Real Estate Glossary

Glossary

 

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A

abstract of title
A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.

abutting
The joining, reaching, or touching of adjoining land. Abutting pieces of land have a common boundary.

acceleration clause
A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at once.

acceptance
An offeree's consent to enter into a contract and be bound by the terms of the offer.

accretion
An addition to land through natural causes.

acknowledgment
A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by him and that it was his free and voluntary act.

acre
A measure of land equal to 43,560 square feet.

ad valorem
Designates an assessment of taxes against property. Literally, according to value.

additional principal payment
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

adjustable rate mortgage (ARM)
A mortgage loan whose interest rate fluctuates according to the movements of an assigned index or a designated market indicator--such as the weekly average of one-year U.S. Treasury Bills--over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary.

adjusted basis
The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

adjustment period
The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

adjustments
Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment. administrator/administratrix A man/woman appointed by a court to settle the estate of a deceased person when there is no will. Contrast with executor/executrix.

adverse possession
The right of an occupant of land to acquire title against the real owner, where possession has been actual, continuous, hostile, visible, and distinct for the statutory period. The requirements for adversely possessing property vary between states, but usually include continuous and open use for a period of five or more years and paying taxes on the property in question.

affidavit
Written statement signed and sworn to before some person authorized to take an oath.

agency
The legal relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent: however, a buyer represented by a broker (i.e., buyer as principal is a growing trend. In an agency relationship, the principal delegates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has a fiduciary relationship with the principal and owes to that principal the duties of accounting, care, loyalty, and obedience. Also see buyer's broker.

agent
A person authorized to act for and under the direction of another person when dealing with third parties. The person who appoints an agent is called the principal. An agent can enter into binding agreements on the principal's behalf and may even create liability for the principal if the agent causes harm while carrying out his or her duties. See also attorney-in-fact.

 

alienation Clause
A clause in a mortgage, which gives the lender the right to call the entire loan balance due if the property is sold; due-on-sale clause.

amenities
Non monetary benefits and satisfactions derived from property ownership, such as a pleasant view, pride in home ownership, etc.

ammendment
A modification to an existing contract, mutually agreed to by all parties. Examples might include a change in the pruchase price due to a low appraisal, or a change in the closing date.

amortization
The operation of paying off indebtedness, such as a mortgage, by installments. The conventional amortization periods are15 or 30 years. (See term)

amortized mortgage
A mortgage requiring periodic payments that include both interest and principal. Also see self amortized loan.

annual membership
The amount that is charged annually for having a line of credit available. Often charged regardless of whether or not you use the line.

antitrust laws
Federal and state laws prohibiting, among other things, monopolies, monopolistic practices, restraint of trade, and price fixing.

application
An initial statement of personal and financial information, which is required to approve your loan.

application fee
Fees that are paid upon application. Charges for property appraisal and a credit report are usually included in the application fee.

appraisal
A determination of the value of something, such as a house, jewelry or stock. A professional appraiser--a qualified, disinterested expert--makes an estimate by examining the property, and looking at the initial purchase price and comparing it with recent sales of similar property. Courts commonly order appraisals in probate, condemnation, bankruptcy or foreclosure proceedings in order to determine the fair market value of property. Banks and real estate companies use appraisals to ascertain the worth of real estate for lending purposes. And insurance companies require appraisals to determine the amount of damage done to covered property before settling insurance claims.

appraised value
An estimate of the present worth.

appreciation
An increase in value or worth of property. Opposite of depreciation.

asking (list) pric
e The price placed on property for sale.

assessor
A local government official who determines the value of the property for taxation purposes.

assignee
A person to whom a property right is transferred. For example, an assignee may take over a lease from a tenant who wants to permanently move out before the lease expires. The assignee takes control of the property and assumes all the legal rights and responsibilities of the tenant, including payment of rent. However, the original tenant remains legally responsible if the assignee fails to pay the rent.

assignment
A transfer of property rights from one person to another, called the assignee. assumable mortgage An existing mortgage that can be taken over by the buyer on the same terms given to the original borrower.

assumption of mortgage
The transfer of title to property to a grantee wherein he assumes liability for payment of an existing note secured by a mortgage against the property; should the mortgage be foreclosed and the property sold for a lesser amount than that due, the grantee-purchaser who has assumed and agreed to pay the debt secured by the mortgage is personally liable for the deficiency. Before a seller may be relieved of liability under the existing mortgage, the lender must accept the transfer of liability for payment of the note. Also known as simple assumption. Contrast withsubject to mortgage.

attachment
Method by which a debtor's property is placed in the custody of the law and held as security pending outcome of a creditor's suit.

attorney's opinion of title
An instrument written and signed by the attorney who examines the abstracts of title, stating his opinion as to whether a seller may convey good title.

attractive nuisance
Something on a piece of property that attracts children but also endangers their safety. For example, unfenced swimming pools, open pits, farm equipment and abandoned refrigerators have all qualified as attractive nuisances.

auction
A public sale of property to the highest bidder.

 

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