Glossary of Real Estate Terms

ABSTRACT OF TITLE - A compilation of recorded documents related to a property often referred to as a Preliminary title report.

ACRE - 43,560 square feet of land. It is sometimes used in place of due-on-sale.

ADDENDUM - An addition that adds or modifies an existing contract or agreement.

ADVANCE FEE - A fee charged by a broker to a seller to cover all or a portion of the broker's costs of promoting the property.

AMORTIZED LOAN - A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan.

The gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest.

APPRAISAL - An estimate of value based upon a factual analysis of a property or home.

APPRECIATION - An increase in value of real estate.

ASSUMPTION OF MORTGAGE - The taking of title to property by a grantee, wherein he or she assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property; becoming a co-guarantor for the payment of a mortgage or deed of trust note.

CLOSING - The date on which a property legally changes hands from seller to buyer.

COMPARABLE MARKET ANALYSIS (CMA) - Estimated resale value of a property usually calculated by recently sold propertites with similar location, size, etc.

CONTINGENCY - An condition that must occur in order for an agreement to be binding.

CONVENTIONAL MORTGAGE - A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed.

COUNTER-OFFER - A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer.

(GRANT) DEED (of TRUST) - Written instrument which, when properly executed and delivered, conveys title.

EARNEST MONEY DEPOSIT - Deposit made by a purchaser of real estate as evidence of good faith.

EASEMENT - The right or privilege to use another individual's property.

ENCROACHMENT - A structure or portion of a structure built on another individual's property.

EQUITY - The interest or market value of real property less all debt including liens.

ESCROW - The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract.

EXPOSURE - The degree to which a property for sale is made noticeable to potential buyers, through advertising, multiple listing services, etc.

FHA LOAN - A loan which has been insured by the federal government guaranteeing its payment in case of default by the borrower.

FEE APPRAISAL - The act or process of estimating values of real estate or any interest therein for a fee.

FORECLOSURE - A process to retract all rights, title, and interest of the owner(s) of property.

GRANTEE - Person receiving interest in property.

GRANTOR - Person giving up an interest in property.

HOME INSPECTION - A review of the physical condition of a home by an experienced individual.

JUDGEMENT - A decision of a court of law where money judgements can become a lien on real property of the defendent.

LAND CONTRACT - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer.

LIEN - A legal claim against a property used to secure the payment of debt, either voluntary (mortgage), involuntary (judgement), or operation of law (property tax lien).

LOAN-to-VALUE RATIO - The percentage of the amount of a loan to the value or selling price of real property.

MARKETABLE TITLE - Merchantable title; title either free and clear of objectionable liens or encumbrances or still sellable despite them.

MULTIPLE LISTING SERVICE (MLS)- Multiple Listing is the name given a service performed by the Local Board of Realtors to expose properties to a wider market base.

NOTARTY PUBLIC - A person that is authorized by law to certify documents and signatures as valid.

ORIGINATION FEE - The amount charged for processing a proposed mortgage loan. Ususally about 1 percent.

PERSONAL PROPERTY - Any property which is not real property (i.e. money, savings accounts, appliances, boats, etc.).

PROMISSORY NOTE - Following a loan commitment from the lender, the borrower signs a note promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment.

PURCHASE AGREEMENT - An agreement between a buyer and seller for the purchase of real estate.

REAL PROPERTY - Land and whatever by nature or artificial annexation is a part of it.

SPECIAL ASSESSMENT - Legal charge against real estate by a public authority to pay cost of public improvements such as: street lights, sidewalks, street improvements, etc.

SUBJECT-TO - The transfer of title without paying off the entire debt.

TITLE - Evidence of ownership.

TRUSTEE - One holding property in trust of another party. Often the bank on a Deed of Trust.

TRUSTEE SALE - An auction of property in foreclosure to repay debt to creditor that filed notice of default and then notice of trustee sale.

TRUSTOR - On a Deed of Trust, the borrower.

TRUST ACCOUNT - An account separate and apart and physically segregated from broker's own funds, in which broker is required by law to deposit all funds collected for clients.

VA LOAN - A loan guaranteed by the Veteran's Administration insuring payment in case of default by the borrower. Available to qualified veterans.

VAPOR BARRIER - The material used to prevent moisture from penetrating walls or floors.

WARRANTY DEED - A deed used to convey real property which contains warranties of title and quiet possession, and the grantor agrees to defend the premises against the lawful claims of third persons.