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Real
Estate Glossary
* Local laws, as well
as custom and use in various areas or regions of the country, may
modify or completely change the meanings of certain terms defined.
A
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.
Acceleration Clause -
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.
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 decreasing.
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 security.
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.
Assumption
of Mortgage - An obligation undertaken by the purchaser of property
to be personally liable for payment of an existing mortgage. In
an assumption, the purchaser is substituted for the original mortgagor
in the mortgage instrument and the original mortgagor is to be released
from further liability in the assumption, the mortgagee's consent
is usually required. The original mortgagor should always obtain
a written release from further liability if he desires to be fully
released under the assumption. Failure to obtain such a release
renders the original mortgagor liable if the person assuming the
mortgage fails to make the monthly payments. An "Assumption
of Mortgage" is often confused with "purchasing subject
to a mortgage." When one purchases subject to a mortgage, the
purchaser agrees to make the monthly mortgage payments on an existing
mortgage, but the original mortgagor remains personally liable if
the purchaser fails to make the monthly payments. Since the original
mortgagor remains liable in the event of default, the mortgagee's
consent is not required to a sale subject to a mortgage. Both "Assumption
of Mortgage" and "Purchasing Subject to a Mortgage"
are used to finance the sale of property. They may also be used
when a mortgagor is in financial difficulty and desires to sell
the property to avoid foreclosure.
B
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.
Binder, insurance - A
written evidence of temporary hazard or title coverage that only
runs for a limited time and must be replaced by a permanent policy.
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.
C
Caps - A limitation on
the interest rate increase of either the periodic or lifetime rate
or both for an adjustable rate mortgage.
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 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:
BUYER'S EXPENSES
Documentary Stamps on
Notes
Recording Deed and Mortgage
Escrow Fees
Attorney's Fee
Title Insurance
Appraisal and Inspection
Survey Charge
SELLER'S EXPENSES
Cost of Abstract
Documentary Stamps on
Deed
Escrow Fees
Real Estate Commission
Recording Mortgage
Survey Charge
Attorney's Fee
The agreement of sale negotiated previously between the buyer and
the seller may state in writing who will pay each of the above costs.
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 on land.
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 project.
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
interest limits.)
Cooperative Housing -
An apartment building or a group of dwellings owned by a corporation,
the stockholders of which are the residents of the dwellings. It
is operated for their benefit by their elected board of directors.
In a cooperative, the corporation or association owns title to the
real estate. A resident purchases stock in the corporation which
entitles him to occupy a unit in the building or property owned
by the cooperative. While the resident does not own his unit, he
has an absolute right to occupy his unit for as long as he owns
the stock.
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.
D
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 a mortgage.
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.
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.
E
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.
F
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
or sell.
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.
G
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.
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.
H
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 profit.
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.
I
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 liens.
L
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 investment.
Loan - A sum of money
loaned at interest to be repaid.
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.
M
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.
Metes and bounds - A
description in a deed of the land location in which the boundaries
are defined by directions and distances.
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 off.
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.
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 basis.
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.
O
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.
P
Per Diem -
Daily
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.
Plot - A map or chart
of a lot, subdivision or community drawn by a surveyor showing boundary
lines, buildings, improvements on the land, and easements.
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.
Possession - Being in
physical control of land or persona property, whether the owner
or not. Possession may be lawful or wrongful.
Power of Attorney
- An authority by which one person (principal) enables another (attorney
in fact) to act for him. (1) General power - authorizes sale, mortgaging,
etc. of all property of the principal. Invalid in some jurisdictions.
(2) Special power - Specifies property, buyers, price and terms.
How specific it must be varies in each state.
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.
Prepaid Interest - Interest
paid before becoming due.
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.
Prime Lending Rate -
The most favorable interest rates charged by a commercial bank on
short term loans. (not mortgages).
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.
Property Line - The boundary
line of a parcel of land.
Property Tax - Generally,
a tax levied on both real and personal property; the amount of the
tax is dependent on the value of the property.
Pro Rate -
To divide in proportionate shares such as taxes, insurance, rent,
or other items which buyer and seller share as of the time of closing,
or other agreed upon time.
Purchase Agreement
- (See agreement of sale).
Q
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.)
R
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 of Realtors.
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.
Rescind - To void or
cancel in such a way as to treat the contract or other object of
the recision as if it never existed.
Restrictive 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 as easement.
S
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 contract.
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.
Selling Agent - The real
estate agent obtaining the buyer rather than listing the property,
The listing and selling agent may be the same person or company.
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 analysis.
Special Assessment -
Lien assessed against real property by a public authority to pay
costs of public improvements (sidewalks, sewers, street lights,
etc.) which directly benefits the assessed property.
Special 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"
lien.
State Stamps - (See documentary
stamps)
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.
T
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 secured.
Tax Base -
The assessed valuation of real property which is multiplied by the
tax rate to determine the amount of tax due.
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 taxes.
Tax Stamps - (See Documentary
Tax Stamps).
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 survivorship.
Term - The period of
time between the commencement date an termination date of a note,
mortgage, legal document, or the contract.
Terms - The
consideration, other than price, in a sale, lease, mortgage, etc.
For example: the way the money will be paid, time to take possession,
conditions, etc.
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.
Title 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.
Transfer - The act by
which the title to property is conveyed from one person to another.
Transfer Tax - State
tax on the transfer of real property. Based on purchase price or
money changing hands. Also called Documentary transfer tax.
Trust Account - An account
used by brokers escrow agents or anyone holding money in trust for
another.
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.)
U
Underwriting - The analysis
and matching of risk to an appropriate rate and term.
Unencumbered property
- A property the title to which is free and clear.
Usury - Charging more
for the use of money than allowed by law.
V
Vacancy - A place which
is empty (vacant). The term is generally used to describe a property
available to buy or rent.
Valuable Consideration
- a term meaning any consideration sufficient to support a contract.
The word "valuable" does not mean a great value but merely
having value.
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 note.
Vendee - Purchases or
Buyer, especially on a land contract.
Vendor - The
person who transfers property by sale. Another word for "Seller"
W
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 conveyed.
Waive - To knowingly
abandon, relinquish, or surrender a right, benefit, or claim.
Z
Zoning Ordinances
- The acts of an authorized local government establishing building
codes, and setting forth regulations for property land usage. |
