Definitions of real estate and foreclosure words and phrases

Absolute Auction – Auction with no minimum bid amount. The highest bidder gets the property no matter what he/she bids.

Abstract – Recorded history of the property.

Appurtenance – A right, privilege or improvement that belongs to and passing with the land.

Balloon payment – Large installment payment by the end of the term.

Building code – An ordinance specifying the minimum standards of construction for buildings to protect public safety and health.

Closing – Accounting of costs of buyer and seller in a real estate sale.

Cloud – Gap in the chain of ownership, lien, unpaid taxes, etc. affecting ownership.

CMA – Comparative Market Analysis to compare the prices of recently sold homes that have similar specifications in terms of location, style and amenities.

Consideration – Money, value, something in kind, benefit, interest, good, real estate, service, anything that has a value. It does not have to be cash.

Contingency – A contract clause requiring a certain act to be done or a certain event to occur before the contract becomes binding.

Conventional loan – Loan extended without a government agency insurance or guarantee.

Conveyance – A document transferring title to real property.

Deed – Document to transfer ownership to real estate property.

Deed of trust – Written instrument in place of mortgage in some states.

Default – Nonperformance of a duty, failure to meet obligations.

Deficiency Judgment – Borrower is requested to pay the lender the difference between the mortgage balance and the proceeds of the foreclosure sale.

Due-on-Sale – Lender has the right to request repayment in full upon sale of property.

Earnest Money – Money given with the offer to purchase a property showing buyer’s serious intent.

Easement – The right to use the land of another for a particular purpose.

Encroachment – A building or some portion of it (a wall, or a fence) extending beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street.

Encumbrance – Mortgage, lien, tax, or any restriction on the use of land.

Equity – Value in a property that exceeds owner’s indebtedness.

Escrow – Deposit with a third party (broker, title company or attorney) for performance under a contract.

Escrow agent – A third party holding money, check, etc. to secure real estate transaction. Typically it is a listing (selling) broker.

Equity – value of the property owned by the homeowner = buying price + appreciation in value + improvement made – mortgage.

Execution – Signing and delivery of an instrument.

Fee Simple – Very common term used to indicate complete legal ownership of a property.

Fraud – Deception intended to cause a person to give up property or a lawful right.

Gross lease – Landlord pays all property charges.

Guarantee – Any person receiving (such as buyer) any interest in real estate.

Guarantor – Person giving (such as seller) any interest in real estate.

Homestead – Land owned and occupied as the family home.

Hypothecate – Pledge a property as a security for a loan without giving up possession.

Improvement – Privately owned structure (building, fence, etc.) on a site to enhance the value of the property.

Lis Pendens – Pending lawsuit.

Mechanic’s lien – Lien on property by suppliers of labor or material.

Origination fee – Application fee for processing a loan

PITI – Principal, Interest, Taxes and Insurance

Plat map – Section or subdivision of a town showing the location and boundaries of a property.

Points – Charge by the lender in extending a loan. One point equals one percent of the loan amount.

Prepayment penalty – Fee charged to borrower who pays off the loan before its due date.

Probate – Legal action where court determines who will inherit the property of a decedent, and what assets he/she had.

Quitclaim deed – Deed indicating that owner gave up his/her interest/claim in the property.

Quite title – Removal of a cloud on the tile by a court action.

Ratification – Signing of agreement by both parties.

Realtor® – Sales agent who is a member of the National Association of Realtors subscribing to its ethical standards.

Redemption – Right of defaulted previous owner to re-own his/her property by curing the default.

Reserved auction – Seller determines the minimum price to be accepted.

RESPA – Real Estate Settlement Procedures Act. It requires that all lenders (except private parties) give you an estimate of lending fees.

Statute of limitations – Period of time during which certain actions must be brought to court.

Title insurance – It is used to ensure ownership where abstracts are not used.

Usury – Applying interest rate at a rate higher than what is allowed by state law.

Zoning ordinance – Regulating the use of property by municipality.

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