A B C D
E F G H
I J K L
M N O P
Q R S T
U V W X
Abstract (Of Title) - A summary of the public records relating to the
title to a particular piece of land. An attorney or title insurance company
reviews an abstract of title to determine whether there are any title
defects which must be cleared before a buyer can purchase clear, marketable,
and insurable title.
- Condition in a mortgage that may require the balance
of the loan to become due immediately, if regular mortgage payments are
not made or for breach of other conditions of the mortgage.
Acceptance - The date when both parties, seller and buyer, have agreed
to and completed signing and/or initialing the contract.
Adjustable Rate Mortgage Loan (ARM) -
A type of alternative mortgage instrument in which the interest rate
adjusts periodically according to a predetermined index and margin.
This adjustment results in the mortgage payment either increasing or
Adjustment Period – The
length of time between interest rate changes on ARM. For example, a
loan with an adjustment period of one-year ARM, which means that the
interest rate can change once a year.
Agreement of Sale - Known by various names, such as contract of purchase,
purchase agreement, or sales agreement according to location or jurisdiction.
A contract in which a seller agrees to sell and a buyer agrees to buy,
under certain specific terms and conditions spelled out in writing and
signed by both parties.
Amortization - A payment plan which enables the borrower to reduce his
debt gradually through monthly payments of principal.
Annual Percentage Rate (APR) -
A rate which represents the relationship of the total finance charge
(interest, loan fees, point) to the amount of the loan.
Application - A form used to apply for a mortgage loan and to record
pertinent information concerning a prospective mortgagor and the proposed
Appraisal - An expert judgment or estimate of the quality or value of
real estate as of a given date.
Appraised Value - An opinion
of value reached by an appraiser based upon knowledge, experience, and
a study of pertinent data.
Appraiser- A person qualified by education, training, and experience
to estimate the value of real and personal property.
Appreciation - An increase in value; the opposite of depreciation.
Assessment - The process of placing a value on property for the strict
purpose of taxation. may also refer to a levy against property for a special
purpose, such as a sewer assessment.
Balloon Mortgage - A mortgage
with periodic installments of principal and interest that do not fully
amortize the loan. The balance of the mortgage is due in a lump sum
at the end of the term.
Balloon Payment- The unpaid
principal amount of a mortgagee or other long-term loan due at a certain
date in he future, usually the amount that must be paid in a lump sum
at the end of the term.
Borrower - One who receives funds with the expressed or implied intention
of repaying the loan in full.
Broker - (See real estate broker)
Building Line or Setback - Distances from the ends and/or sides of the
lot beyond which construction may not extend. The building line may be
established by a filed plat of subdivision, by restrictive covenants in
deeds or leases, by building codes, or by zoning ordinances.
Buydown – Permanent–prepaid interest bringing the note rate
on the loan down to a lower, permanent rate. Temporary–prepaid
interest lowering the note rate temporarily on the loan, allowing the
buyer to more readily qualify and to increase payments as income grows.
Caps - A limitation on the interest rate increase of either the periodic
or lifetime rate or both for an adjustable rate mortgage.
Cash Reserves -
The amount of the buyer’s liquid cash remaining
after making the down payment and paying all closing costs.
CC&R’s – Covenants,
conditions and restrictions. A document that controls the use, requirements
and restrictions of the property.
Certificate Of Occupancy (CO) -
Written authorization given by a local municipality that allows a newly-completed
or substantially-completed structure to be inhabited. The issuing of
a CO means that: the home is SAFE, SOUND & SANITARY, and has matches the PLANS & SPECIFICATIONS
given to the Appraiser at the beginning of the Loan Process.
Certificate of Commitment – The lender’s
approval of a VA loan, which is usually good for up to six months.
Certificate of Reasonable Value (CVR) – A
document that establishes the maximum value and loan amount or a VA
Certificate of Title - A certificate issued by a title company or a written
opinion rendered by an attorney that the seller has good marketable and
insurable title to the property which he is offering for sale. A certificate
of title offers no protection against any hidden defects in the title
which an examination of the records could not reveal. The issuer of a
certificate of title is liable only for damages due to negligence. The
protection offered a homeowner under a certificate of title is not as
great as that offered in a title insurance policy.
Closing or Close of Escrow - The day on which the formalities of a real
estate sale are concluded. The certificate of title, abstract, and deed
are generally prepared for the closing by an attorney and this cost charged
to the buyer. The buyer signs the mortgage, and closing costs are paid.
The final closing merely confirms the original agreement reached in the
agreement of sale.
Closing Costs - The numerous expenses which buyers and sellers normally
incur to complete a transaction in the transfer of ownership of real estate.
These costs are in addition to price of the property and are items prepaid
at the closing day. This is a typical list:
|1. Documentary Stamps on Notes
||1. Cost of Abstract
|2. Recording Deed and Mortgage
||2. Documentary Stamps on Deed
|3. Escrow Fees
||3. Escrow Fees
|4. Attorney's Fee
||4. Real Estate Commission
|5. Title Insurance
||5. Recording Mortgage
|6. Appraisal and Inspection
||6. Survey Charge
|7. Survey Charge
||7. Attorney's Fee
Cloud (On Title) - An outstanding claim or encumbrance which adversely
affects the marketability of title.
Commission - Money paid to a real estate agent or broker by the seller
as compensation for finding a buyer and completing the sale. Usually it
is a percentage of the sale price--6 to 7 percent on houses, 10 percent
Commitment Period – The
period during which a loan approval is valid.
Comparative Market Analysis (CMA) – An
opinion of the market value of a home expressed by a real estate agent
and not an appraiser.
Condemnation - The taking of private property for public use by a government
unit, against the will of the owner, but with payment of just compensation
under the government's power of eminent domain. Condemnation may also
be a determination by a governmental agency that a particular building
is unsafe or unfit for use.
Condominium - Individual ownership of a dwelling unit and an individual
interest in the common areas and facilities which serve the multi-unit
Consideration – Anything
of value to induce another to enter into a contract, i.e., money, services,
Contingency – A
condition that must be satisfied before a contract is binding. For
instance, a sales agreement may be contingent upon the buyer obtaining
Contract of Purchase - (See agreement of sale)
Construction Loan - A short-term, interim loan for
financing the cost of construction. The lender makes payments to the
builder at periodic intervals as the work progresses.
Contractor - In the construction industry, a contractor is one who contracts
to erect buildings or portions of them. There are also contractors for
each phase of construction: heating, electrical, plumbing, air conditioning,
road building, bridge and dam erection, and others.
Conventional Mortgage - A mortgage loan not insured by HUD or guaranteed
by the Veterans' Administration. It is subject to conditions established
by the lending institution and State statutes. The mortgage rates may
vary with different institutions and between States. (States have various
Conversion Clause – A
provision in some ARMs that enables home buyers to change an ARM to
a fixed rate loan, usually after the first adjustment period. The new
fixed rate is generally set at the prevailing interest rate for fixed
rate mortgages. This conversion feature may cost extra.
Co-signer- A person who signs a legal instrument and therefore becomes
individually and jointly liable for repayment or performance of an obligation.
Credit Report - A report to
a prospective lender on the credit standing of a prospective borrower
or tenant. Used to help determine creditworthiness.
Deed - A formal written instrument by which title to real property is
transferred from one owner to another. The deed should contain an accurate
description of the property being conveyed, should be signed and witnessed
according to the laws of the State where the property is located, and
should be delivered to the purchaser at closing day. There are two parties
to a deed: the grantor and the grantee. (See also deed of trust, general
warranty deed, quitclaim deed, and special warranty deed.)
Deed of Trust - Like a mortgage, a security instrument whereby real property
is given as security for a debt. However, in a deed of trust there are
three parties to the instrument: the borrower, the trustee, and the lender,
(or beneficiary). In such a transaction, the borrower transfers the legal
title for the property to the trustee who holds the property in trust
as security for the payment of the debt to the lender or beneficiary.
If the borrower pays the debt as agreed, the deed of trust becomes void.
If, however, he defaults in the payment of the debt, the trustee may sell
the property at a public sale, under the terms of the deed of trust. In
most jurisdictions where the deed of trust is in force, the borrower is
subject to having his property sold without benefit of legal proceedings.
A few States have begun in recent years to treat the deed of trust like
Deposit -(See Earnest Money)
Default - Failure to make mortgage payments as agreed to in a commitment
based on the terms and at the designated time set forth in the mortgage
or deed of trust. It is the mortgagor's responsibility to remember the
due date and send the payment prior to the due date, not after. Generally,
thirty days after the due date if payment is not received, the mortgage
is in default. In the event of default, the mortgage may give the lender
the right to accelerate payments, take possession and receive rents, and
start foreclosure. Defaults may also come about by the failure to observe
other conditions in the mortgage or deed of trust.
Depreciation - Decline in value of a house due to wear and tear, adverse
changes in the neighborhood, or any other reason.
Discount Points – A
loan fee charged by a lender of FHA, VA, or conventional loans to increase
the yield on the investment. One point = 1% of the loan amount.
Documentary Stamps - A State tax, in the forms of stamps, required on
deeds and mortgages when real estate title passes from one owner to another.
The amount of stamps required varies with each State.
Down Payment - The amount of
money to be paid by the purchaser to the seller upon the signing of
the agreement of sale. The agreement of sale will refer to the down
payment amount and will acknowledge receipt of the down payment. Down
payment is the difference between the sales price and maximum mortgage
amount. The down payment may not be refundable if the purchaser fails
to buy the property without good cause. If the purchaser wants the down
payment to be refundable, he should insert a clause in the agreement
of sale specifying the conditions under which the deposit will be refunded,
if the agreement does not already contain such clause. If the seller
cannot deliver good title, the agreement of sale usually requires the
seller to return the down payment and to pay interest and expenses incurred
by the purchaser.
Draw System - Scheduled payment of money to a builder during the phases
of home construction. Between each draw, the appraiser must inspect the
home to ensure that construction is proceeding as planned.
Due-on-sale Clause - A type of acceleration clause, calling for a debt
under a mortgage or deed of trust to be due in its entirety upon transfer
of ownership of the secured property.
Earnest Money - The deposit money given to the seller or his agent by
the potential buyer upon the signing of the agreement of sale to show
that he is serious about buying the house. If the sale goes through, the
earnest money is applied against the down payment. If the sale does not
go through, the earnest money will be forfeited or lost unless the binder
or offer to purchase expressly provides that it is refundable.
Easement Rights - A right-of-way granted to a person or company authorizing
access to or over the owner's land. An electric company obtaining a right-of-way
across private property is a common example.
Eminent Domain - The right of
a government to take private property for public use upon payment of
its fair value.
Encroachment - An obstruction, building, or part of a building that intrudes
beyond a legal boundary onto neighboring private or public land, or a
building extending beyond the building line.
Encumbrance - A legal right or interest in land that affects a good or
clear title, and diminishes the land's value. It can take numerous forms,
such as zoning ordinances, easement rights, claims, mortgages, liens,
charges, a pending legal action, unpaid taxes, or restrictive covenants.
An encumbrance does not legally prevent transfer of the property to another.
A title search is all that is usually done to reveal the existence of
such encumbrances, and it is up to the buyer to determine whether he wants
to purchase with the encumbrance, or what can be done to remove it.
Equity - The value of a homeowner's unencumbered interest in real estate.
Equity is computed by subtracting from the property's fair market value
the total of the unpaid mortgage balance and any outstanding liens or
other debts against the property. A homeowner's equity increases as he
pays off his mortgage or as the property appreciates in value. When the
mortgage and all other debts against the property are paid in full the
homeowner has 100% equity in his property.
Escrow - Funds paid by one party to another (the escrow agent) to hold
until the occurrence of a specified event, after which the funds are released
to a designated individual. In FHA mortgage transactions an escrow account
usually refers to the funds a mortgagor pays the lender at the time of
the periodic mortgage payments. The money is held in a trust fund, provided
by the lender for the buyer. Such funds should be adequate to cover yearly
anticipated expenditures for mortgage insurance premiums, taxes, hazard
insurance premiums, and special assessments.
Escrow Payment - That portion
of a mortgagor's monthly payment held by the lender to pay for taxes,
hazard insurance, mortgage insurance, lease payments, and other items
as they become due. Known as impounds or reserves in some states.
Exclusive Right To Sell (Listing) -
A written contract giving a licensed real estate agent the exclusive
right to sell a property for a specified time. The owner agrees to pay
a full commission to the broker even though the owner may sell the property.
FHA Loan - A loan insured by the Federal Housing Administration (of the
Department of Housing and Urban Development).
Fair Market Value - The price at which property is transferred between
a willing buyer and a willing seller, each of whom has a reasonable knowledge
of all pertinent data and neither of whom is under any compulsion to buy
Federal Home Loan Mortgage Corporation (FHLMC) - A private corporation
authorized by Congress to provide secondary mortgage market support for
conventional mortgages. Also know as Freddie Mac.
Federal Housing Administration (FHA) - A division of HUD. Its main activity
is the insuring of residential mortgage loans made by private lenders.
FHA does not lend money.
Federal National Mortgage Association (FNMA) - A privately owned corporation
created by Congress to support the secondary mortgage market. Also known
as Fannie Mae.
Fee Simple - An estate under which the owner is entitled to unrestricted
powers to dispose of the property, and which can be left by will or inherited.
The greatest interest a person can have in real estate.
Fiduciary - A person in a position of trust and confidence for another.
Firm Commitment - A lender's
agreement to make a loan to a specific borrower of a specific property.
First Mortgage - A mortgage
having priority over all other voluntary liens against certain property.
Foreclosure - A legal term applied to any of the various methods of enforcing
payment of the debt secured by a mortgage, or deed of trust, by taking
and selling the mortgaged property, and depriving the mortgagor of possession.
Fully Indexed Rate – The
maximum interest rate on an ARM that can be reached at the first adjustment.
General Warranty Deed -
A deed which conveys not only all the grantor's interests in and title
to the property to the grantee, but also warrants that if the title
is defective or has a "cloud" on it (such
as mortgage claims, tax liens, title claims, judgments, or mechanic's
liens against it) the grantee may hold the grantor liable.
Gift Letter – A
letter from a relative stating that an amount will be gifted to the
buyer and that said amount is not to be repaid.
Government National Mortgage Association (GNMA) – Called “Ginnie
Mae,” a governmental part of the secondary market that deals in
primarily in recycling VA and FHA mortgages, particularly those that
are highly leveraged.
Graduated Payment Mortgage - Residential mortgage which has monthly mortgage
payments that start at a low level and increase at a predetermined rate.
Grantee - That party in the deed who is the buyer or recipient.
Grantor - That party in the deed who is the seller or giver.
Hazard Insurance - Protects against damages caused to property by fire,
windstorms, and other common hazards.
Holdback - That portion of a loan commitment not funded until some additional
requirement such as rental or completion is attained. In construction
it is a percentage of the contractor's draw held back to provide additional
protection for the interim lender, often in an amount equal to the contractor's
Home Inspection Report – A qualified inspector’s report on
a property’s overall condition. The report usually included an
evaluation of both the structure and mechanical systems.
Home Warranty Plan – Protection
against failure of mechanical systems within the property. Usually
includes plumbing, electrical, heating systems and installed appliances.
HUD - U.S. Department of Housing and Urban Development. Office of Housing/Federal
Housing Administration within HUD insures home mortgage loans made by
lenders and sets minimum standards for such homes.
Index - An economic measurement that is used to measure periodic interest
rate adjustments for an adjustable rate mortgage.
Interest - A charge paid for borrowing money. (See mortgage note)
Interest Rate- The percentage
of an amount of money which is paid for its use for a specified time.
Usually expressed as an annual percentage.
Investor - An person or institution investing in mortgages.
Involuntary Lien - A lien imposed
against property without consent of an owner. Examples include taxes,
special assessment, federal income tax liens, mechanics liens, and materials
Joint Tenancy - An equal undivided ownership of property by two or more
persons. Upon the death of any owner, the survivors take the decedent's
interest in the property.
Jumbo Loans – Mortgage
loans that exceed the loan amounts acceptable for sale in the secondary
market; these jumbos must be packaged and sold differently to investors
and therefore have separate underwriting guidelines.
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. This financing vehicle is often used when property
is sold on a small down payment.
Lease - A written document containing the conditions under which the
possession and use of real or personal property are given by the owner
to another for a stated period and for a stated consideration.
Legal Description - A property
description recognized by law which is sufficient to locate and identify
the property without oral testimony.
Lessee (tenant) - The person or persons holding rights of possession
and use of property under terms of a lease.
Lessor (landlord) - The one leasing property to a lessee.
Licensed Mortgage Broker - The licensed person who, for a commission
or a fee, brings parties together and assists in negotiating contracts
between them. A firm or individual bringing the borrower and lender together
and receiving a commission. A mortgage broker does not retain servicing.
Lien - A claim by one person on the property of another as security for
money owed. Such claims may include obligations not met or satisfied,
judgments, unpaid taxes, materials, or labor.
Limited Partnership - A partnership
that consists of one or more general partners who are fully liable and
one or more limited partners who are liable only for the amount of their
Loan - A sum of money loaned at interest to be repaid.
Loan Commitment – A
written promise to make a loan for a specified amount on specified
Loan Processing - (1) A System by which a Buyer is evaluated for loan
approval. The system compares the stated income, debt, savings and credit
against documentation provided by the buyer (or alternative Federal documents).
Calculations of Debt-To-Income, Loan-To-Value, Net Worth, Cash Reserves
and Compensating Factors are used to develop and Underwriting Opinion.
(2) The system of structuring a Buyer's financial situation and documentation
in such a way that an Underwriting Opinion can be reached.
Loan Submission - A package
of pertinent papers and documents regarding specific property or properties.
It is delivered to a prospective lender for review and consideration
for the purpose of making a mortgage loan.
Loan-to-value Ratio - The relationship
between the amount of the mortgage loan and the appraised value of the
security expressed as a percentage of the appraised value.
Lock-in – The
fixing of an interest rate or points at a certain level, usually during
the loan application process. It is usually done for a certain period
of time such as 60 days and may require a fee or premium in the form
of a higher interest rate.
Margin - The number of basis points a lender adds to the index to determine
the interest rate of an adjustable rate mortgage.
Marketable Title - A title that is free and clear of objectionable liens,
clouds, or other title defects. A title which enables an owner to sell
his property freely to others and which others will accept without objection.
Mortgage - A lien or claim against real property given by the buyer to
the lender as security for money borrowed. Under government-insured or
loan-guarantee provisions, the payments may include escrow amounts covering
taxes, hazard insurance, water charges, and special assessments. Mortgages
generally run from 10 to 30 years, during which the loan is to be paid
Mortgage Commitment - A written notice from the bank or other lending
institution saying it will advance mortgage funds in a specified amount
to enable a buyer to purchase a house.
Deed – Companion legal document to promissory note recorded
by the county enumerating the lender’s procedure to enforce loan
Mortgage Insurance Premium - The payment made by a borrower to the lender
for transmittal to HUD to help defray the cost of the FHA mortgage insurance
program and to provide a reserve fund to protect lenders against loss
in insured mortgage transactions. In FHA insured mortgages this represents
an annual rate of one-half of one percent paid by the mortgagor on a monthly
Mortgage Life Insurance - A type of term life insurance often bought
by mortgagors. The amount of coverage decreases as the mortgage balance
declines. In the event that the borrower dies while the policy is in force,
the debt is automatically satisfied by insurance proceeds.
Mortgage Note - A written agreement to repay a loan. The agreement is
secured by a mortgage, serves as proof of an indebtedness, and states
the manner in which it shall be paid. The note states the actual amount
of the debt that the mortgage secures and renders the mortgagor personally
responsible for repayment.
Mortgage (Open-End) - A mortgage with a provision that permits borrowing
additional money in the future without refinancing the loan or paying
additional financing charges. Open-end provisions often limit such borrowing
to no more than would raise the balance to the original loan figure.
Mortgagee - The lender in a mortgage agreement.
Mortgagor - The borrower in a mortgage agreement.
Negative Amortization - Occurs when monthly payments fail to cover the
interest cost. The interest that isn't covered is added to the unpaid
principal balance, which means that even after several payments the borrowers
could owe more than they did at the beginning of the loan. Negative amortization
can occur when an ARM has a payment cap that results in monthly payments
that aren't high enough to cover the interest.
Note - Promissory note to lender detailing terms of repayment of amount
Offer to Purchase - A preliminary agreement, secured by the payment of
earnest money, between a buyer and seller as an offer to purchase real
estate. A binder secures the right to purchase real estate upon agreed
terms for a limited period of time. If the buyer changes his mind or is
unable to purchase, the earnest money is forfeited unless the binder expressly
provides that it is to be refunded.
Origination - The process of originating mortgages. Solicitation may
be from individual borrowers, builders, or brokers.
Origination Fee - A fee or
charge for the work involved in the evaluation, preparation, and submission
of a proposed mortgage loan.
Originator - A person who solicits builder, brokers, and others to obtain
applications for mortgage loans. origination is the process by which the
mortgage lender brings into being a mortgage secured by real property.
Cap – the maximum amount the payment can adjust in any
given time frame.
PITI (principal, interest, taxes, and insurance) - The principal and
interest payment on most loans is fixed for the term of the loan; the
tax and insurance portion may be adjusted to reflect changes in takes
or insurance costs. Note: In cases where the buyer puts down less than
20% of the Sales Price, Mortgage Insurance may be required as part of
the Total Monthly Payment (PITI).
Plans and Specifications -
Architectural and engineering drawings and specifications for construction
of a building or project, including a description of materials to
be used and the manner in which they are to be applied.
Plat - A
map dividing a parcel of
land into lots, as in a subdivision.
Plot - An
ground for a specific use, such as a cemetery plot..
Points - Sometimes called "discount points." A point is one
percent of the amount of the mortgage loan. For example, if a loan
is for $25,000, one point is $250. Points are charged by a lender
to raise the yield on his loan at a time when money is tight, interest
rates are high, and there is a legal limit to the interest rate that
can be charged on a mortgage. Buyers are prohibited from paying points
on HUD or Veterans' Administration guaranteed loans (sellers can
pay, however). On a conventional mortgage, points may be paid by
either buyer or seller or split between them.
Preclosing - A transaction preceding the formal closing, often used to
settle outstanding issues (survey, pest inspection, hazard insurance,
flood insurance (if required), with the formal closing shortly thereafter.
Prepayment - Payment of mortgage loan, or part of it, before due date.
Mortgage agreements often restrict the right of prepayment either by limiting
the amount that can be prepaid in any one year or charging a penalty for
prepayment. The Federal Housing Administration does not permit such restrictions
in FHA insured mortgages.
Penalty – A fee charged to a borrower who pays a loan
before it is due. Not allowed for FHA or VA loans.
Principal - The basic element of the loan as distinguished from interest
and mortgage insurance premium. In other words, principal is the amount
upon which interest is paid.
Principal Balance - The outstanding
balance of a loan.
Private Mortgage Insurance
(PMI) - Insurance written by a private company
protecting the mortgage lender against loss by a mortgage default.
Purchase Agreement - (See agreement of sale).
Qualify – The
process where the buyer meets the requirements as set forth by the
lender when obtaining a mortgage.
Quitclaim Deed - A deed which transfers whatever interest the maker of
the deed may have in the particular parcel of land. A quitclaim deed is
often given to clear the title when the grantor's interest in a property
is questionable. By accepting such a deed the buyer assumes all the risks.
Such a deed makes no warranties as to the title, but simply transfers
to the buyer whatever interest the grantor has. (See deed.)
Real Estate Broker - A middle man or agent who buys and sells real estate
for a company, firm, or individual on a commission basis. The broker does
not have title to the property, but generally represents the owner.
Realtor - A real estate broker or an associate holding active membership
in a local real estate board affiliated with the National Association
Reconveyance - The transfer of land from one person to the immediately
preceding owner. It is used when the performance of debt is satisfied
under the terms of a deed of trust.
Redemption Period - That period
of time in those states where it is allowed in which a foreclosed
mortgagor has to buy back his property by paying principal amount
and interest and fees.
Refinancing - The process of the same mortgagor paying off one loan with
the proceeds from another loan.
Release of Lien - An instrument
discharging secured property from a lien.
with Option – A contract, which gives one the right to lease
property at a certain sum with the option to purchase at a future
Covenants - Private restrictions limiting the use of real property.
Restrictive covenants are created by deed and may "run
with the land," binding all subsequent purchasers of the land, or
may be "personal" and binding only between the original seller
and buyer. The determination whether a covenant runs with the land
or is personal is governed by the language of the covenant, the intent
of the parties, and the law in the State where the land is situated.
Restrictive covenants that run with the land are encumbrances and may
affect the value and marketability of title. Restrictive covenants
may limit the density of buildings per acre, regulate size, style or
price range of buildings to be erected, or prevent particular businesses
from operating or minority groups from owning or occupying homes in
a given area. (This latter discriminatory covenant is unconstitutional
and has been declared unenforceable by the U.S. Supreme Court.)
Right of Survivorship - In
joint tenancy, the right of survivors to acquire the interest of a
deceased joint tenant.
Right-of-Way - A privilege
operating as an easement upon land, whereby a land owner, by grant
or agreement, gives another the right to pass over land. Also knows
Sale-Leaseback - A technique
in which a seller deeds property to a buyer for a consideration and
the buyer simultaneously leases the property back to the seller, usually
on a long-term basis.
Sales Agreement - See agreement of sale.
Sales Contract - Another name for a sales agreement, purchase agreement,
etc. Not to be confused with a land contract, which is a conditional sales
Satisfaction of Mortgage -
The record able instrument given by the lender to evidence payment
in full of the mortgage debt. Sometimes knows as a release deed.
Secondary Financing - Financing
real estate with a loan, or loans, subordinate to a first mortgage
or first trust deed.
Secondary Mortgage Market-
The market where existing mortgages are bought and sold. It contrasts
with the primary mortgage market, where mortgages are just originated,
and packaged for delivery to the secondary market.
Servicing - The duties of the mortgage lender as a loan correspondent
as specified in the servicing agreement for which a fee is received. Consists
of operational procedures covering accounting, bookkeeping, insurance,
tax records, loan payment follow-up, delinquency loan follow-up and loan
Ownership – Ownership by one person only. Sole ownership.
Special Assessments - A special tax imposed on property, individual lots
or all property in the immediate area, for road construction, sidewalks,
sewers, street lights, etc.
Lien - A lien that binds a specified piece of property, unlike a
general lien, which is levied against all one's assets. It creates
a right to retain something of value belonging to another person
as compensation for labor, material, or money expended in that person's
behalf. In some localities it is called "particular" lien or "specific"
Special Warranty Deed - A deed in which the grantor conveys title to
the grantee and agrees to protect the grantee against title defects or
claims asserted by the grantor and those persons whose right to assert
a claim against the title arose during the period the grantor held title
to the property. In a special warranty deed the grantor guarantees to
the grantee that he has done nothing during the time he held title to
the property which has, or which might in the future, impair the grantee's
Survey - A map or plat made by a licensed surveyor showing the results
of measuring the land with its elevations, improvements, boundaries, and
its relationship to surrounding tracts of land. A survey is often required
by the lender to assure him that a building is actually sited on the land
according to its legal description.
Takeout Commitment - A promise
to make a loan at a future specified time. It is commonly used to
designate a higher cost, shorter term, backup commitment as a support
for construction financing until a suitable permanent loan can be
Tax -As applied to real estate, an enforced charge imposed on persons,
property or income, to be used to support the State. The governing body
in turn utilizes the funds in the best interest of the general public.
Tax Lien - A claim against property for the amount of its due and unpaid
Tenancy - A holding of real estate under any kind of right of title.
Tenancy At Will - A holding of real estate that can be terminated at
the will of either the lessor or the lessee, usually with notice.
Tenancy by Entirety - The
joint ownership of property by a husband and wife where both are viewed
as one person under common law that provides for the right of survivorship.
Tenancy in Common - In law,
the type of tenancy or estate created when real or personal property
is granted, devised or bequeathed to two or more persons, in the absence
of expressed words creating a joint tenancy. There is no right of
Term - The period of time between the commencement date an termination
date of a note, mortgage, legal document, or the contract.
Title - As generally used, the rights of ownership and possession of
particular property. In real estate usage, title may refer to the instruments
or documents by which a right of ownership is established (title documents),
or it may refer to the ownership interest one has in the real estate.
Insurance - Protects lenders or homeowners against loss of their
interest in property due to legal defects in title. Title insurance
may be issued to a "mortgagee's title policy." Insurance benefits
will be paid only to the "named insured" in the title policy,
so it is important that an owner purchase an "owner's title policy",
if he desires the protection of title insurance.
Title Search or Examination - A check of the title records, generally
at the local courthouse, to make sure the buyer is purchasing a house
from the legal owner and there are no liens, overdue special assessments,
or other claims or outstanding restrictive covenants filed in the record,
which would adversely affect the marketability or value of title.
Trustee - A party who is given legal responsibility to hold property in the
best interest of or "for the benefit of" another. The
trustee is one placed in a position of responsibility for another,
a responsibility enforceable in a court of law. (See deed of trust.)
Underwriting - The analysis and matching of risk to an appropriate rate
Unencumbered Property - A
property the title to which is free and clear.
Usury - Charging more for the use of money than allowed by law.
Loans – A loan, made by a private lender that is partially
guaranteed by the veterans Administration.
Variable Rate Mortgage - A
mortgage agreement that allows for adjustment of the interest rate
in keeping with a fluctuating market and terms agreed upon in the
Warehousing - The holding of a mortgage on a short term basis pending
either a sale to an investor or other long term financing.
Warranty deed - A deed in which the grantor or seller warrants or guarantees
that good title is being conveyed, as opposed to a quitclaim deed that
contains no representation or warrant as to the quality of title being
X - Marks the Spot - Proper signatures and initials are required to make
a document legally enforceable.
Yesterday - Normally the real estate activities of yesterday usually sets
the precedence for real estate activities of today.
Zoning Ordinances - The acts of an authorized local government establishing
building codes, and setting forth regulations for property land usage.