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.
