Abstract of Title: A summary of the public records relating to the title to a specific parcel of real estate. An attorney or a 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 the home with a clear and marketable title.

Acceleration Clause: Condition in a mortgage that may require the balance of the loan to become due and payable in advance of the fixed payment date if regular mortgage payments are not made.

Acceptance: The date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract.

Agency: In real estate, an agency is created by the contract between a real estate agent and buyer or seller whereby the agent agrees to act as a buyer(s) or seller(s) agent in representing and negotiating for the purchase or sale of real property.

Agreement of Sale: A contract in which a seller agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties. Also may be known as Contract to Purchase, Purchase Agreement, or Sales Agreement.  

Appraisal: An estimate of real estate value, usually issued to standards of FHA, VA, and FHMA.  The most recent comparable sales in the neighborhood are the most important factor in determining value.

Appreciation:  An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Assumption of Mortgage: When the purchaser of the property of interest is held personally liable for payment of the existing mortgage. The purchaser is than substituted for the original mortgagor in the mortgage note.

Bill of Sale: A document that is used to transfer ownership of personal property.

Binder or Offer to Purchase: A preliminary agreement, secured by the payment of earnest money, between a buyer and a 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 or offer expressly provides that it is to be refunded.

Broker: See Real Estate Broker

Building Line or Setback:  A setback line; Distances from the ends and/or sides of the lot beyond which one may not build any improvement. The building line may be established by a filed plat of subdivision, or by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

Certificate of Title: A certificate issued by the 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 Costs: There are 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 property and are items prepaid at closing.
           
Closing Day: The day on which the sale of real estate is finalized.  The certificate of title abstract & deed are generally prepared for by the title company or by an attorney and this cost is charged to the buyer. The buyer signs the mortgage documents, and the closing costs and down payment are paid. The final closing merely confirms the original agreement reached in the agreement of sale. 

Closing Statement (HUD1):  A financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received or expended.  

Cloud (on the title):  An outstanding claim or encumbrance which adversely affects the marketability of the title.

Commission:  Money paid to the real estate broker by the seller as compensation for finding a buyer and completing the sale, usually a percentage of sales price.

Condominium:  Individual ownership of a dwelling interior within the unit and an individual interest in the common areas and facilities such as the land, parking area, elevators, stairs, exterior structures and so on which serve the multi-unit project.

Condominium Conversion:  Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

Contract of Purchase: See Agreement of Sale

Deed: Written instrument, which when properly executed and delivered, conveys title to real property

Deed-in-lieu: Short for "deed in lieu of foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history. What a deed-in-lieu may prevent is having the documents preparatory to a foreclosure being recorded and become a matter of public record.

Deed of Trust: A legal document whereby real property is given as security for a debt.  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.

Default: The mortgage is in default when the payment is 30 days late. It is the mortgagor's responsibility to remember the due date and send the payment prior to the due date, not after. In the event of default, the lender may have 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 the value of a house due to wear and tear; adverse changes in the neighborhood, market conditions or any other reason.

Easement: The right to use the land of another.

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.  These usually “run with the land”, meaning the easement is permanently granted no forever.

Encroachment: An unauthorized obstruction, building, or part of a building that intrudes beyond a legal boundary onto a neighboring private or public land, or a building extending beyond the building line thus reducing the size and or value of the invaded property.

Encumbrance: A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It could be claims, mortgages, liens, charges, a pending legal action, unpaid taxes, zoning ordinances, easement rights, or restrictive covenants.  An encumbrance does not legally prevent transfer of the property to another. A title search will reveal the existence of such encumbrances. It is up to the buyer to decide whether he wants to purchase the property with the encumbrance, or what can be done to remove it.

Equity: Equity is computed by subtracting market value from the total unpaid mortgage balance along with any outstanding liens 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 leans 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, such as earnest money. When referring to a mortgage escrows, the money is held in a trust fund, provided by the lender for the buyer. Such funds are collected as a part of the closing cost and should be adequate to cover yearly anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, and special assessments.

Escrow Payment: A portion of the owner’s monthly mortgage payment is taken and put into a trust by the lender to pay for future taxes and insurance payments as they come due.

Eviction: The legal removal of a tenant from real property due to a breach of contract.

Exclusive Listing: A listing contract whereby a property owner agrees to appoint only one broker to sell the property for a specified period of time.

Executor: A person appointed in a will to administer an estate. The court will appoint an administrator if no executor is named.

Fair Market Value (FMV): The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.

Foreclosure: A legal procedure whereby property that is used as security for a debt will be sold to satisfy the debt in the event that the mortgage is in default of payment.

General Warranty Deed: A deed which grantor fully warrants a good clear title to the property of the grantee. It 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.  This warranty deed is used most in real estate deed transfers and offers the greatest protection of any deed.

Grantee: The party in the deed who is the buyer or the recipient.

Grantor: The party in the deed who is the seller or the giver.

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.

Interest: A charge paid for borrowing money.  The sum accrued in return for the use of money.
Lease Purchase Agreement:  Buyer leases the property for a specific time frame with the option to purchase the property once the lease has ended.  All deposits typically go towards the purchase of the property.

Listing Agreement: Contract between a Real Estate Broker and an owner of real property authorizing the broker to find a buyer for a certain real property.  The price and terms, length of time after which it expires, inclusions and exclusions as well as a commission agreement are noted in the contract.  There are three basic types of listing agreements; Agency Listing, Exclusive Listing and Open Listing.

Marketable Title: A title that is free and clear of objectionable liens, clouds, or other title defects. 

Note: A written promise to pay a certain amount of money.

Open Listing: A listing contract that is given to any number of brokers who can work the listing at the same time to sell it. There is no Exclusive Right to Sell and the offer must be brought before any other offer is presented or accepted.  It is not required that the offer be accepted by the owner for the commission to have been earned.  For other types of listing agreements, see Agency Listing and Exclusive Listing.

Plat: A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land and easements.

Principal: The capital sum before tax, insurance and interest.

Promissory Note: A written contract containing a promise to pay a specified amount of money at a definite future date.

Quitclaim Deed: Sometimes called a release deed. This type of deed makes no warranties as to the title, it only transfers to the buyer 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.  Often times, this is used between close relatives.  An example might be one spouse will quitclaim a deed to the other spouse due to a divorce settlement.

Real Estate Agent: A licensed sales agent working for a licensed Broker.  In some states, agent is required to have a broker’s license, in others, only a sales agent license is required.  Check with a state’s Board of Realtors for their requirements.

Real Estate Broker: In many states, a Broker is a manager over sales agents.  A Broker may still represent a Buyer or a Seller and has more training in state and federal law then a real Estate Agent also known as Broker Associate. 

Realtor: A member of local and state real estate boards, which are affiliated with the National Association of Realtors (NAR).

Rent Loss Insurance: Insurance that protects a landlord against loss of rent due to fire or other casualty that renders the leased premises unavailable for use. When this occurs the tenant is excused from paying rent.

Rent with Option: A contract, which gives one the right to lease property at a certain sum with the option to purchase at a future date.

Restrictive Covenants: A private agreement placing restrictions on the use and occupancy of real property. Such restrictive covenants may "run with the land," binding all subsequent purchasers of the land, their heirs and or assigns. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title.

Sales Agreement: See agreement of sale.

Sale-leaseback: A technique in which a seller sells the property to a buyer for a consideration and the buyer simultaneously leases the property back to the seller. 
 
Seller Agency (Single Agency): Agent will represent the best interest of the Seller.  Agent will owe the Seller fiduciary duties.  Seller(s) agent must give the Buyer all material facts so that the buyer can make an educated decision.

Special Assessments: A tax or levy imposed on real property, individual lots or all property in the immediate area for public improvements, i.e.; road construction, sidewalks, sewer lines, street lights, etc.

Special Liens: A lien or charge that binds a specified parcel 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, materials, (most commonly known as a mechanic’s lien) or money expended in that person's behalf.  In some localities it is called "particular" lien or "specific" lien. (See lien")

Special Warranty Deed: A deed in which the grantor 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 only during the period the grantor held title to the property.  Home builders typically convey title with this type of deed to the buyer.  This type of deed is sometimes used when one spouse conveys property to the other spouse as part of a divorce settlement.
 
State Stamps: See documentary stamps.

Tax: As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State.

Title: The rights to or ownership of particular property.

Title Insurance: An insurance policy which protects the purchaser or lender against loss arising from legal defects in the title.

Title Search or Examination: A examination of public 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 of title.

Transaction Broker: Agent represents both the Buyer and the Seller equally.  The agent’s objective is to get a mutually satisfactory agreement among all parties.  Agent gives all options to the Buyer and Seller.  Depending on the local market, all parties may be present at the presentation of the contract and is allowed to negotiate on their own behalf.  All of the parties have confidentiality.  Agent may do nothing to the sway either the Buyer or the Seller.  Before making any decisions, both parties have the right to seek family, financial, legal or religious counsel.

Transfer Tax: State or local tax imposed when title passes from one owner to another.  The Seller is liable for the tax.

Trustee: One who is given the legal responsibility to hold property in a trust for the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, enforceable in a court of law. (See deed of trust.)    

Zoning Ordinances: To regulate the building of structures and property land usage.  These regulations are set forth by local authorized governments.