Glossary of Terms
Real Estate Glossary
Agency: An expressed contractual relationship which can be created in writing or orally in which a principal authorizes and empowers the agent to act on behalf of the principal in dealing with third parties.
Agent: A natural or legal person who has either expressed or implied authority to act for and represent another party known as the principal typically in business matters.
Amenities: Satisfaction of enjoyable living to be derived from a home; conditions of agreeable living or a beneficial influence from the location of the improvements that are not measured in monetary considerations but rather as tangible and intangible benefits, such as good neighborhood, schools, parks, a view or other tangible or intangible assets.
Bill of Sale: A written instrument which evidences the transfer of title to personal property from the vendor, seller, to the vendee, buyer.
Binder: A written agreement to consider the down payment for the purchase of real estate as evidence of good faith on the part of the purchaser.
Clear Title: Ownership of property that is not encumbered by any counter claim or lien.
Cloud on Title: Any outstanding claim, lien, encumbrance, document or condition usually revealed by a title search which impairs the title and the marketability of a property until it is removed by a quit claim deed or quiet title court action
Commission: The compensation or fee for services that a licensee receives for performing the agreed-upon terms under a brokerage contract which in the practice of real estate this is usually a percentage of the selling price of a property and/or a percentage of rentals.
Contract: A written or oral agreement, between two or more legally competent parties to do or not to do certain obligations which has four essential elements.
- Parties who have the capacity or legal ability to contract;
- Consent of the parties;
- Consideration and;
- A lawful object.
Counter Offer: A response to an offer to enter into a contract which acts as a rejection of the original offer and introduces a new offer or one with different terms and conditions.
Deed: A written instrument which when properly executed (signed) and delivered (accepted) conveys title to real property from one party, the grantor, to another party, the grantee.
Earnest Money: A sum of money or other consideration tendered by a prospective purchaser as evidence of good faith in conjunction with an offer to purchase rights in real property.
Escrow: An arrangement for the deposit of instruments and/or the handling of funds with instructions with a neutral third party to carry out the provisions of the agreement or contract when the specified conditions have been met.
Informally, short form to describe Escrow Agent, Escrow Account or Escrow Period. E.g., Escrow (Agent) works closely with agents to close a transaction. The buyer deposits funds into Escrow (Account). Escrow (Period) is 30 days.
Fiduciary: A party who is an agent in a position of trust and confidence and as a result owes fiduciary duties to a principal or a client which cannot be breached under the rules of agency. See Fiduciary Duties.
Fixture: The movable items such as toilets and built-in store showcases that are attached to land or its improvements which become appurtenances and which under normal circumstances cannot be removed without a prior agreement because the affixing converts them.
Foreclosure: The legal process whereby a lender (bank or secured creditor) terminates the owner’s right to a property that was pledged as security for a debt.
The lender usually then forces a sale of parcel of the real estate or home, often at a public action, to satisfy the debt after the owner defaulted to comply with the agreement between the borrower and the lender.
Forfeiture: The loss of money or something of value resulting from the failure to perform.
General Lien: A broad-based claim against several properties owned by a defaulting party.
Lease:
- A contract between owner and tenant setting forth conditions upon which a tenant may possess and use the property and the term of the occupancy.
- Sometimes used as a method of financing as an alternative to purchasing property outright.
Lien: A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation such as judgments, taxes, mortgages, deeds of trust, etc.
Master Deed: A title document used in common area projects such as condominiums which creates both the fee units and the common interests involved in the projects.
Mechanic’s Lien:
- A lien created by statute in favor of contractors, laborers, and material men for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to a property.
- A non-voluntary, statutory lien recorded against a specific property in favor of contractors/material men for unpaid improvements made to the property. A mechanic's lien priority is established when the improvements were begun (visible to the eye test) rather than when it was recorded. The lien must be coupled with a court action to be perfected.
Mortgage: An instrument recognized as evidence by law by which property is hypothecated or pledged as security for the payment of a debt or obligation and by which a procedure for foreclosure is established by statute in event of default.
- A home loan is a transaction in which you promise to repay money you have borrowed and also give the lender a mortgage on your home to secure repayment.
Mortgage Commitment: A notice in writing from a lending institution promising to make the loan in the future and also specifying its terms and conditions.
Mortgage Broker: A party who acts as agent and brings a lender and borrower together in order to earn a commission.
Mortgagee: A lender or creditor who is the receiver of a mortgage and to whom a mortgagor gives a mortgage to secure a loan or the performance of an obligation. See Secured Party.
Mortgagor: A debtor or borrower who gives a mortgage on his or her property to a mortgagee to secure a loan or assure performance of an obligation.
Net Income: The profit or money remaining after the expenses have been deducted from all income.
Nonconforming Use: The use of land for purposes contrary to the applicable municipal zoning specifications; often occurs when zoning changes after a property is in use.
Offer: A presentation of a set of terms that is subject to another party's acceptance that is essential to arrive at a meeting of the minds needed to result a valid contract.
Plat: A plan, map or chart of a tract or town site dividing a parcel of land into lots and showing boundary lines, streets, actual measurements and easements.
Plot Plan: A drawing of one parcel of land showing its lot dimensions, boundaries and improvements which are drawn to scale which may also include walks, driveways and roof plans of the various structures on the property.
Power of Attorney: A written instrument whereby a principal authorizes an agent who is sometimes called an attorney in fact to perform specified acts on his or her behalf.
Prepayment Penalty: The charge payable under the terms of a loan agreement to a lender by a borrower if the outstanding principal balance of the loan is paid off prior to its maturity.
Quitclaim Deed:
- A legal document which transfers any ownership an individual has in a piece of property often used when the amount of ownership is not known or is unclear.
- A quitclaim deed is a deed that transfers whatever ownership interest the transferor has in a particular property without guarantee about what is being transferred. For example, a divorcing husband may quitclaim his interest in certain real estate to his ex-wife, officially giving up any legal interest in the property.
RESPA: The Real Estate Settlement Procedures Act (RESPA) is a federal law passed in 1975 requiring the disclosure to borrowers details about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by the Department of Housing and Urban Development (HUD).
Setback: The distance from curb or other established line on which nothing may be erected.
Specific Lien: A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
Square Foot: The square root of a number is the inverse operation of squaring that number which is the number or quantity produced by multiplying a given number by itself.
Tenancy at Sufferance: A wrongful holding of premises by a tenant after his or her lease has terminated.
Tenancy at Will: A possession of premises by permission of an owner or landlord and having no fixed term.
Tenancy by the Entireties: The ownership of property under certain state laws that is acquired by a husband and wife during marriage, is jointly and equally owned, and upon the depth of one spouse it becomes the property of the survivor which is not used in community property stat.
Tenancy in Common: The co-ownership of property by two or more persons whose interests need not be equal and who each hold an undivided interest in the entire property and without the right of survivorship.
Title Insurance: A policy which insures a property owner should a prior claim arise against the property after the purchase has been completed. This also covers a lender should a question of ownership arise.
Variance: An approval generally granted by a Board of Zoning Appeals to improve or develop a specific property in a manner that is not authorized by the current zoning ordinance.
