount on the mortgage principal at some time prior to
the due date.
Prepayment Penalty
A fee paid to the lending
institution for paying a loan prior to the scheduled
maturity date.
Primary Mortgage Market
Lenders who originate loans and
makes funds available directly to the
borrowers.
Prime Rate
The interest, or discount rate
charged by a commercial bank to its largest and strongest
customers.
Principal
The amount of money owed to the
lender not including interest.
Principle of Conformity
An appraisal principle which holds
that the maximum value is realized when a reasonable
degree of homogeneity (sameness) exists in a
neighborhood.
Private Mortgage Insurance
(PMI)
Default insurance on conventional
loans, normally insuring the top 20%-25% of the loan and
not the whole loan.
Pro-Rate
To divide or distribute
proportionally. At closing, various expenses such as
taxes, insurance, interest, rents, etc. are prorated
between the seller and buyer.
Puffing
Non-factual or extravagant
statements and opinions made to enhance the perceived
desirability of a property. The is a fine line between
legal puffing and illegal misrepresentation, and puffing
is best avoided. An example of puffing would be, "This
home has the best view in the city". Also known as
Puffery.
Purchase Offer
A document that lists the price,
terms and conditions under which a buyer is willing to
purchase a property.
Qualify
To meet a mortgage lender's approval
requirements.
Qualifying Ratios
Comparisons of a borrower's debts
and gross monthly income.
Quit Claim Deed
A deed that conveys whatever title,
if any, a grantor has, but contains no warranties of
ownership.
Ready, Willing and Able
A buyer who is prepared to buy on
the seller's terms and has the financial capacity to do
so.
Real Estate
Refers to land and improvements and
the rights to own or use them.
Real Estate Board
A non profit organization
representing local real estate agents/brokers and
salespeople, which provides services to its members and
maintains and operates the Multiple Listing Service in
the community.
Real Property
Refers to the right to own land and
improvements. Commonly used interchangeably with Real
Estate and Realty.
Realty
Refers to land and buildings and
other improvements from a physical standpoint. Real
Estate and Real Property tend to be used interchangeably
with Realty in everyday usage.
Reciever
Court-appointed custodian who holds
property for the court, pending final disposition of the
matter before the court.
Recorded Plat
A subdivision map filed with the
county recorder's office that shows the location and
boundaries (lot and block number) of individual parcels
of land.
Recording
The act of entering in the public
records, the written record of title to real property,
thereby giving constructive notice to the
public.
Recovery Fund
A fund maintained by the Real Estate
Commission which upon court order is used to reimburse
the public for monetary loss due to illegal acts of
licensees.
Redlining
The illegal practice of refusing to
originate mortgage loans, or limiting their number, in
certain neighborhoods on the basis of racial or ethnic
composition.
Refinancing
To apply for a new mortgage in order
to gain better terms, usually either a lower interest
rate or a different principal amount.
Regulation 'Z'
Truth in lending law developed by
the Federal Reserve System which requires lenders to
provide full disclosure of the terms of the loan,
including interest rates expressed as an annual
percentage rate (APR).
RELA
Real Estate License
Act.
Release
To relinquish an interest or claim
to a piece of property.
Remainder
The future interest in an estate
which takes effect after the termination of another
estate, such as a life estate; what is left at the
termination of a life estate.
Reservation
A right reserved by a grantor in the
sale or lease of a property. In a sale, the title of all
property passes to the grantee, but the use may be
reserved for the grantor.
RESPA
Real Estate Settlement Procedures
Act is a federal law which deals with the procedures to
be followed in a real estate closing, and is intended to
make borrowers more knowledgeable about possible costs
and charges.
Restrictions
Limitations on the use or occupancy
of real estate contained in a deed or in local ordinances
pertaining to land use.
Riparian Owner
One who owns land bounding upon a
river or water course (stream, creek, bayou,
etc.).
Sales Contract
A written agreement stating the
terms of the sale agreed to by both buyer and
seller.
Secondary Mortgage
Market
Buying and selling of existing
mortgage loans, designed to provide additional liquidity
for lenders.
Security Interest
An interest that a lender takes in
the borrower's property to assure repayment of a
debt.
Self Amortized Loan
A loan which will retire the debt by
systematic payments of principal and interest, so that at
the end of the loan period, the balance will be
zero.
Servicing a Loan
The ongoing process of collecting
your monthly mortgage payment, including accounting for
and payment of your yearly tax and/or homeowners
insurance bills.
Set Back
The distance a building must be set
back from the property lines in accordance with local
zoning ordinances or deed restrictions.
Simple Interest
Interest computed only on the
principal balance.
Special Warranty Deed
A warranty deed which, instead of
warranting the title from sovereignty of the soil to the
last grantee, merely warrants the title against every
person whomsoever lawfully claiming or to claim the same,
or any part thereof, by, through or under the
grantor.
Specific Lien
A claim that only applies to or
affects a certain property or group of
properties.
Specific Performance
Carrying out of the precise terms
agreed upon in a contract.
Statute of Frauds
The law which requires among other
things, that all contracts transferring real estate, or
for the leasing of property for over one year, must be in
writing to be enforceable.
Statutory Year
A year composed of twelve months,
each with thirty (30) days, for a total of 360 days in a
statutory year. Also known as a banker's
year.
Steering
The illegal practice of directing
members of minority groups to, or away from, certain
areas or neighborhoods.
Subpoena
A legal process ordering a witness
to appear and give testimony or to present documents
under penalty of law.
Substitution, Principle
of
The principle which states that a
buyer will pay no more for a property than the cost of an
equally desirable alternative property.
Suit for Specific
Performance
A legal action brought by either a
buyer or a seller to enforce performance of the terms of
a contract.
Tenancy in Common
A type of ownership in which two or
more people have an undivided interest in property,
without the right of survivorship. Upon death of one of
the owners, his/her interest passes to his.her heirs or
devises.
Tenement
Everything that may be occupied
under a lease by a tenant.
Term
The actual life of a mortgage, at
the end of which the mortgage becomes due and payable
unless the lender renews the mortgage.
Time is of the Essence
A clause, which if included in a
contract, makes failure to perform by a specified date a
material breach or violation of the
contract.
Timeshare
An arrangement under which a
purchaser receives an interest in real property and the
right to use an accommodation or ammenities, or both, for
a specified period and on a recurring basis. Used
primarily for selling vacation properties.
Title
The right of ownership of a
property.
Title Company
A company that provides title
insurance policies. In Texas title companies also act as
escrow agents, conduct title searches and hold
closings.
Title Insurance
Protection for lenders or homeowners
against financial loss resulting from legal defects in
the title.
Title Search
Checks all the records relating to
the property to determine whether the seller can sell the
property, and can do so free of liens.
Title Theory State
The system in which the lender has
legal title to the mortgaged property and the borrower
has equitable title.
Torrens System
A system of land registration in
which clear title is established with a governmental
authority, which issues title certificates to
owners.
Townhouse
A dwelling unit usually with two or
three floors, and shared walls. It can be individually
owned, a condominium, a cooperative, or rental
property.
Trustee
One who as agent for others handles
money or holds title to their land.
Underwriting
The process of verifying data and
approving a loan.
Usury
Charging more than the rate of
interest allowed by law.
VA
The Veterans Administration, a
federal agency which guarantees loans made to qualified
veterans on approved property.
Variable Rate
An interest rate that changes
periodically in relation to an index. Payments may
increase or decrease accordingly.
Vendee
Purchaser.
Vendor
Seller.
Void
Having no legal force or effect;
legally invalid.
Voidable
A contract which appears valid and
enforceable on the surface, but may be declared invalid
by one of the parties, such as a contract entered into by
a minor.
Waiver
The intentional or voluntary
relinquishment of a known claim or right.
Writ of Execution
A court order which authorizes and
directs the proper officer of the court (usually the
sheriff) to carry into effect the judgment or decree of
the court.
Zero Lot Line
A term generally used to describe
the positioning of a structure on a lot so that one side
rests directly on the lot's boundary line (no set back).
Where allowed by zoning and/or deed restrictions, it is
used for "garden homes".
Zoning
Exercise of police power of city in
regulating and controlling the character or use of
property.