Real estate glossary terminologies used throughout the nation is pretty universal. For example, “title insurance,” which protects your property against hidden liens or potential ownership issues, always means “title insurance.” However, some words while describing or relating to the same thing often differ considerably in various parts of the nation. For example, “closing” in one area is sometimes called a “settlement” or “escrow” in another.
This glossary is not exhaustive and may not be accurate for all jurisdictions. These definitions are for general purposes only and should not be used for legal purposes. Please consult with your local title company, real estate agent or lender to see if these terms apply in your area.
An abbreviation of the cardinal aspects of all recorded deeds, mortgages, leases and other instruments affecting the title to a particular piece of land.
An authorized person who manages or transacts business for another. Laws governing real estate—especially relating to agents—vary considerably from state to state. While some standardization has been achieved, it is best to check the particulars in each state.
- Buyer Agent
An agent who represents the buyer in a real estate transaction. A buyer agent may be paid by the buyer, seller, or listing agent at closing, provided all parties consent.
- Dual Agent
An agent representing both parties in a transaction. In almost every state, dual agency is illegal and unethical without the written consent of both the buyer and the seller.
- Listing Agent
The agent who represents the seller.
- Selling Agent
The agent who obtains a buyer. A selling agent may represent the buyer, or may be a subagent of the seller.
A salesperson who works for an agent.
Features that enhance the value or desirability of a property.
To pay a debt in periodic amounts until the total amount, including any interest, is paid.
A qualified party’s estimate of the value of a property. This may include examples of sales of similar properties.
An increase in value.
Annual Percentage Rate. The yearly interest percentage of a loan as expressed by the actual rate of interest paid.
A process where disputes are mortgage to cover processing costs. settled by referring them to a fair and neutral third party (arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise or lower the mortgage interest rate according to a set index, such as six-month Treasury bills
Assessment / Assessed Value
An official valuation of property for tax purposes. Payments made by condominium or cooperative owners for their share of building maintenance expenses.
The written statement of an attorney setting forth what he believes to be the condition of a real estate title.
A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mort-gage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.
Legally declared unable to pay your debts. Bankruptcy can severely impact your credit and your ability to borrow money.
When referring to title insurance, the basic rate is the rate charged to a consumer who does not qualify for a reduced rate.
An independent business person who sets real estate office policies, hires employees, determines their compensation, and supervises their activities. Also, one who acts as an agent for another in negotiating sales or purchases in return for a fee or commission.
A fee or commission paid to a broker.
Certificate of Title
In areas where attorneys examine abstracts or chains of title, a written opinion, executed by the examining attorney stating that title is vested as stated in the abstract.
Chain of Title
Beginning with a conveyance out of an original source of title such as a government, each succeeding deed, will or other medium which conveys and transfers the title to succeeding owners constitutes a link in the chain of title. The chain of title is the composite of all such links.
A right to assert, or the assertion of, a demand for payment of money due; or the surrender or delivery of possession of property or the recognition or some right. A demand for something as one’s rightful due.
CLO (Computerized Loan Origination)
A computer network of major lenders that allows agents to initiate mortgage applications in their office. HUD has approved the procedure as long as 1) full disclosure is made of the fee; 2) multiple lenders are displayed on the computer screen to give borrowers a basis for comparison; 3) the fee charged is a dollar amount rather than a percentage of the loan.
The point at which real estate formally changes ownership. In some areas called a “settlement.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.
The five-page Closing Disclosure must be provided to the consumer three business days before they close on the loan. The Closing Disclosure details all of the costs associated with their mortgage transaction.
A summation, in the form of a balance sheet, made at a closing, showing the amounts of debits and credits to which each party to a real estate transaction is entitled.
Cloud on Title
An irregularity, possible claim, or encumbrance which, if valid, would affect or impair the title.
CMA (Competitive Market Analysis)
A method of determining the value of a property by comparing the prices paid for similar properties.
Code of Ethics
A written standard of ethical conduct embraced by the NATIONAL ASSOCIATION OF REALTORS®, a trade organization of more than 700,000 members representing all branches of the real estate industry.
Compensation paid to a real estate agent (usually by the seller) for services rendered in connection with the sale, exchange, or lease of property.
This refers to provisions in deeds and other real estate instruments that make a particular right contingent upon the occurrence of some future event.
Individual ownership of a portion of a building, with common areas shared by all owners. Maintenance fees called “assessments” are paid to the condominium association to maintain, repair, or improve the property.
Consummation is not the same thing as closing or settlement. Consummation occurs when the consumer becomes contractually obligated to the creditor on the loan, not, for example, when the consumer becomes contractually obligated to a seller on a real estate transaction.
Same as “agreement,” but usually more formal.
A fixed-rate, fixed term loan that is not insured by the government.
An arrangement in which a corporation made up of residents owns a building. The buyer owns a proprietary lease, rather than real property, and a corresponding number of shares in the corporation.
A new offer as to price, terms, and conditions, made in response to a prior, unacceptable offer. A counter offer terminates an original offer.
A formal agreement or contract between two parties in which one party gives the other certain promises and assurances, such as covenants of warranty in a warranty deed.
CRS (Certified Residential Specialist)
A professional designation awarded to experienced agents who complete an advanced course of study in residential real estate and demonstrate proficiency in sales and production. CRS Designees are members of the Residential Sales Council, a not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®.
A legal written document transferring ownership of a property from one party to another.
A book among the public records in which deeds are recorded.
Deed in Lieu of Foreclosure
The voluntary surrender of property by an owner or borrower to a lien holder (such as a bank) that eliminates the need to continue foreclosure action by the lien holder. The lien holder can refuse to accept the Deed in Lieu and file a Notice of Non Acceptance with the County Recorder.
Failure to perform a promised task or to pay an obligation when due.
Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.
Revealing what previously was private knowledge. Any statement of fact that is required by law.
A percentage of the purchase price the buyer pays in cash.
A buyer’s partial payment to the seller as a show of good faith in completing the transaction.
A right held by a person to enjoy or make limited use of another’s real property.
The right to a path or right-of-way over that a person may leave or go away from his own real estate.
(1) Eviction or dispossession. (2) A law suit to regain possession of real estate held by another.
The right of a government to take privately owned property for public purposes under condemnation proceedings upon payment of its reasonable value.
The extension of a structure from the real estate to which it belongs across a boundary line and onto adjoining property.
A claim, right or lien upon the title to real estate, held by someone other than the real estate owner.
Addition to or modification of a title insurance policy that expands or changes coverage of the policy, fulfilling specific requirements of the insured.
The difference between the current market value of a property and the claims—such as the unpaid portion of a mortgage—that exist against it.
The closing of a real estate transaction through a neutral third party who holds funds and/or documents for delivery after specific conditions have been met. In the title industry, it means the depositing with an impartial third party (typically an escrow agent or title company) of anything pertaining to a real estate transaction including money and documents of all kinds. The money and documents are to be disbursed and delivered to the rightful parties by the escrow agent or title company when all conditions of the transaction have been met.
A written agreement usually made between buyer, seller and escrow agent, but sometimes only between one person and the escrow agent. It sets forth the conditions to be performed incident to the object deposited in escrow, and gives the escrow agent instructions with respect to the disposition of the object so deposited.
(1) A sizable piece of rural land usually with a large house and other pretentious improvements. (2) The whole of one’s possessions, especially all of the property, assets, debts, and liabilities left by a deceased or bankrupt person. (3) The nature and extent of an owner’s rights in real estate.
In title industry terms, to peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.
Usually referred to, in title industry terms, as title examiner. One who examines and determines the condition and status of real estate titles.
Insurance policies include a list of items excluded from coverage. Items excluded from coverage can be found in section two of Schedule B of the policy.
A written agreement in which the seller appoints only one agent to market the property for a specific period of time. If the owner sells the property himself, he is not required to pay a commission.
Exclusive Right of Sale Listing
A written agreement between an agent and a property owner stating that the owner will pay a commission to the agent if the property is sold during a specific time period—whether or not the agent is responsible for the sale.
Fannie Mae (Federal National Mortgage Association)
Fannie Mae purchases home mortgages, thus serving as a source of funds for mortgage lenders. It is a privately owned corporation whose shares are traded on the New York Stock Exchange, but it is subject to the strict supervision of the secretary of the U.S. Department of Housing and Urban Development (HUD).
Federal Fair Housing Law
Refers to Title VIII of the Civil Rights Act, and stipulates that discrimination based on race, color, sex, familial status, handicap, religion, or national origin is illegal in connection with the sale or rental of most dwellings.
The highest degree of ownership that a person can have in real estate. An interest in real estate that gives the owner unqualified ownership and full power of disposition.
FHA (Federal Housing Administration)
A federal agency established to improve housing standards and conditions. The FHA provides mortgage insurance to approved lending institutions.
A mortgage having priority as a lien over any other mortgage or lien on the same property.
An agreement between a mortgage holder and a borrower that specified a loan payment plan and halts the foreclosure action if borrower meets requirements and terms of the agreement. The payment plan generally includes provisions for repayment to the mortgage holder of all delinquent interest and fees and could include extending the life of the mortgage beyond its original term.
The legal process by which property that is mortgaged as security for a loan may be sold to pay a defaulting borrower’s loan.
Freddie Mac (Federal Home Loan Mortgage Corporation)
A federally chartered corporation established to purchase mortgages in the secondary, or resale, market. Freddie Mac’s policies are designed to serve the needs of savings and loan associations. It is subject to oversight by the U.S. Department of Housing and Urban Development (HUD).
A warranty provision in a deed or mortgage or other real estate instrument containing all of the common law items of warranty. Also known as a full warranty.
A pledge made by one person (the guarantor) to ensure that another person (the obligor) will fulfill an obligation to a third party (the oblige).
Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. The buyer often adds liability insurance and extended coverage for personal property.
A person who inherits or who is entitled to inherit real estate by provisions of law or under the provisions of a will.
HUD (U.S. Department of Housing and Urban Development)
A federal department active in a variety of national housing programs including urban renewal and public housing.
Additions intended to increase the value of a property.
The right or permission to enter; also means or place of entry such as a right-of-way across adjoining land.
An examination of a property by the buyer, agent, title insurance company, or other interested party.
Two or more persons who hold title to real estate jointly, with equal rights to share in its enjoyment during their respective lives with the provision that upon the death of a joint tenant, his share in the property passes to the surviving tenants, and so on, until the full title is vested in the last survivor. A joint tenant cannot legally sell or encumber his interest without the consent or joinder of all of the other joint tenants.
A conclusion or determination by a court of law usually awarding the payment of money or relief of some kind to one of the parties to a lawsuit.
An agreement granting the use or occupancy of land during a specified period in exchange for rent.
The liability of real estate as security for payment of a debt. Such liability may be created by contract, such as a mortgage, or by operation of law, such as a mechanics lien.
A written agreement between a property owner and a real estate broker authorizing the broker to find a buyer.
A three-page Loan Estimate must be provided to the consumers no later than three business days after they submit a loan application for most mortgages. The Loan Estimate provides information about key features, costs and risks of the mortgage loan for which the consumer is applying.
A policy of title insurance issued to the mortgage lender insuring against loss by defects in, liens against, or unmarketability of title.
Banks and lenders look to limit losses on delinquent mortgages by working out solutions with borrowers through a Loss Mitigation Department, generally operated by the bank or lender to deal specifically with delinquent accounts.
An average between the highest price that a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing, but not compelled to sell, would accept.
A title that a court of equity considers to be so free of material defects and liens that it will force the title’s acceptance by questioning purchaser. Also known as a merchantable title.
A lien on real estate, created by operation of law, which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvements on the real estate.
Metes and Bounds
Describing boundaries by using courses, directions, distances and monuments.
MLS (Multiple Listing Service)
A means by which agents are informed of the properties offered for sale by other agents.
A legal document pledging property as security for the payment of a loan.
An insurance plan that protects the lender if the borrower does not repay a loan. Mortgage insurance is required when a home buyer makes less than a 20% down payment at the time of purchase. Private mortgage insurance (PMI) covers conventional (fixed-year, fixed-rate) loans. The Federal Housing Administration charges a mortgage insurance premium (MIP) on FHA loans.
NATIONAL ASSOCIATION OF REALTORS®
A trade organization serving over 700,000 members from all branches of the real estate industry. Members subscribe to a strict Code of Ethics which governs their conduct.
Abbreviation for Notice Of Default.
Notice of Default
An official notice filed and recorded by a designated trustee at the request of a lender indicating lender has commenced foreclosure action.
A proposal to purchase property at a specified price and terms.
The common real estate practice of showing “For Sale” homes to the public during established hours.
In title industry terms, referred to as title opinion. The conclusion and judgment of a skilled person as to the status of a title, based upon a title examination.
A lender’s charge for establishing and processing a new mortgage loan. It is generally computed as a percentage of the loan and may be tax deductible.
Owner of Record
The person named in the public record as the owner of a property or mortgage.
This policy is purchased for a one-time fee and protects a homeowner’s investment in a property for as long as they or their heirs have an interest in the property. Only an owner’s policy protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include errors or omissions in deeds, mistakes in examining records, forgery and undisclosed heirs.
A one-time charge paid to the lender for issuing a loan. Each point equals one percent of the loan amount and is used to obtain revenue in addition to the interest rate.
Power of Attorney
A legal instrument authorizing one to act as another’s agent or attorney.
Preliminary Title Report
A report prepared prior to issuing a title insurance policy that shows the ownership of a specific parcel of land. It includes information about liens and encumbrances that will not be covered under a title insurance policy.
The amount payable for an insurance policy.
The amount of money upon which interest is paid.
A legal procedure in which the validity and probity of a document, such as a will, is proven.
A written promise to pay or repay a specified sum of money at a stated time, or on demand, to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest.
The transcriptions in a recorder’s office of instruments that have been recorded, including the indexes pertaining to them.
Planned Unit Development
A buyer who has demonstrated the financial ability to afford the asking price of a home. Prequalifying with a lender can expedite the home buying transaction.
Quiet Title Suit
A lawsuit brought by an owner of real estate for the purpose of cancelling, wiping out, and putting a quietus upon supposedly immaterial, inconsequential, and unenforceable claims and interests that cloud the owner’s title.
Quit Claim Deed
A deed that does not imply the grantor holds title, but which surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.
A registered trade name that may only be used by members of the NATIONAL ASSOCIATION OF REALTORS®, an organization with over 700,000 members who represent all branches of the real estate industry. REALTORS® subscribe to a strict Code of Ethics which governs their conduct.
The aspects of a title that appear in the public records as distinguished from unrecorded title aspects and interests.
When referring to title insurance, the refinance rate is the reduced rate for a loan policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.
Obtaining a new loan to pay off an existing loan. Refinancing is a popular practice when interest rates drop.
When referring to title insurance, the reissue rate is the reduced rate for an Owner’s Policy of title insurance issued on a property that was previously insured within some period of years. In some states, the term is also used for a refinance rate.
Residential Sales Council
A not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORS®. The Council awards the Certified Residential Specialist (CRS) Designation, to experienced members who have completed an advanced course of study in residential real estate.
Right Of Way
(1) The right to pass over property owned by another, usually based upon an easement. (2) A path or thoroughfare over which passage is made. (3) A strip of land over which facilities such as highways, railroads, or power lines are built.
The many rights of a person in, to, and over the banks, bed, shallows, shore, and water of a stream or body of water upon which his land borders.
When referring to title insurance, the risk rate is a rate that does not include the cost of researching the title or the cost of conducting the closing.
Residential Low Density. This District is generally intended for low-density rural single-family detached residential development at a subdivision density of 1 dwelling unit per number of acres, a minimum lot size of several thousands of square feet, a maximum lot coverage by structures set percentage, and a maximum structure height in feet.
A careful exploration and inspection of the public records in an effort to find all recorded instruments relating to a particular chain of title.
A mortgage ranking in priority immediately below a first mortgage.
A single-family mortgage that is 90 days or more past due, or a multifamily mortgage that is two months or more past due.
In some areas called a “closing.” The process of completing a real estate transaction during which deeds, mortgages, leases and other required instruments are signed and/or delivered, an accounting between the parties is made, the money is disbursed, the papers are recorded, and all other details such as payment of outstanding liens and transfer of hazard insurance policies are attended to.
Short refinance is the replacement of a mortgage, usually with a reduced mortgage, when the borrower is already in default. This is done to transition the borrower to a more affordable payment structure. The lender has to write off the difference between the old mortgage and the new mortgage, but in some cases this may be preferable to foreclosure.
To sell a home through negotiation with the bank or lender, who agrees to accept less than the full amount owed to satisfy the debt allowing the debt to be ‘paid off’, short. Short sales are subject to bank approval and are often used as options in lieu of foreclosure.
Simultaneous Issue Rate
When referring to title insurance, the simultaneous issue rate is the reduced rate for a loan policy or owner’s policy issued on the same property or loan at the same time as another policy. The term usually refers to a loan policy issued at the same time as an owner’s policy when a property is purchased.
Special Warranty Deed
A deed that warrants the title only with respect to acts of the seller and the interests of anyone claiming by, through, or under him.
An area of land divided into lots, blocks and building sites, and in which public facilities are laid out, such as streets, alleys, parks and easements for public utilities.
(1) To determine the location, boundaries, area, or the elevations of land and structures upon the earth’s surface by means of courses in relation to the North Star, and the measuring of angles and distances by using the techniques of geometry and trigonometry. (2) The map or plat drawn by a surveyor that represents the property surveyed and shows the results of a survey.
The lien that is imposed upon real estate by operation of law that secures the payment of real estate taxes.
Tenancy by Entireties
An estate or interest in real estate predicated upon the legal fiction that a husband and wife are one person. A conveyance or devise to them (unless contrary intent is expressed) vests title in them as one person. Upon the death of either husband or wife, full title passes to the survivor.
(1) Usually one who holds possession of real estate under a lease. (2) In a broader sense, one who holds or possesses lands and tenements by any kind of title.
Tenants in Common
Two or more persons in whom title to a single piece of real estate is vested in such a manner that they have a common or equal right to possession and enjoyment of the property, but each holds a separate individual interest or estate in the property. Each owner may sell or encumber his respective interest or dispose of it by will, and if he dies without leaving a will, his heirs inherit his undivided interest.
A term usually applied to persons who are not principal parties to a contract or other instrument, but who have some right, interest or duty that such contract or instrument affects. For example, where a sale contract between buyer and seller of real estate provides that the money and documents involved in the transaction will be deposited with a title company pending the closing of the deal, the title company becomes a third party to the transaction.
(1) A combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy, and dispose of real estate or an inheritable right or interest therein. (2) The rights of ownership recognized and protected by the law.
An offer to issue a title insurance policy. The title commitment will describe the various conditions, exclusions and exceptions that will apply to that particular policy.
Covenants ordinarily inserted in conveyances and in transfers of title to real estate for the purpose of giving protection to the purchaser against possible insufficiency of the title received. A group of such covenants known as “common law covenants” includes: (a) covenants against encumbrances; (b) covenant for further assurance (in other words, to do whatever is necessary to rectify title deficiencies); (c) covenant of good right and authority to convey; (d) covenant of quiet enjoyment; (e) covenant of seining; (f) covenant of warranty.
(1) Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. (2) Any material irregularity in the execution or effect of an instrument in the chain of title.
To peruse and study the instruments in a chain of title and to determine their effect and condition in order to reach a conclusion as to the status of the title.
An insurance that protects purchasers of real estate and mortgages against loss from defective titles, liens and encumbrances.
(1) In many areas, synonymous with abstract plant. (2) A geographically filed assemblage of title information which is to help in expediting title examinations, such as copies of previous attorneys’ opinions, abstracts, tax searches, and copies or take-offs of the public records.
An examination of the public records to determine whether the current title is clear or defective. (See also Abstract and Examination).
Also known as a row house, generally refers to a type of dwelling having two floors, with the living area and kitchen on the first floor, and the bedrooms on the second. Town houses share a common wall between units.
An insurance company that issues insurance policies either to the public or to another insurer.
VA (Veterans Administration)
A federal agency designed to help veterans enter the housing market.
A loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans are made to honorably discharged veterans or their un-remarried widows or widowers. Such loans require a minimal or no down payment and offer lower interest rates.
How ownership of title is taken. Common methods of holding title include sole ownership (such as a single man or woman) or co-ownership (such as community property, community property with right of survivorship, joint tenancy or tenancy in common). How title is vested has important legal consequences and tax consequences. The tax consequences may be different for same sex legally related couples. You may wish to consult an attorney or tax advisor to determine the most advantageous form of ownership for your particular situation.
The voluntary and intentional relinquishment of a known right, claim or privilege.
A final inspection of a property before it changes ownership.
A deed containing one or more title covenants. (See Title Covenants)
Low Density Residential
While our Real estate glossary may be very thorough, new words appear consistently in the real estate world. If you find a word that needs added or have questions about the Real Estate process, please call 865.908.6000 for assistance from one of our experienced agents.