REAL ESTATE GLOSSARY
Acre – A measure of land equal to 43,560 square feet, 4,840
square yards, or 4,047 square meters.
Adjustable Rate Mortgage (ARM) – A mortgage loan in which
the interest rate may increase or decrease in specific intervals,
with an economic indicator.
Amortized Loan – A loan in which the principal as well as the
interest is payable in monthly or other periodic installments
over the term of the loan.
Appraisal – Estimate of a property’s valuation by a trained expert.
Assignment – The transfer in writing of interest in a bond,
mortgage, lease, or other instrument.
Assumption of Mortgage – Acquiring the title to a property on
which there is an existing mortgage and agreeing to be personally
liable for the terms and conditions of the mortgage payments.
Balloon Payment – The final payment of a mortgage loan that is
considerably larger than the required periodic payments because
the loan amount was not fully amortized.
Beneficiary – Who receives or is to receive benefits resulting from
certain acts.
Bill of Sale – A written instrument given to pass title of personal
property from vendor to vendee.
Capital Gains – Profits realized from sale of assets as real estate.
Certificate of occupancy (C of O) – Document issued by a municipal
authority stating that a building complies with building, health, and
safety codes and may be occupied.
Chain of Title – The conveyance of real property to one owner from
another, reaching back to the original grantor.
Chapter 7, Chapter 11, Chapter 13 – Forms of bankruptcy.
Cloud on the Title – An outstanding claim or encumbrance that, if
valid, would affect or impair the owner’s title.
Comparables (also called comps) – Properties listed in an appraisal
report that are substantially equivalent to the subject property.
Contract – An agreement entered into by two or more legally
competent parties by the terms of which one or more of the parties,
for a consideration, undertakes to do or refrain from doing some
legal act or acts.
Deed – A written document that, when executed and delivered,
conveys title to or an interest in real estate.
Earnest Money Deposit – Money deposited by a buyer under terms of
a contract, to be applied to the purchase price if the sale is closed.
Escrow – The closing of a transaction through a third party called an
“escrow agent”. Also can refer to earnest money deposits or to
mortgagee’s trust account for insurance and tax payments.
Eviction – A legal process which will oust a person from possession
of real estate.
Foreclosure – A procedure whereby property pledged as security for a
debt is sold to pay the debt in event of default in payments or terms.
Grantee – One receiving a conveyance of real property from grantor.
Grantor – One transferring title to or an interest in real property to a
grantee.
Judgement – The formal decision of a court regarding the respective
claims of the parties to an action.
Lease – A written or oral contract between a landlord (the lessor) and
a tenant (the lessee) that transfers the right to exclusive possession
and use of the landlord’s real property to the lessee for a specified
period of time and for a stated consideration (rent).
Lien – A right by law to certain creditors to have their debt paid out
of the property of a defaulting debtor, by means of a court sale.
Lis pendens – A recorded legal document giving constructive notice
an action affecting a particular property has been filed in court.
Listing Agent – The broker with whom a seller enters into a valid
listing agreement for the sale of his or her real estate.
Mortgage – A conditional transfer or pledge of real estate as security
for payment of a debt. Also, the document creating a mortgage lien.
Notary Public – A public officer authorized to take acknowledgments
to certain classes of documents such as deeds, contracts, and
mortgages and before whom affidavits may be sworn.
Note – An instrument of credit given to attest to a debt.
PITI – Principal, interest, taxes and insurance; the different
components of payment.
PMI – Private mortgage insurance.
Points – A unit of measurement used for various loan charges; one
point equals 1 percent of the amount of the loan.
Power of Attorney – A written instrument authorizing a person, the
“attorney-in-fact” to act as agent on behalf of another person.
Prepayment Penalty – A charge imposed on a borrower who pays off
the loan principal early.
Quitclaim Deed – A conveyance by which grantor transfers whatever
interest he/she has in real estate, without warranties or obligations.
Real Estate Contract – A contract for the sale of real estate, which
the purchaser promises to pay the agreed purchase price and the
seller agrees to deliver title to the property.
Subject to a Mortgage – When a property is taken “subject to” a
mortgage, the purchaser is not personally liable to the mortgagee
for satisfaction of the pre-existing debt.
Tax Lien – A charge against property created by operation of law.
The tax liens and assessments take priority over all other liens.
Termites – Wood-boring insects that cause structural damage.
Title – Evidence that the owner of land is in lawful possession
thereof; evidence of ownership.
Title Insurance – A policy insuring the owner or mortgagee against
loss by reason of defects in the title to a parcel of real estate, other
than the encumbrances, defects and matters specifically excluded
by the policy.
Title Search – An examination of the public records to determine
the ownership and encumbrances affecting real property.
Transfer Tax – Tax stamps required to be affixed to a deed by state
and/or local law.
Trust – A fiduciary arrangement whereby property is conveyed to a
person or an institution, called trustee, to be held and administered
on behalf of another person, called beneficiary.
Warranty Deed – A deed in which the grantor fully warrants good
clear title to the premises.
Wraparound Loan – A method of refinancing in which the new
mortgage is placed in a secondary, or subordinate, position; the
new mortgage includes both the unpaid principal balance of the
first mortgage and whatever additional sums are advanced by the
lender. In essence, it is additional mortgage in which another lender
refinances a borrower by lending an amount over the existing first
mortgage amount without disturbing existence of the first mortgage.
Wraparound Mortgage – An additional mortgage in which another
lender refinances borrower by lending an amount including the
existing first mortgage.