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The REAL ESTATE DICTIONARY is a compilation of terms commonly used in the real
estate and title insurance industry. The definitions are based on English Common
Law, and while generic, may not be exactly applicable in all states. Please
check with a local real estate attorney prior to making any decisions.
A
B
C D E
F G H
I J
K L M N
O P Q
R S T
U V
W X Y Z
Index
Defined words are capitalized
- ABSTRACT
- The notes made by a title examiner
based on his examination of the land records. These notes are
a concise summary of the transactions affecting the property.
The title agency produces a BINDER from
the information in the abstract.
- ACCELERATION
CLAUSE
- A condition in a real estate financing
instrument giving the lender the power to declare all sums owing
lender immediately due and payable upon the happening of an event,
such as the sale of the property, or a delinquency in the repayment
of the note.
- ACCRETION
- The buildup of land from natural
forces such as wind or water.
- ACKNOWLEDGEMENT
- As a verb, the confirmation by
a party executing a legal document that this is his signature
and voluntary act. This confirmation is made to an authorized
officer of the Court or notary public who signs a statement also
called an acknowledgment.
- ACRE
- 43,560 square feet of land.
- ADJUSTMENT
INTERVAL
- On an adjustable rate mortgage,
the time between changes in the interest rate and/or monthly payment,
typically one, three or five years, depending on the index.
- ADDENDUM
- A form/document added to a contract
or agreement also known as a Rider.
- ADJUSTABLE RATE MORTGAGE
(ARM)
- A mortgage loan which bears interest
at a rate subject to change during the term of the loan.
- ADMINISTRATOR
- A person appointed by the Court
to settle the estate of a person who dies without a will. The
feminine form is Administratrix. Compare, EXECUTOR.
- ADVERSE
POSSESSION
- A claim made against land titled
in another person based on open, notorious and hostile possession
and use of the land to the exclusion of the titled owner.
- AGENCY
- A relationship in which the agent
is given the authority to act on behalf of another person (Principal).
- AGREEMENT
- A meeting of minds.
- AIR RIGHTS
- The right to the air space above
the real property.
- ALTA OWNER'S POLICY
(American Land Title Association )
- A type of title insurance policy
issued by title insurance companies which expands the risks normally
insured against under the standard type policy to include unrecorded
mechanic's liens; unrecorded physical easements; facts a physical
survey would show ; water and mineral rights; and rights of parties
in possession, such as tenants and buyers rights under unrecorded
instruments.
- AMENDMENT
- A change to the correct or alteration
to the original document/agreement without changing its principal
essence.
- AMORTIZED
LOAN
- A loan to be repaid, interest and
principal, by a series of regular payments that are equal or nearly
equal, without any special balloon payment prior to maturity.
- AMORTIZATION
- The periodic principal pay down
of a loan.
- ANNUAL PERCENTAGE
RATE (A.P.R.)
- Is a interest rate reflecting the
cost of a mortgage as a yearly rate. This rate is likely to be
higher than the stated note rate or advertised rate on the mortgage,
because it takes into account point and other credit cost. the
APR allows home buyers to compare different types of mortgages
based on the annual cost for each loan.
- APPRAISAL
- An estimate of the value of property,
made by a qualified professional called an "appraiser".
Most states require licenses. Various lenders have their own lists
of approved appraisers.
- APPROVED
ATTORNEY
- An attorney authorized by a title
insurance company to handle closings and render title opinions.
- APPURTENANCE
- Anything attached to the land or
used with it passing to the new owner.
- ASSESSMENT
- A local tax levied against a property
for a specific purpose, such as a sewer or street lights.
- AS IS CONDITION
- What you see is what you get. Seller
does not make any guarantees or warrantees as to the physical
condition of the property.
- ASSIGN
- To transfer interest.
- ASSIGNEE
- One who receives an assignment
or transfer of rights. An assignment of a contract transfers the
right to buy property.
- ASSIGNOR
- The one who assigns to another
person.
- ASSUMPTION
- The agreement between buyer and
seller where the buyer takes over the payments on an existing
mortgage from the seller. Assuming a loan can usually save the
buyer money since this is an existing mortgage debt, unlike a
new mortgage where closing cost and new, possibly higher, market-rate
interest charges will apply.
- ATTACHMENT
- Seizure of property through Court
process to repay a debt.
- ATTORNEY
IN FACT
- A type of agency relationship where
one person holds a POWER OF ATTORNEY
allowing him to execute legal documents on behalf of another.
Decisions made by the attorney in fact are binding on the principal.
- BALLOON
(payment) mortgage
- Usually a short-term fixed-rate
loan which involves small payments for a certain period of time
and one large payment for the remaining amount of the principal
at a time specified in the contract.
- BANKRUPTCY
- A provision of Federal Law whereby
a debtor surrenders his assets to the Bankruptcy Court and is
relieved of the future obligation to repay his unsecured debts.
A Trustee in Bankruptcy administers the assets, selling them to
pay as much of the debt as possible. If your seller is in bankruptcy,
the Trustee in Bankruptcy owns the property and is the party to
sign the contract and make decisions. After bankruptcy, the debtor
is discharged and his unsecured creditors may not pursue further
collection efforts against him. Secured creditors, those holding
deeds of trust or judgment liens, continue to be secured by the
property but they may not take other action to collect from the
debtor.
- BENCHMARK
- A permanent reference mark for
surveyors.
- BENEFICIARY
- A person named to receive a benefit
from a TRUST. A contingent beneficiary has
conditions attached to his rights, usually someone else must die
first.
- BID
- An offer.
- BINDER
- A title insurance binder is the
written commitment of a title insurance company to insure title
to the property subject to the conditions and exclusions shown
on the binder.
- BLANKET
MORTGAGE
- A mortgage covering at least two
pieces of real estate as security for the same mortgage. This
sort of loan is more common for commercial property or "special
case" loans.
- BOND
- An amount of money, often posted
with the Court, to guarantee against loss as a result of a possible
claim. For example, if there is a LIEN against
the property, the owner may post a bond and the lien is removed
from the property and the parties argue over the money rather
than the property.
- BREACH OF CONTRACT
- Failure to perform provisions of
a contract.
- BROKER.
- An individual in the business of
assisting in arranging funding or negotiating contracts for a
client buy who does not loan the money himself. Brokers usually
charge a fee or receive a commission for their services.
- BUILDING
RESTRICTION LINE
- A required set-back a certain distance
from the road within which no building may take place. This restriction
may appear in the original plat of subdivision, restrictive covenants
or by building codes and zoning ordinances.
- BUY-DOWN
- When the lender and/or the home
builder subsidized the mortgage by lowering the interest rate
during the first few years of the loan. While the payments are
initially low, they will increase when the subsidy expires. These
are sometimes used to qualify borrowers for a loan amount that
they would not otherwise qualify for but will be able to pay in
subsequent years as their income increases.
- BUYER'S MARKET
- Market where there is more properties
available for sale than interested buyers.
- BY-LAWS
- Rules and regulations governing
an association orcorporation.
- CAPITAL
GAINS
- Profit earned from a sale of real
estate.
- CAPITALIZATION
- A method used to estimate value
of a property based on the rate of return on investment.
- CASHFLOW
- The amount of cash derived over
a certain period of time from an income-producing property. The
cash flow should be large enough to pay the expenses of the income
producing property (mortgage payment, maintenance, utilities,
etc.)
- CAVEAT
EMPTOR
- Buyer beware. The buyer must inspect
the property and satisfy himself it is adequate for his needs.
The seller is under no obligation to disclose defects but may
not actively conceal a known defect or lie if asked.
- CERTIFICATE
OF ELIGIBILITY
- The document given to qualified
veterans which entitles them to VA guaranteed loans for homes,
business, and mobile homes. certificates of eligibility may be
obtained by sending DD-214 (Separation Paper) to the local VA
office with VA form 1880 (request for Certificate of Eligibility)
- CERTIFICATE
OF OCCUPANCY
- A certificate issued by a local
governmental body stating that the building is in a condition
to be occupied.
- CERTIFICATE
OF SATISFACTION
- A document signed by the Noteholder
and recorded in the land records evidencing release of a DEED
OF TRUST, MORTGAGE or other lien on
the property.
- CERTIFICATE
OF TITLE
- A written opinion by an attorney
setting forth the status of title to the property as shown on
the public records. The certificate does not certify as to matters
not of record and affords no protection unless the author was
negligent. Compare, TITLE INSURANCE.
- CHAIN
OF TITLE
- The series of transactions from
GRANTOR to GRANTEE
as evidenced in the land records.
- CHATTEL
- Personal property.
- CLASS ACTION
- A claim brought up on behalf of
a group of people.
- CLOSING
- The meeting between the buyer,
seller and lender or their agents where the property and funds
legally change hands. Also called settlement. closing costs usually
include an origination fee, discount points, appraisal fee, title
search and insurance, survey, taxes, deed recording fee, credit
- CLOUD
ON TITLE
- An evidence of encumbrances.
- CC&R's
- Covenants, conditions, and restrictions.
- The basic rules establishing the
rights and obligations of owners of real property within a subdivision
or other tract of land in relation to other owners within the
same subdivision or tract and in relation to an association of
owners organized for the purpose of operating and maintaining
property commonly owned by the individual owners.
- COINSURANCE
- When more than one insurance company
shares the risk of a particular transaction or series of transactions.
Lenders may require co-insurance on large commercial projects.
- COLLATERAL
- Property pledged to secure a loan.
- CONDEMNATION
- Taking of private property for
a public use through exercise of the power of EMINENT
DOMAIN. The Constitution protects against taking without fair
compensation.
- CONDOMINIUM
- A system of individual FEE
SIMPLE ownership of portions (units) in a multi-unit structure,
combined with joint ownership of common areas. Each individual
may sell or encumber his own unit. Compare, COOPERATIVE.
- CONSERVATOR
- Also called a Committee or Guardian,
a person designated by the Court to protect and preserve the property
of someone who is not able to manage their own affairs. Examples
include the mentally incompetent, minors and incarcerated persons.
- CONSTRUCTION
LOAN
- A short term interim loan to pay
for the construction of buildings or homes. These are usually
designed to provide periodic disbursements to the builder as he
progresses. These are generally done by lenders with offices local
to the site of the construction. This enables the lender or their
agent to monitor the progress of the construction.
- CONTRACT
- A legally enforceable agreement
between two parties.
- CONTRACT
FOR DEED
- Also known as a Land Contract or
Land Installment Contract. A method of financing where title remains
in the Seller's name until the Buyer has paid the full purchase
price. A Contract for Deed will normally trigger the DUE
ON SALE CLAUSE in a DEED OF TRUST
or MORTGAGE but Veterans Administration
regulations specifically allow Contracts for Deed without invoking
the DUE ON SALE CLAUSE.
- CONVENTIONAL
LOAN
- A mortgage not insured by FHA or
guaranteed by the VA.
- COOPERATIVE
-
 A
system of individual ownership of stock in a corporation that
in turn, owns the structure. Each owner has an exclusive right
to use his individual unit and must pay his portion of the debt
encumbering the entire building. Compare, CONDOMINIUM.
- COST APPROACH
- A method used by an appraiser to
estimate replacement cost of improvements less depreciation.
- COTENANCY
- Ownership in the same land by more
than one person. See, TENANTS IN
COMMON, JOINT TENANTS, TENANTS
BY THE ENTIRETY.
- COVENANT
- A written agreement or restriction
on the use of land or promising certain acts. Homeowner Associations
often enforce restrictive covenants governing architectural controls
and maintenance responsibilities. However, land could be subject
to restrictive covenants even if there is no homeowner's association.
- CREDIT
REPORT
- A report documenting the credit
history and current status of a borrower's credit standing.
- DEBT-TO-INCOME
RATIO
- The ratio, expressed as a percentage,
which results when a borrower's monthly payment obligation on
long-term debts is divided by his or her gross monthly income.
See housing expenses-to-income ratio.
- DEED
- The written document conveying
real property. The Deed must be executed (signed), ACKNOWLEDGED,
and DELIVERED to the Grantee. Once recorded
at the Courthouse, the original piece of paper is not needed to
convey title in the future.
- DEED OF
TRUST
- A voluntary lien to secure a debt
deeding the property to Trustees who foreclose, sell the property
at public auction, in the event of default on the Note the Deed
of Trust secures. Compare, MORTGAGE.
- DEFAULT
- Failure to meet legal obligations
in a contract, specifically, failure to make the monthly payments
on a mortgage.
- DEFERRED
INTEREST
- When a mortgage is written with
a monthly payment that is less than required to satisfy the note
rate, the unpaid interest is deferred by adding it to the loan
balance. Seenegative amortization
- DEFICIENCY
JUDGMENT
- If the foreclosure sale does not
bring sufficient proceeds to pay the costs of sale and the note
in full, the holder of the note may obtain a judgment against
the maker for the difference.
- DELIVERY
- The final, unconditional and absolute
transfer of a DEED to the Grantee so that
the Grantor may not revoke it. A Deed, signed but held by the
Grantor, does not pass title.
- DOWER
- A spouse's interest in the property
of a deceased spouse.
- DOWN PAYMENT
- Money paid to make up the difference
between the purchase price and the mortgage amount.
- DUAL AGENCY
- Representation of opposing parties
(buyer and seller) at the same time in the same transaction. This
situation most often refers to cases where the Realtor is the
agent for both parties.
- DUE
ON SALE CLAUSE
- A clause in the MORTGAGE
that makes the loan non-assumable by providing the noteholder
may call the loan immediately due and payable upon a sale or conveyance
of an interest in the property. The FNMA/FHLMC form provides that
a lease of more than three years or a lease with an option to
buy also triggers this provision.
- EARNEST
MONEY
- A good faith deposit.
- EASEMENT
- The right to use the land of another
for a specific limited purpose. Examples include utility lines,
driveways, and INGRESS AND EGRESS.
Easements can be temporary or permanent.
- EMINENT
DOMAIN
- The power of the state to take
private property for public use upon payment of just compensation.
- ENCROACHMENT
- The physical intrusion of a structure
or improvement on the land of another. Examples include a fence
or driveway over the property line.
- ENCUMBRANCE
- Any lien, liability or charge against
a property.
- EQUAL CREDIT OPPORTUNITY
ACT (ECOA)
- Is a federal law that requires
lenders and other creditors to make credit equally available without
discrimination based on race, color, religion, national origin,
age, sex, marital status or receipt of income from public assistance
programs.
- EQUITY
- The difference between the fair
market value and current indebtedness, also referred to as the
owner's interest. The value an owner has in real estate over and
above the obligation against the property.
- EQUITY
SHARING
- A form of joint ownership between
an owner/occupant and an owner/investor. The investor takes depreciation
deductions for his share of the ownership. The occupant receives
a portion of the tax write-offs for interest and taxes and a part
of his monthly payment is treated as rent. The co-owners divide
the profit upon sale of the property. Compare, JOINT
OWNERSHIP AGREEMENT.
- ESCHEAT
- Property that reverts to the state
when an individual dies without heirs and without a will.
- ESCROW
- A disinterested third party holds
funds or documents on behalf of others and subject to their instructions.
- EXECUTOR
- A person named in a will to carry
out its terms and administer the estate. The feminine form is
Executrix. Compare, ADMINISTRATOR.
- FEE SIMPLE
- The absolute total interest in
real property. Compare, LIFE ESTATE,
REVERSION.
- FEDERAL HOME LOAN
MORTGAGE CORPORATION
- A affiliate of the Federal Home
loan Bank which creates a secondary money market in conventional
residential loans and in FHA and VA loans by purchasing mortgage
loans from members of the Federal Reserve System and the Federal
Home Loan Bank Systems.
- FIDUCIARY
RELATIONSHIP
- A relationship of trust and confidence
between principal and agent; lawyer and client; doctor and patient;
etc..
- FINANCING
STATEMENT
- Lenders record financing statements
to evidence personal property, such as a new furnace, siding or
windows, is subject to a lien.
- FIXTURE
- An item of personal property attached
to real property so that it can not be removed without damage
to the real property. A FIXTURE becomes
part of the real property.
- FORECLOSURE
- The process by which a lender sells
property securing a loan in order to repay the loan. Under a DEED
OF TRUST, foreclosure is by public auction after appropriate
advertisement. A MORTGAGE may require
the lender to obtain Court approval prior to sale.
-
FULLY
INDEXED NOTE RATE
- As related to adjustable rate mortgages,
the index value at the time of application plus the gross margin
stated in the note.
- GENERAL
WARRANTY DEED
- The Grantor warrants title against
all claims.
- GRANTEE
- The person receiving an interest
in property. Compare, GRANTOR
- GRANTOR
- The person granting, selling or
giving up an interest in property. Compare, GRANTEE.
- GRADUATED
PAYMENT MORTGAGE (GPM)
- A type of flexible-payment mortgage
where the payments increase for a specified period of time and
then level off.
- GROSS INCOME
- Income before expenses
-
GROSS MARGIN
- With regard to an adjustable rate
mortgage, an amount expressed as percentage points, stated in
the note which is added to the current index value on the rate
adjustment date to establish a new note rate.
- GROUND LEASE
- The owner grants a long term lease
of the land (usually 99 years) and allows the lessee to build
and use the land as agreed. At the end of the term, the land and
all improvements revert to the owner.
- GUARDIAN
- One appointed by the Court to administer
the affairs of a minor. A guardian ad litem is appointed to protect
one's interest in a particular legal action. See, CONSERVATOR.
- HAZARD
INSURANCE
- A form of insurance in which the
insurance company protects the insured from specified losses,
such as fire, windstorm and the like.
- HIATUS
- A gap or space left between two
parcels of land and not included in the legal description of either
parcel. Similar terms are Gaps and Gores.
- HOMESTEAD
DEED
- A declaration filed in the land
records that an individual is asserting his homestead exemption.
That exemption allows one to protect some assets (amount varies
by state) against the claims of creditors.
- HOUSING
RATIO
- The ratio, expressed as a percentage,
which results when a borrower's housing expenses are divided by
his/her gross monthly income. See debt-to-income ratio.
- IMPOUND
- That portion of a borrower's monthly
payments held by the lender or servicer to pay for taxes, hazard
insurance, mortgage insurance, lease payments, and other items
as they become due. Also known as reserves.
- INCOME
APPROACH
- A method used by an appraiser to
estimate the value of a property by calculating it's generated
income.
- INDEMNITY
- A protection against actual loss
or damage as a result of the matter mentioned. An indemnity is
not an absolute guarantee that something won't happen, it states
the terms under which an actual loss will be compensated.
- INDEX
- A published interest rate against
which lenders measure the difference between the current interest
rate on an adjustable rate mortgage and that earned by other investments
(such as one- three-, and five-year U.S. Treasury security yields,
the monthly average interest rate on loans closed by savings and
loan institutions, and the monthly average costs-of-funds incurred
by savings and loans), which is then used to adjust the interest
rate on an adjustable mortgage up or down.
- INGRESS
AND EGRESS
- Applied to EASEMENTS, meaning the
right to go in and out over a piece of property but not the right
to park on it.
- INSURABLE
TITLE
- Title subject to a defect or claim
which a title insurance company is willing to insure against.
Compare, MARKETABLE TITLE.
- INSURED
CLOSING LETTER
- An Indemnity given to a lender
from a title insurance company, agreeing to be responsible if
the closing agent does not follow the lender's instructions or
misappropriates the loan proceeds. Lender's usually require an
insured closing letter be on file for each settlement.
- INTERIM
FINANCING
- A construction loam made during
completion of a building or a project. A permanent loan usually
replaces this loan after completion.
- INITIAL NOTE RATE
- With regard to an adjustable rate
mortgage, the note rate upon origination. This rate may differ
from and is usually less than the fully indexed rate.
- INTESTATE
- An estate without a Will. Compare,
TESTATE
- JOINT
OWNERSHIP AGREEMENT
- An agreement between owners defining
their rights, ownership, monetary obligations and responsibilities.
This could be between and investor and an occupant or the occupants.
If an investor is involved, the investor does not take depreciation
deductions and none of the occupant's payment is deemed rent for
tax purposes. Compare, EQUITY SHARING.
- JOINT TENANTS
- Two or more persons own a property.
Joint tenants with the common law right of survivorship means
the survivor inherits the property without reference to the decedent's
will. Creditors may sue to have the property divided to settle
claims against one of the owners. Compare, TENANTS
IN COMMON, TENANTS BY THE
ENTIRETY.
- JUDGMENT LIEN
- A judgment is a lien against all
real property owned by the judgment debtor in the county where
the judgment is docketed (recorded).
- JUMBO LOAN
- a loan which is larger (more than
$207,000 as of 1/1/96) than the limits set by the Federal
National Mortgage Association and the Federal Home Loan
Mortgage Corporation. Because jumbo loans cannot be funded
by these two agencies, they usually carry a higher interest rate.
- JUNIOR
MORTGAGE
- Mortgage of lesser priority than
the prior recorded mortgage.
- LAND CONTRACT
- See, CONTRACT
FOR DEED.
- LEASE
HOLD ESTATE
- Tenants right of possession for
a specific period of time under a lease agreement. (Common in
Hawaii.)
- LIEN
- A claim or charge against property.
Property is said to be encumbered by a lien and the lien must
be removed to clear title.
- LIFE CAP
- With regard to an adjustable rate
mortgage, a ceiling the note rate cannot exceed over the life
of the loan.
- LIFE ESTATE
- The right to use, occupy and own
for the life of an individual. Compare, FEE
SIMPLE.
- LOAN-TO-VALUE RATIO
(LTV)
- The relationship between the amount
of the mortgage loan and the appraised value of the property expressed
as a percentage.
- LIS PENDENS
- Recorded document showing a pending
litigation filed in the court. These show up on the preliminary
title report and must be dealt with when transferring ownership
or refinancing.
- LOAN
APPLICATION
- The loan application is the source
of information on which the lender bases a decision to make the
loan; defines the term of the loan, gives the name(s) of the borrower(s)
, place of employment, salary, bank accounts and credit references,
and describes the real estate that is to be mortgaged. It also
stipulates the amount of the loan being applied for and the repayment
terms.
- MAJORITY
- The age at which a person may handle
his own affairs.
- MARGIN
- The amount a lender adds to the
index on an adjustable rate mortgage to establish the adjusted
interest rate.
- MARKETABLE
TITLE
- Title without defects or claims
so as to be readily accepted without fair or reasonable doubt.
Compare, INSURABLE TITLE.
- MARKET VALUE
- The highest price that a buyer
would pay and the lowest price a seller would accept on a property.
Market value may be different from the price a property could
actually be sold for at a given time.
- MECHANIC'S
LIENS
- The right of an unpaid contractor,
laborer or supplier to file a lien against property to recover
the value of his work
- METES
AND BOUNDS
- A means of describing land by directions
and distances rather than reference to a lot number. Generally
used when land has not been subdivided into lots.
- MORTGAGE
- A voluntary lien filed against
property to secure a debt, usually a loan. To foreclose, the lender
must often institute a court action and the borrower may have
the right to reclaim the property after foreclosure. Compare,
DEED OF TRUST.
- MORTGAGE
INSURANCE
- Money paid to insure the mortgage
when the down payment is less than 20 percent. See private
mortgage insurance, FHA mortgage insurance.
- MORTGAGEE
- The lender
- MORTGAGOR
- The borrower or homeowner
- NEGATIVE
AMORTIZATION
- Occurs when your monthly payments
are not large enough to pay all the interest due on the loan.
This unpaid interest is added to the unpaid balance of the loan.
the danger of negative amortization is that the home buyer ends
up owing more than the original amount of the loan.
- NET
EFFECTIVE INCOME
- The borrower's gross income minus
federal income tax.
- NET WORTH
- The difference between total assets
and total liabilities.
- NON
ASSUMPTION CLAUSE
- A statement in a mortgage contract
forbidding the assumption of the mortgage without the prior approval
of the lender. Note: The signed obligation to pay a debt, as a
mortgage note.
- NON-PERFORMING
LOAN
- A loan in default, usually referred
by lenders to pending foreclosures.
- NOTE
- A written promise to pay a certain
sum of money at a certain time. A negotiable note starts"Pay
to the order of" and is transferable by endorsement similar
to a check.
- NOTARY
PUBLIC
- One authorized by law to acknowledge
and certify documents and signatures.
- OFFER
- A proposal; after acceptance it
becomes a contract.
- OPTION
- A right given for a consideration
to keep an offer to purchase or lease open for specific time.
- PARTITION
- The forced division of land among
parties who were formerly co-owners. A partition suit may ask
to divide the land or if that is not practical, sell the land
and divide the proceeds.
- PAY-OFF
AMOUNT
- A total balance, amount of a full
payment on existing loan or lien.
- PLAT
- A map showing the division of piece
of land with lots, streets and, if applicable, common area.
- PIPESTEM
LOT
- A lot connected to a public street
by a narrow strip of land. Usually several adjacent pipestems
are combined to form one driveway with each owner having a mutual-reciprocal
easement to use and maintain the driveway to the street.
- PITI
- Principal, Interest, Taxes and
Insurance. Also called monthly housing expense.
- POINTS
(loan discount points)
- Prepaid interest assessed at closing
by the lender. Each point is equal to 1 percent of the loan amount
(e.g., two points on a $100,000 mortgage would cost $2,000).
- POWER
OF ATTORNEY
- A written document authorizing
another to act on his behalf as an ATTORNEY
IN FACT. One does not need to be a licensed attorney to act
as an attorney in fact but, power of attorney forms are powerful
legal documents that should be used only under advice of a licensed
attorney at law.
- PREPAYMENT
PENALTY
- An additional charge imposed by
the lender for paying off a loan before the due date.
- PRIME RATE
- The most favorable interest rate
charged by lenders on a short term loans to qualified customers.
- PRIVATE MORTGAGE
INSURANCE (PMI)
- In the event that you do not have
a 20 percent down payment, lenders will allow a smaller down payment
- as low as 3 percent in some cases. With the smaller down payment
loans, however, borrowers are usually required to carry private
mortgage insurance. Private mortgage insurance will usually require
an initial premium payment and may require an additional monthly
fee depending on you loan's structure.
- PROBATE
- Court process to prove a valid
will.
- PROMOSSORY
NOTE
- A written unsecured note promising
to pay a specified amount of money on demand, transferable to
a third party.
- PUBLIC SALE
- Sale, auction open to the public.
- PURCHASE MONEY MORTGAGE
(PMM)
- Seller financing as a part of the
purchase price.
- QUIET TITLE
- A suit brought to remove a claim
or objection on title.
- QUITCLAIM
DEED
- A deed releasing whatever interest
you may hold in a property but making no warranty whatsoever.
Compare, SPECIAL WARRANTY DEED
and GENERAL WARRANTY DEED
- REALTOR
- A member of National Association
of Realtors.
- REISSUE
RATE
- A discounted rate for title insurance
when the title was previously insured with an owner's title insurance
policy issued within the last ten years.
- RECISION
- The cancellation of a contract.
With respect to mortgage refinancing, the law that gives the homeowner
three days to cancel a contract in some cases once it is signed
if the transaction uses equity in the home as security.
- RECORDING
FEES
- Money paid to the lender for recording
a home sale with the local authorities, thereby making it part
of the public records.
- REFINANCE
- Obtaining a new mortgage loan on
a property already owned. Often to replace existing loans on the
property.
- REMAINDER
- An interest in land that is postponed
until the termination of some other interest such as a LIFE
ESTATE. Compare, FEE SIMPLE.
- RESPA
- short for the Real Estate Settlement
Procedures Act. RESPA is a federal law that allows consumers to
review information on known or estimated settlement cost once
after application and once prior to or at a settlement. The law
requires lenders to furnish the information after application
only.
- REVERSION
- A provision in a conveyance that
the land will return to the grantor upon the happening of an event
or contingency. Compare, FEE SIMPLE.
- RIPARIAN
RIGHTS
- The rights of an owner of land
adjacent to water.
- SBA
- Small Business Administration.
- SECONDARY
MARKET
- A market for the purpose of purchase
and sale of existing mortgages usually at discounted prices to
provide greater liquidity to the mortgagee/lender.
- SECOND
MORTGAGE
- A mortgage recorded after a First
mortgage, ranks second in priority.
- SPECIAL
ASSESSMENT
- Additional tax imposed by the local
government for public improvements such as new streets, etc..
- SPECIAL
WARRANTY DEED
- The seller warrants he has done
nothing to impair title but makes no warranty before his ownership.
Compare, GENERAL WARRANTY DEED
and QUITCLAIM DEED.
- SPECIFIC
PERFORMANCE
- A legal action to complete the
performance of a contract.
- STATUTE
OF LIMITATIONS
- The time period to file a law suit
to enforce a claim or it is barred by law.
- SUBDIVISION
- Dividing land into lots and streets.
The owner signs a PLAT and Deed of Resubdivision
which is recorded among the land records. The state and county
have strict requirements for subdivision of land.
- SUBJECT TO
- Taking title to property with a
lien but not agreeing to be personally responsible for the lien.
If the holder who forecloses the lien can take the property but
may not collect any money from the owner who took "subject
to." Compare, ASSUMPTION.
- TENANTS
BY THE ENTIRETY
- A husband and wife own the property
with the common law right of survivorship so, if one dies, the
other automatically inherits. One may not sue the other to PARTITION
the property. A creditor of one may not claim the property or
the proceeds of sale. Compare, TENANT
IN COMMON, JOINT TENANTS.
- TENANTS
IN COMMON
- Two or more persons own the property
with no right of survivorship. If one dies, his interest passes
to his heirs, not necessarily the co-owner. Either party, or a
creditor of one, may sue to PARTITION
the property. Compare, TENANTS
BY THE ENTIRETY, JOINT TENANTS.
- TESTATE
- To die with a Will. Compare, INTESTATE.
- TESTATOR
- One who makes out a last will and
testament. The feminine form is Testatrix.
- TITLE
- a document that gives evidence
of an individual's ownership of property.
- TITLE
INSURANCE
- Insurance that provides an INDEMNITY
against loss or damage as a result of defect in title ownership
to a particular piece of property. Title insurance covers mistakes
made during a TITLE SEARCH as well
as matters which could not be found or discovered in the public
records such as missing heirs, mistakes, fraud and forgery. Compare,
CERTIFICATE OF TITLE.
- TITLE SEARCH
- An examination of the public records,
including court decisions, to disclose facts concerning the ownership
of real estate. The title examiner prepares an ABSTRACT
and the title agent prepares a BINDER but
decisions regarding the legal sufficiency of title or questions
requiring legal interpretation must be resolved by a licensed
attorney at law.
- TRUST
- A right to or in property held
for the benefit of another. A trust may be written or implied.
An implied trust is called a Constructive Trust.
- TRUSTEE
- One who holds property in Trust
for another.
- TRUTH-IN-LENDING
- a federal law requiring disclosure
of the Annual Percentage Rate to home buyers shortly after they
apply for the loan. Also known as Regulation Z.
- TWO-STEP MORTGAGE
- a mortgage in which the borrower
receives a below-market interest rate for a specified number of
years (most often five or 7), and then receives a new interest
rate adjusted (within certain limits) to market conditions at
that time. the lender sometimes has the option to call the loan
due with 30 days notice at the end of five or 7 years.
- UNDERWRITING
- the decision whether to make a
loan to a potential home buyer based on credit, employment, assets,
and other factors and the matching of this risk to an appropriate
rate and term or loan amount.
- USURY
- Charging more than the maximum
legally permitted rate of interest.
- VA LOAN
- a long-term, low-or no-down payment
loan guaranteed by the Department of Veterans Affairs. Restricted
to individuals qualified by military service or other entitlements.
- VARIABLE
RATE MORTGAGE (VRM)
- see adjustable rate mortgage
- VERIFICATION
OF DEPOSIT (VOD)
- a document signed by the borrower's
financial institution verifying the status and balance of his/her
financial accounts.
- VERIFICATION OF EMPLOYMENT
(VOE)
- a document signed by the borrower's
employer verifying his/her position and salary.
- WAIVER
- Relinquishment of a right.
- WARRANTY
DEED
- A deed conveying the title to a
property with a warranty of clean, clear marketable title
- WRAPAROUND
- The debt secured includes an existing
debt already on the property. The payments made to the holder
of the wraparound include payments due on the existing loan and
the holder must forward the appropriate portion of each payment
to the existing noteholder. Often used to avoid a PREPAYMENT
PENALTY or a DUE ON SALE CLAUSE.
Can refer to a wraparound DEED OF TRUST
or CONTRACT FOR DEED.
- ZONING
- Regulation of private land use
and development by local government.
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