Introduction

Real estate in the United States is a diverse and complex world with its own set of specialized terms and jargon. Understanding these terms is essential for property buyers, sellers and real estate professionals alike. Whether you are looking to buy your first home, invest in property, or simply want to learn more about this market, this glossary will help you navigate the language of real estate.

From fundamental concepts such as "mortgage" and "property" to more specialized terms such as "easement" and "escrow," this glossary provides clear, concise definitions so you can make informed decisions in the exciting and sometimes complicated world of U.S. real estate. As you explore these terms, you'll discover how they apply in a variety of situations, from leases to commercial real estate transactions.

Whether you are looking to buy, sell or invest in real estate, this glossary will provide you with the tools you need to understand and make the most of your experience in the U.S. real estate market. With clear and accessible language, we invite you to explore and learn more about these crucial terms that shape the real estate industry in this country.

Real Estate Terms Beginning with A

Abutting (Adjacent): Means an area of land or a building that has a common boundary with another.

Acceleration clause (Acceleration clause): A contractual provision that allows the lender to require the borrower to repay the entire outstanding loan if payments are not made or a default under the contract occurs. A condition in a real estate financing instrument that gives the lender the power to declare all sums due and payable to the lender immediately due and payable upon the occurrence of an event, such as the sale of the property or default on the note.

Acceptance (Acceptance): The unconditional and unrestricted agreement of the offeree to the terms of the offer. When an offer is accepted, it becomes a binding contract.

Accession (Accession): In property law, accession is the acquisition of land by adding it to real property already owned through human or natural processes. The potential right of ownership of land that is produced, then added or attached to the owner's land.

Accretion (accretion): The slow accretion or acquisition of land, usually when soil is deposited due to the natural action of water. Long-term accretion may increase the size of a property. The process of gradual growth or accretion over a period of time from natural events, resulting in additional layers of matter.

AcknowledgementA formal statement made before an authorized person (e.g., a notary public) by a person who has executed an instrument, affirming that the execution was a voluntary act. In California, an acknowledgment is a statement by an official, such as a notary, that the signer of the instrument is the person he or she purports to be.

Active property (Active Property): If you or your client see a listing with the status "active", this indicates that the property is available for sale.

Current fraud (Actual fraud): It is an intentional misrepresentation of a fact; in simple terms, it is lying.

Actual NoticeExpress or implicit knowledge of a fact.

Addendum (Addendum): Used to clarify and add things that were not initially part of the original contract or agreement.

Additional Principal Payment

An additional principal payment is a payment made by a borrower of more than the scheduled amount of principal due in order to reduce the remaining balance of the loan. This type of payment is made to accelerate the amortization of the loan and ultimately decrease the outstanding debt.

Ad valorem (Ad valorem): The Latin phrase ad valorem means "according to value".

Adjustable-rate mortgage (ARM) (Adjustable Rate Mortgage): An adjustable rate mortgage has a flexible interest rate. Adjustable rate mortgages have a fixed period during which the initial interest rate remains the same, after which the interest rate adjusts at a preset frequency. The fixed rate period can vary significantly, from one month to 10 years.

Adjusted Basis

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

Adjustment Date

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

Adjustment Period

The period between adjustment dates for an adjustable rate mortgage (ARM).

Administrator

A person appointed by a probate court to administer the estate of a person who has died without a will.

Adverse possession (Adverse Possession): The legal principle in which a person who does not have the legal right to a property acquires legal ownership based on continued occupation of the land without the permission of its true owner. A method of acquiring title to real property by meeting statutory requirements; a form of involuntary alienation of title.

Affidavits: A formal affidavit of fact. As part of the closing process, you will likely sign numerous affidavits. You may be required, for example, to sign an affidavit of occupancy. This states that you will use the property as your primary residence. Or you and the seller may be required to sign an affidavit stating that all improvements to the property required in the sales contract were completed prior to closing.

Your lender can provide you with additional information on any of these documents that you will sign.

Affordability Analysis: A detailed analysis of your ability to purchase a home. An affordability analysis takes into account your income, liabilities and available funds, along with the type of mortgage you plan to use, the area where you want to buy a home and the closing costs you could expect to pay.

Affinity housing (Affinity Housing): Allows marginalized groups with shared backgrounds to live in their own communities, avoiding certain FHA guidelines. These affinity communities are common on college campuses and allow students with protected characteristics to live in a familiar environment and culture.

Agency (Agency): The relationship between the principal and the principal's agent arising out of a contract, whether express or implied, written or oral, in which the agent is employed by the principal to perform certain acts in connection with a third party.

Agent (Agent): One who speaks for or represents someone. One who acts on behalf of and with authority of another called the principal.

Agreement of sale (Agreement of Sale): A form that states that the buyer consents to purchase a property and the seller agrees to sell that property under the terms and conditions illustrated by both parties.

Air rights (Air Rights): The rights to use space above the Earth.

Alienate - The ability of a property or property right to be sold or transferred from one party to another.

Alienation (Disposal): The act of transferring title, ownership, an estate, or an interest in real property from one party to another. The transfer of property to another person; the transfer of ownership and possession of land or other things, from one person to another.

Alienation clause (Dispossession clause): The provision in a mortgage or deed of trust signed with the lender that states that the borrower must pay the mortgage in full before the borrower can transfer the property.

Amendments (Amendments): Usually used to change something that is part of an original contract.

Amenities (Amenities): A useful feature or addition to a home that generally adds value to the property.

Americans with Disabilities Act of 1990The Americans with Disabilities Act (ADA) protects people with disabilities from discrimination in housing. This federal law states that housing providers must provide equal opportunity for people with physical or mental disabilities. It is a federal law that protects the rights of people with physical or mental disabilities.

Amortization (Amortization): When payments are divided into equal amounts over the life of the loan. Amortization is an accounting process in which the carrying value of a loan or intangible asset is reduced periodically through regular payments.

Amortization Term

The amount of time required to amortize the mortgage loan. The amortization term is expressed in number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

Amortize

Repay a mortgage with regular payments that cover both principal and interest.

Amortization Schedule

A schedule for repayment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal, and shows the remaining balance after each payment is made.

Annual Mortgagor Statement (Annual Mortgagor Statement)

A report sent to the mortgagee each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining balance of the mortgage loan at the end of the year.

Annual Percentage Rate (APR)

The cost of a mortgage expressed as an annual rate; includes items such as interest, mortgage insurance and loan origination fee (points).

The relative cost of credit, determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for the implementation of the Federal Truth in Lending Act.

Annuity: An amount paid annually or at other regular intervals, often on a guaranteed dollar basis.

Anticipatory RepudiationWhen a default occurs before the expiration of the performance period as a result of the clear intention of one of the parties not to substantially perform.

Antitrust laws (Antitrust laws): A set of federal and state government laws that regulate the conduct and organization of business, generally to promote fair competition for the benefit of consumers.

Application: A form used to apply for a mortgage loan and to record pertinent information about a prospective mortgagor and the proposed security.

*See also the "Loan Application" entry.

Appraisal (Appraisal/Appraisal): An estimate of the approximate value of something. A written statement, prepared independently and impartially by a qualified appraiser, that establishes an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date. It is supported by the presentation and analysis of relevant market information.

Appraisal contingency (Appraisal Contingency): Most large lenders or banks require the buyer to have an appraisal done on the property before the loan is granted. This is done to make sure the home is worth approximately the accepted offer price.

Appraised Value

An opinion of the fair market value of a property, based on the knowledge, experience and analysis of an appraiser.

Appraiser (Appraiser/Appraiser): Although brokers and agents generally have some understanding of the appraisal process, they usually bring in an appraiser to do the work. Appraisers must have detailed knowledge of appraisal methods, and many states require a specific license or certification to perform these tasks. A person qualified by education, training, and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and the use of formal appraisal processes.

Appreciation (Appreciation): Any increase in the value of a property over time for any reason.

Appurtenance (Accessory): A noun describing an item attached to something. In real estate, after something is installed on a property, it can be called an appurtenance. It means that it is passed on to a new owner if the property is sold. Something that is outside the property itself but belongs to the land and contributes to its greater enjoyment, such as a right-of-way or a barn or a dwelling.

Appurtenant (Accessory): An adjective meaning attached to something. If something is accessory, it belongs to something else, either attached or by law.

Appurtenant easement (appurtenant easement): A type of easement that "runs with the land".

Arbitration (Arbitration): A way to resolve disputes. Normally, real estate arbitration occurs when two property owners want to resolve a problem and do not wish to involve the courts directly.

Assessment: The process of assigning a value to a property for the sole purpose of taxation. It may also refer to a charge against property for a special purpose, such as an assessment for the sewer system.

Assessment Rolls (Assessment Rolls): The public registry of taxable property.

Assessor (Appraiser): A public official who establishes the value of a property for tax purposes.

Asset: Anything of monetary value that is owned by a person. Assets include real estate, personal property, and claims enforceable against others (including bank accounts, stocks, mutual funds, etc.).

Assignment: The transfer of a mortgage from one person to another. A transfer of benefits and obligations within a contract to a third party who was not originally a party to the contract.

Assignees (Assignee)Those to whom the ownership or interest in the property has been transferred.

AssignorWho assigns or transfers the property.

Assumable Mortgage: A mortgage that can be assumed by the buyer when a home is sold.

Assumption (Asunción): The transfer of the existing mortgage from the seller to the buyer.

Assumption Clause: A provision in an assumable mortgage that allows the buyer to assume responsibility for the seller's mortgage. The loan need not be paid in full by the original borrower upon sale or transfer of the property.

Assumption Fee: The fee paid to a lender (usually by the real estate buyer) as a result of the assumption of an existing mortgage.

Attorney-in-fact (Practicing Attorney): Someone authorized to act on behalf of another person, usually in business or for some type of commercial transaction.

Automated Underwriting: After you complete your loan application with a lender, it is sent to "underwriting" for review. In short, underwriting is the process used to analyze how you have handled credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for (i.e., your income and assets), and whether the price you are willing to pay for the home is supported by the price of the property.

Avulsion (Avulsion): The immediate action of adding or uprooting land by violent acts of natural causes. An example of avulsion is a dam break or hurricane.

Real Estate Terms Beginning with B

Balance Sheet (Balance Sheet): A financial statement that shows assets, liabilities and net worth at a specific date.

Balloon loan (Balloon Loan: A loan that begins with fixed, regular payments over a specified term and ends with a final payment of the remaining balance. A Balloon loan is not fully amortized over the term.

Balloon Mortgage: A mortgage that has fixed monthly payments that will amortize over a specified period, but provides for a balloon payment to be made at the end of a previously specified term.

Balloon Payment: The final balloon payment that is made on the maturity date of a balloon mortgage.

Bankrupt: A person, firm or corporation that, through a judicial process, becomes exempt from payment of all debts after surrendering all assets to a court-appointed trustee.

Bankruptcy: A proceeding in federal court in which a debtor who owes more than he or she has in assets can discharge the debts by transferring his or her assets to a trustee. A legal proceeding by an individual or business that can no longer pay their respective debts.

Bargain and sale deed (Deed of Sale): Proves that only the seller of the property holds title to the property and has the legal right to transfer the property.

Before-Tax Income: Income before taxes are deducted.

Beneficiary (Beneficiary): An individual for whom a trust works. They "benefit" from the trust.

Bequeath (Legar): Transferring personal property through a will.

Betterment: An improvement that increases the value of a property, as opposed to repairs or replacements that simply maintain its value.

Bilateral contract (Bilateral contract): An agreement between at least two persons or groups. Most commercial and personal contracts fall into this category. A contract in which each party agrees to do something.

Bill of sale (Contract/CREDIT OF SALE): The documentation given to transfer title to an individual property. A written instrument delivered to transfer title to personal property from the seller to the buyer.

Binder (Preliminary Agreement)

A preliminary agreement, backed by the payment of an earnest money deposit, whereby a buyer offers to purchase real estate.

Biweekly Mortgages (Biweekly Mortgages)

Your lender will probably tell you that a biweekly mortgage is structured the same way as a traditional fixed-rate, level-payment amortizing mortgage. However, you make your payments every 14 days instead of once a month. The monthly payment is divided in half, resulting in the same total monthly mortgage amount, but the 26 and sometimes 27 biweekly payments per year translate into 13 monthly payments, or one additional monthly payment per year.

Borrowers may qualify for a 30-year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates. At higher rates, the actual term decreases.

If you are looking to build equity in your home faster without the higher monthly payments that come with a shorter-term mortgage, you may want to consider the bi-weekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account.

Blanket Insurance Policy: A single policy that covers more than one property (or more than one person).

Blanket mortgage (Balloon Mortgage): A single loan that allows borrowers to purchase multiple real estate properties under one mortgage. Instead of having multiple mortgages for multiple properties, this type of mortgage allows borrowers to purchase multiple properties with a single mortgage.

Blind ad (Anonymous Advertising): An advertisement in which the advertiser does not disclose his or her name or licensing status. Real estate brokers and agents must identify themselves in all advertisements and provide sufficient information to notify the public of their status as real estate professionals. Failure to disclose licensing status is illegal in most states, so it is crucial that agents understand the intricacies of blind advertising. An advertisement that remains anonymous as to who is doing the advertising.

Blind offer (Blind Offer): An offer to purchase written by a buyer without seeing the property. Blind offers are a quick and easy way for buyers to bid on a home. It saves buyers and sellers time by omitting inspections or appraisals.

Blockbusting (Real Estate Pressure): The discriminatory practice of encouraging property owners to sell below market value due to the socioeconomic decline of the neighborhood, specifically due to the influx of minorities into that area. It is the use of prejudice to instill fear or panic (also known as panic selling) in order to motivate people in a particular area or neighborhood to sell or part with their property due to the influx or potential influx of a protected class.

Bona Fide (Good Faith): In good faith, without fraud.

Bond: An interest-bearing debt certificate with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation generally secured by a mortgage or deed of trust. A debt instrument representing a debt.

Borrower Paid PointsAdditional amounts paid by the borrower outside the cost of obtaining the loan.

Breach (Non-compliance)A violation of any legal obligation.

Breach of contract (Breach of contract): The failure to perform an agreement according to the agreed terms.

Bridge loan (Bridge Loan): Provides short-term financing to homeowners as they move from one home to another.

Broker: A person who, for a commission or fee, brings parties together and assists in negotiating contracts between them.

Budget: A detailed plan of expected income and expenses over a specified period of time. A budget can provide guidelines for managing future investments and expenses.

Budget Category A category of income or expense data that can be used in a budget. You can also define your own budget categories and add them to one or more of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.

Buffer zone (Buffer Zone): A space of land between two use districts, such as a park, playground, or roadway. The purpose of a buffer zone is to facilitate the transition from one zone to another.

Building codes (Building codes): The rules and property standards for the protection of public safety and welfare. A systematic regulation of the construction of buildings within a municipality established by ordinance or law.

Bundle of rights (Package of Rights): When a person purchases property, he or she is granted rights to the property; these rights may be divided and granted to different parties. The rights or interests that a person has in a particular property. The right to dispose, the right to encumber, the right to possess, the right to use, and the right to exclude others (the right to quiet enjoyment).

Buydown (Buy-down): A financing process in which the borrower obtains a lower interest rate for a few years during the term of the loan by paying more up front. By paying a larger lump sum up front, buy-down allows the borrower to pay a lower interest rate for a few years.

Buydown Account (Interest Rate Reduction Account) An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment is due during the period that an interest rate reduction plan is in effect.

Buydown Mortgage (Mortgage with Interest Rate Reduction) A temporary interest rate reduction is a mortgage in which a down payment is made by either party to reduce a borrower's monthly payments during the early years of a mortgage. A permanent reduction reduces the interest rate for the life of a mortgage.

Buyer's home sale contingency (Buyer's Home Sale Contingency): This contingency allows the buyer to cancel the contract if they are unable to sell their current home within a specified period of time.

Buyer's agent (Buyer's Agent): If someone is in the market for a new home, they hire a buyer's agent. A buyer's agent represents the buyer in a transaction and receives a fee for their services.

Buyer's Market (Buyer's Market): An excess of supply and a decrease in demand.

Real Estate Terms Beginning with C

Capital gain (Capital Gain): The gain realized from the sale or auction of a property or investment. In the resale of a capital asset, the amount by which the net proceeds from the sale exceed the adjusted cost basis (book value). It is used for income tax calculations. Gains are referred to as short-term or long-term depending on the holding period after acquisition. Normally taxed at lower rates than ordinary income.

Capitalization (Capitalization): The conversion of assets or income into capital.

Capitalization rate (Capitalization rate): The rate used to indicate the expected return on a property. The interest rate that is considered a reasonable return on investment and is used in the income-based value determination process. Capitalization Rate = NOI / Purchase Price

Caveat emptor (Caveat emptor): Latin expression meaning "let the buyer or buyers beware". The concept is that the buyer is responsible for verifying the quality of a product before making a purchase.

Cetris peribus (Ceteris paribus): A Latin phrase meaning "all other things remaining equal" or, in simple terms, that all other conditions remain constant.

Chattels (Personal property): Another word for personal property.

Chattel mortgage (Chattel Mortgage): A loan for a mobile or manufactured home or a tangible movable asset, such as business equipment, machinery, or any type of vehicle. With a chattel mortgage, the movable assets (whatever they may be) are used as collateral on the loan.

Chronological AgeThe actual age of a building.

Civil Law - The legal system that deals with private relations between members of a community rather than criminal, military or religious matters.

Civil Rights Act of 1866 - A federal law that prohibits discrimination on the basis of race.

Civil Rights Act of 1964 (Civil Rights Act of 1964) - A law that prohibited discrimination on the basis of race, color, national origin, or gender in any housing program receiving federal funds.

Client (Client): Prior to signing a listing contract, a party to a real estate transaction who will employ an agent.

Closing (Closing): The final step in the execution of a real estate transaction. It is when ownership and official payment are transferred to the appropriate parties. Closing generally takes place after a purchase agreement has been made and title is ready to be transferred.

Closing cost (Closing Costs: Closing costs typically represent 2% to 5% of the purchase price of the home. Costs included in closing costs are all fees required to close the loan, including loan fees, origination fees, title fees, prepaid taxes, attorney fees and others.

Co-borrower (Co-borrower): Also known as co-applicant or joint applicant. They share responsibility for making loan payments as the primary borrower and have equal access to funds as the primary borrower.

Co-op (Cooperative): A non-profit corporation, with a board of directors, in which each resident is a shareholder. The major difference between a condominium and a cooperative is that most cooperative associations require that a potential buyer be approved by a committee composed of current owners of the cooperative.

Co-ownership (Joint Ownership): When title to a parcel of real estate is held by two or more individuals, those parties are called co-owners or concurrent owners. Individuals may co-own the property as tenants in common, joint tenants, or as community property.

Color of title (Color of title): The legal concept of a title claim that appears to be legally valid, but in reality, the claim is defective.

Collateral (Collateral): Something of value pledged to a lender as security (mortgage) for an obligation.

Commercial property (Commercial property): A property that generates income or salary.

Commingling (Commingling): In real estate, commingling refers to the act of mixing client funds with the broker's own funds. Commingling can be both legal and illegal, depending on the state and circumstances. Commingling or combining, for example, a client's funds in a broker's personal or general account.

Commingled real estate funds (commingled real estate funds): Broadly speaking, refers to funds that are commingled in real estate investments. From an agent's perspective, these funds are best defined as personal funds commingled with client funds.

Commission (Commission): A fee paid to an agent for conducting a transaction.

Community property (community property): Laws providing that husband and wife are equal and separate partners in marital property.

Comparables (Comparable Properties): Another word for properties sold in the same area that are used as a reference to determine the value of a property.

Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (Comprehensive Environmental Response, Compensation, and Liability Act of 1980): Also known as "Superfund," this is a U.S. federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants.

Condemnation (Expropriation): The procedure used by a public or private entity with the powers granted by eminent domain to take possession of privately owned real property. Taking private property for public use, with just compensation to the owner; exercising the right of eminent domain.

Condominium (Condominium): Five or more units in which the owner has a freehold interest in the airspace, or the four walls in which he lives or occupies, plus the common areas held as tenancy in common.

Consideration (Consideration/Contract): Something of value given by one party to another as part of a valid contract. Anything given or promised by one party to induce another to enter into a contract, e.g., personal services or even love and affection. It may be a benefit conferred on one party or a detriment suffered by the other.

Conspiracy to boycott (Conspiracy to boycott): Occurs when two or more persons or entities conspire to restrict someone's ability to compete, which is antithetical and highly illegal.

Construction loan (Construction loan): A short-term loan that provides cash to build a residential property.

Constructive eviction (constructive eviction): A legal term used in real estate law to describe a situation in which a landlord performs or fails to perform an action that he or she has a legal duty to provide, leading the tenant to vacate the premises. Any disturbance of the tenant's possession of the leased premises by the landlord whereby the premises become unfit or unsuitable for the purpose for which they were leased.

Constructive fraud (Constructive fraud): This is best described as ignorance or lying without knowing that one is lying.

Constructive NoticeA fact imputed to a person by law, which should have been discovered because of the person's actual knowledge of the circumstances and the investigation that a prudent person would be expected to make.

Contingent property (Contingent ownership): Means that an offer for the property has been accepted, but there is a condition or "contingency" written into the contract that must be met before the sale can be completed.

Contract (Contract): An agreement between two or more parties that is legally binding. An agreement to do or not to do a particular thing. It must have four essential elements: parties capable of contracting, consent of the parties, a legal object, and consideration. A real estate sales contract must also be in writing and signed by the party or parties responsible for performance.

Conventional loan (Conventional Loan): A loan provided by a private lender and not part of any government program such as VA or FHA. These loans are backed by the private sector and are available through conventional lenders such as financial institutions, credit unions, banks and online lending platforms. A loan in which there is no government involvement or cooperation.

Corporation (Corporation): Corporations may be formed for profit or not-for-profit. A corporation is managed and operated by a board of directors. A corporation has certain rights, privileges and responsibilities beyond those of partnerships. Doing business as a corporation has its advantages and disadvantages.

Corporeal property (corporeal property): Refers to the property of a material thing. This type of property includes objects that can be seen or touched and that have a physical existence. So, if you have something in your possession that you can see and touch, it is corporeal property.

Cosigner (Co-signer): A person who agrees to be responsible for making loan payments if the borrower defaults or goes into default. Typically, the co-signer has better credit scores and is more financially stable than the borrower. Therefore, the co-signer may help the borrower qualify for the loan because of his or her creditworthiness.

Cost approach (Cost Approach): A real estate appraisal method that determines how much it would cost to replace a property, subtracting depreciation. The method is based on the idea that the price of a property should be determined by the value of the land plus the cost of construction (subtracting the cost of depreciation).

One of three methods in the appraisal process. An analysis in which an estimate of a property's value is derived by estimating the replacement cost of improvements, deducting the estimated accumulated depreciation, and then adding the market value of the land.

Counteroffer (Counteroffer): Similar to a purchase contract. If a counteroffer is made, the original offer ceases to exist because, legally, the seller has rejected it.

CovenantsAgreements included in deeds and other instruments promising the performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property.

Crawl Space (Crawl Space)An area of limited height below a floor or ceiling, providing access to wiring and plumbing.

Creative financing (Creative financing): A financing process that does not involve conventional lending practices. In this type of financing, an individual or business uses specialized tactics to obtain financing for real estate purchases.

Creditor - A person who regularly extends consumer credit that is subject to a finance charge, or that is paid by written agreement in more than four installments, not including a down payment, and to whom the obligation is initially owed, either for the face value of the note or contract, or by agreement where there is no note or contract.

Criminal Law: A legal system that deals with the punishment of those who commit crimes.

Real Estate Terms Beginning with D

 

Damages (Damages and Damages)Compensation recoverable by a person who has suffered an injury, whether to his person, property or relative rights, by reason of an act or default of another person. Loss suffered or damage caused to a person or property.

DatumThe data set representing heights and depths measured in a horizontal plane.

DBA (Doing Business As): Used to indicate that a company is doing business under a trade name other than its registered legal name.

Debt (Debt): Something owed or promised to be paid. That which is owed from one person to another; obligation, responsibility.

Debt InstrumentA paper or electronic obligation.

Deceit: Making a statement of fact that you know is not true. Making a statement of fact that no one has reason to believe is true, or failing to disclose a "material fact".

Deed (Deed): A written legal document by which ownership of real property is transferred from one party to another. A written instrument which, when properly executed and delivered, transfers title to real property from one person (grantor) to another (acquirer).

Deed in Lieu of Foreclosure (Deed in Lieu of Foreclosure)A deed to real property accepted by a lender on behalf of a borrower in default to avoid the need for foreclosure proceedings by the lender.

Deed restrictions (Deed Restrictions): Limitations on the use of property imposed by a previous or current owner and are generally legally binding on a permanent basis.

Defeasance clause (Release Clause): A required contractual provision that ensures that title to the property is transferred to the buyer once the mortgage is paid in full.

Deficiency JudgmentA judgment granted by a court when the value of the collateral offered as security for a loan is insufficient to pay the debt owed by the borrower in default.

Delinquent mortgage (Mortgage in default): A mortgage in which the borrower has failed to make the payments required under the mortgage contract.

Delinquent taxes (Delinquent taxes): Past due taxes that have not been paid on time.

Delivery (Delivery): The legal act of transferring ownership.

DemandThe general desire for a product or service. The supply of willing and able buyers in the market or lack thereof.

Department of Housing and Urban Development (HUD): A federal agency that administers funding for housing-related projects.

Depreciation (Depreciation): Any decrease in the value of a property over time, regardless of cause. The ability to deduct expenses on improvements made to income property.

Discount points (Discount Points): Prepaid interest that borrowers can purchase to reduce their interest on their monthly payment. These points take the form of a down payment or a one-time fee that is included in the closing costs.

Discount RateThe minimum interest rate established by the Federal Reserve for loans to other banks.

Dividing territories (Division of territories): When competing brokers agree to divide territories and divide interests accordingly. This constitutes a clear violation of antitrust laws.

Documentary Transfer Tax (Impuesto de Transferencia Documental)A state enabling law that allows a county to adopt a documentary transfer tax that applies to all transfers of real property located in the county. The notice of payment is entered on the deed or on a separate document filed with the deed.

Dominant estate (Dominant): A parcel of real estate that has an easement over another property.

Dominant Tenement (Dominant Tenement)Land benefiting from an accessory easement.

Double net lease (Double Net Lease): "Double" means that two additional costs will be added to your base rent. Generally, tax and insurance costs are added to the monthly lease payment.

Down payment (Down Payment): The amount the borrower pays to the lender as a percentage of the purchase price of a property.

Due on Sale ClauseAn acceleration clause that gives the lender the right to demand full payment of the mortgage when the property is sold.

Duress (Dureza): Coercion or pressure to force an individual or business to do something against its will.

Dual agency (Dual Agency): Occurs when a real estate agent represents both the buyer and seller in a transaction. An agency relationship in which the agent acts simultaneously for both principals in a transaction.

DVA loan (DVA Loan): A loan to a certified veteran through the Department of Veterans Affairs (DVA).

Real Estate Terms Beginning with E

Easement (Easement): A right that one person has to use another person's land for a specific purpose, such as driving across another person's property. A right, privilege, or interest limited to a specific purpose that one party has in the land of another.

Easement Appurtenance (Accessory Easement)A right to use another person's contiguous land that is conveyed with title to the property benefiting from the easement.

Easement by necessity (Easement by necessity): A type of easement that allows the use of land to reach another part of the land. It is a court-created easement, similar to an implied easement. Courts will only grant this type of easement if it is a real necessity for the use of the land. It exists when a landowner has no access to roads and is left without access to the land. It exists when a landowner has no access to roads and is left without access to the land.

Easement by PrescriptionObtained through the use of another person's land for the legally prescribed period of time.

Easement by Voluntary GrantA grantor transfers the right to use the grantor's land to a grantee for the purpose of access and egress.

Easement in gross (Easement in Kind): An easement that is attached to a person or entity rather than to the property itself. It differs from a regular easement in that most easements apply to the property, not to a specific part. A right to use another person's land without the need for the holder of the right to own contiguous land.

Easement for ingress and egress (Access and egress easement): An easement used to enter and exit a property.

Economic life (Economic Life): The specific period during which a property can be profitably used. The number of years a building can generate income.

Economic IndexA statistic used to assess the overall health or condition of the economy.

Economic obsolescence (Economic Obsolescence): Refers to the loss of value of a property due to external factors, i.e., things outside the property that affect its value. A loss in value due to factors external to the subject property, but which adversely affect the value of the subject property.

Effective age (Effective Age): The age of a property based on its usefulness, condition and physical wear and tear, not its actual age. Effective age is one of the concepts used in appraisal to determine the market value of a property. The conditional age of a building.

Effective Gross IncomeThe amount of income produced by a property, plus miscellaneous income, less vacancy costs and collection losses.

Egress (Egress): The right to leave a property.

Emblements (Emblems): Annual crops produced by cultivation that legally belong to the tenant with the implied right to harvest, and are treated as property of the tenant.

Eminent domain (eminent domain): The right of government to acquire privately owned real property for public use. A right of the government to acquire property for a necessary public use by c0mpensation; the owner must be fairly compensated.

Encroachment (Trespassing): An intrusion into a person's territory or property. An unlawful trespass on another person's adjacent property by means of improvements on real property (e.g., a swimming pool built across a property line).

Encumbrance (Encumbrance: Means that there is an involuntary encumbrance on the property. Any right or interest in land that interferes with its use or transfer, or subjects it to an obligation. Any charge, claim, right, right, burden (also called "cloud on title") and/or interest in real property other than the owner's, including, but not limited to, any restriction on the title to real property, which affects and/or limits any interest or its use.

Endorsement (Endorsement): The signing of documents, usually a contract.

Enforceability (Execution)The capacity to sue to enforce the contract.

Environmental Protection Agency (EPA) (Environmental Protection Agency): The Environmental Protection Agency (EPA) is the federal agency charged with addressing environmental issues.

Equal Credit Opportunity Act (ECOA) (Equal Credit Opportunity Act): Prohibits discrimination against borrowers applying for mortgage loans.

Equitable Remedies (Equitable Remedies)Remedies for the purpose of 'equity and fairness'.

Equitable title (Equitable title): The interest held by a party to purchase a property prior to closing.

Equity (Equity: The difference between the value of a property and the debt owed on it. The value of an asset minus the debt.

Erosion (Erosion): The wearing away of land or soil due to the action of wind, water, currents, or ice. The wearing away of a shoreline or land due to the action of water, ice and/or wind, or the wearing away of a surface due to corrosion or traffic.

Errors and omissions insurance (Errors and Omissions Insurance): A type of liability insurance that protects professionals against claims of insufficient work or negligent actions.

Escheat (Forfeiture): When an owner dies and leaves no documented estate plan, the property reverts to the government. The property reverts to the State in the event the owner abandons it or dies without leaving a will and has no heirs to whom the property can pass by legal descent.

Escrow (Deposit): A method of transferring money and property from one party to another through a neutral third party agent. The deposit of instruments and/or funds with instructions in the hands of a neutral third party to carry out the provisions of an agreement or contract.

Estate - The extent, amount, nature and scope of a person's interest in real and personal property (includes everything one owns).

Estate at sufferance (Suffering status/domain): Arises when the tenant remains in the property after the expiration of its term.

Continuing to occupy a property after the legal authorization has expired; a form of leasehold ownership.

Estate at will (Status at will): Means that it can be terminated at any time and its duration is indefinite.

A leasehold estate that may be terminated at the will of either party.

Estate for Years - A domain lease for a specific period of time. A domain for years is not automatically renewed.

Exchange (Exchange): Transfer of goods or services.

Exclusive right to sell listing (Exclusive Right to Sell Listing): A broker is appointed as the seller's sole agent and has exclusive authority to represent the property.

Exclusive Right to Sell Listing Agreement (Exclusive Agreement)A listing granted to a single broker who is entitled to the commission if someone sells the property during the term of the listing contract.

Exclusive Agency Agreement: A listing granted to a single (exclusive) broker who is entitled to the commission if the broker or any agent of the listing broker effects a sale but does not impose any commission obligation on the owner who sells the property to a person who was not interested in the property through efforts of the listing broker or an agent of the listing broker.

Exclusive agency listing (Exclusive Agency Listing): An agreement in which the seller grants the exclusive right to sell his or her home to a real estate agent.

Exclusive listing (Exclusive Listing): An agreement in which the seller grants the exclusive right to sell his or her home to a real estate agent.

Executed contract (Executed contract): When the contracting parties have signed a contract and both have fulfilled everything promised.

Execution date (Date of execution): The day on which the contract is signed.

Executor (Testamentary Executor) - A person or institution appointed by a testator to carry out the terms of his or her will.

Executory contract (Executory contract): A contract in which the terms are established but will be fully completed later.

Express Agency (Express Agency): An agency relationship created by oral or written agreement between the principal and the agent.

Express Contract (Express contract): Occurs when both parties legally establish an agency relationship through a written contract. A contract that has been expressed in words, either spoken or written.

Real Estate Terms Beginning with F

 

Face ValueThe amount borrowed as shown on the promissory note.

Fannie Mae (Nickname for Federal National Mortgage Association, FNMA)A privately owned corporation that purchases conventional mortgages.

Fair Market Value (FMV)This is the amount of money that would be paid for a property offered on the open market for a reasonable period of time, with the buyer and seller knowing all the uses to which the property could be put and neither party being under pressure to buy or sell.

Federal Funds Rate (Federal Funds Rate)The rate at which member banks charge each other for short-term loans.

Federal income tax (Federal income tax): An annual government tax based on an individual's earnings.

Federal National Mortgage Association (Federal National Mortgage Association): Fannie Mae, or the Federal National Mortgage Association (FNMA), is a Government Sponsored Enterprise (GSE) that offers mortgages to low- to moderate-income borrowers.

Federal Reserve System (Federal Reserve System)The U.S. federal banking system under the control of the Federal Reserve Board, which involves a central bank in each of the twelve geographic districts with broad powers to control credit and the amount of money in circulation.

Fee simple absolute/Fee Simple Estate/Fee Simple Estate/Fee Estate (Freehold/Proprietary Freehold): Freehold in ownership, or simply dominion, is a real property ownership recognized by law as the highest form of ownership, in which the owner can enjoy the property to its fullest extent and is limited only by governmental powers. An inheritable ownership in land that provides the highest interest of any form of title.

Fee Simple Determinable (Full Determinable Domain) - An estate that will automatically terminate upon the occurrence of the stated event or condition. The interest will revert to the grantor or the grantor's heirs.

Fee Simple on Condition (Fee Simple on Condition) - A terminable domain (title), recognizable by the words 'but if'.

Fee simple defeasible (Conditional domain): A conditional domain is created when a condition is added to an absolute domain. If the condition is met, the property can be lost.

Fee Simple Estate (Absolute Ownership) - Absolute ownership of real estate; a person has this type of ownership where the person is entitled to all of the property with unconditional power of disposition during the person's lifetime and which passes to the person's heirs or distributees.

FHA appraisal (FHA Appraisal: The process performed by an approved FHA appraiser to appraise a property for an FHA loan.

FHA loans (FHA Loans: Mortgage loans issued by an FHA-approved lender and insured by the FHA, which is the Federal Housing Administration. FHA loans are sought after because they require minimum down payments and lower credit scores than many conventional loans.

Foreclosure (Foreclosure: The legal process in which a mortgage lender takes possession of a property if a borrower fails to make mortgage payments. A procedure by which property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms.

FiduciaryA person in a position of trust and confidence, as between the principal and the broker; the broker as a fiduciary owes a certain loyalty that cannot be violated under agency rules.

Fiduciary DutyThat duty that an agent must act in the most sincere manner towards the principal and not gain any advantage over the latter by the slightest misrepresentation, concealment, coercion or pressure.

Financial contingency (Financing Contingency): A financing contingency provides a way for buyers to back out of the sale of the property if their loan fails.

Fixed Interest Mortgage (Fixed Interest Mortgage)A mortgage in which the interest rate does not change.

Fixed term tenancy or estate for years (Fixed-term lease or ownership for years): The term "ownership for years" refers to an ownership that has a specific duration as defined in the lease agreement.

Fixture (Fixture): A fixture in real property is an item of personal property that has been permanently attached or affixed to real property or land. Or an item that was once personal property, but is considered real property either by attachment or legal addition. An item of personal property after it has been attached to real property.

Flat RoofA roof that is almost level.

Floor PlanA scale drawing showing a top view of the relationships between rooms, spaces, and other physical features on one level of a structure.

Foundation PlanA scale drawing of the floor plan showing the location and size of the foundation walls of a building.

Fraud: The intentional and successful use of any cunning, deception, collusion or artifice used to evade, deceive or deceive another person, whereby that person acts in consequence by suffering a loss of property and legal damage.

Freehold estate (Dominio en propiedad/Property in Full Right): A dominion in property is a dominion in which you have the exclusive right to enjoy possession of a property indefinitely. It is contrasted with a leasehold estate, where possession is limited for a period of time. A right of title to land.

Freddie Mac (Nickname for Federal Home Loan Mortgage Corporation, FHLMC)A wholly owned corporation of the Federal Home Loan Bank System that purchases FHA, VA and conventional mortgages.

Frontage (Front) - The linear distance along which a building faces a lot or road.

Functional obsolescence (Functional Obsolescence): Refers to the loss of property value due to an obsolete design feature. A loss of value due to adverse factors from within the structure that affect the structure's utility, value and marketability.

Real Estate Terms Beginning with G

Gap (Gap): A real estate term meaning a space or pause in a contract.

Gambrel Roof (Gable Roof): A roof with two sides, each of which has a gentler slope over a steeper one.

Gable Roof (Gable Roof): A roof that slopes downward in two parts at an angle from a central ridge, so as to leave a gable at each end.

General agent (General Agent): A general agent is a retained agent who can perform all acts associated with a particular business for which a principal has appointed the agent; these relationships are usually ongoing. An agent with full authority over a principal's property, such as a property manager.

General contractor (General Contractor): The term used to describe someone whose primary responsibility is the construction, improvement, or renovation of a property or project. A contractor whose principal activity is related to any structure being built (or to be built), which requires in its construction the use of at least two unrelated building trades or crafts.

General LienA lien on all of a debtor's assets.

General warranty deed (General Warranty Deed): A deed in which the grantor (seller) warrants that he has clear title to real property and has the right to sell it to the grantee (buyer).

Ginnie Mae (Nickname for Government National Mortgage Association, GNMA)A government-owned corporation that guarantees bonds backed by home mortgages guaranteed by other government agencies (FHA and VA loans).

Good Faith Estimate - The lender's estimate of settlement costs to the borrower; RESPA requires the lender to provide it to the borrower at the time of the loan application.

Government National Mortgage Association (Ginnie Mae): Ginnie Mae, or Government National Mortgage Association, is a government organization that provides guarantees to investors in mortgage-backed securities. The federal corporation guarantees USDA, FHA and VA loans and enhances market interest in securities. It does this by ensuring timely payments on mortgage-backed securities.

Government power (Governmental Power): Governmental power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals and general welfare.

Government survey system (Government Survey System): This method of valuation is a federal system defined by identifying reference lines. The system is based on sets of two intersecting lines: principal meridians and base lines. It is sometimes referred to as the rectangular survey system.

Graduated payment mortgage (Graduated Payment Mortgage): A graduated payment mortgage is a mortgage loan with monthly payments that start at one amount and then, after a time, the payments gradually increase over time.

Grant (Concession): The transfer of title to real property.

Grantee (Grantee/Beneficiary): The legal term for purchaser. A person who receives title to real estate by deed.

Grantor (Grantor/Grantee): The legal term for seller. A person who transfers title to real estate by deed.

Group boycotting (Group boycott): A group boycott occurs when two or more competitors agree to conspire against a third competitor by ceasing to work with it. A group boycott increases the market power of the competitors who joined and harms the boycotted business.

Gross Domestic Product (GDP)The aggregate value of all goods and services provided in the economy during a given period of time.

Gross IncomeTotal income from the property before deducting expenses.

Gross lease (Gross Lease): A gross lease is a rental agreement for the use of property in which the tenant pays a fixed amount that does not change as a result of changes in the various expenses of the property.

Gross national product (GNP) (Gross National Land (GNP)): The total price of all goods and services produced within a country annually.

Gross Rent Multiplier (Gross Rent Multiplier): A number that, when multiplied by a property's gross income, produces an estimate of the property's value. The Gross Rent Multiplier is a calculation used by real estate professionals to determine how quickly an investment property can pay for itself. Gross Rent Multiplier (GRM) = Price (Property / Purchase Price) ÷ Gross Annual Rental Income.

Growing equity mortgage (increasing principal mortgage): An increasing principal mortgage is a mortgage in which the interest rate remains the same during the term, but payments increase annually. Payments increase to include more principal according to the previously agreed upon payment schedule.

Real Estate Terms Beginning with H

Habendum clause (Habendum clause): The statement in a contract that describes the rights and interests being granted.

Heir (Heir): The person who would inherit an interest or property when the owner dies without leaving a will.

Highest and Best Use: An appraisal term meaning that use which at the time of an appraisal is most likely to produce the greatest net benefit for the land and/or buildings during a given period; that use which will produce the greatest amount of amenity or profit. This is the starting point for the appraisal.

Hip Roof (Tejado a Cuatro Aguas)A roof with sloping ends as well as sides.

Home Equity Line of Credit (HELOC) Home Equity Line of Credit (HELOC): A Home Equity Line of Credit (HELOC) allows homeowners to obtain cash against equity and repay the loan at a variable interest rate. This is a type of revolving line of credit that helps the homeowner establish credit in advance if needed, and the collateral is the home.

Home inspection (Home Inspection): A home inspection is an examination of the condition of a real property. This is usually conducted in connection with the sale of the property.

Homeowner insurance (Homeowner's Insurance): Homeowners insurance is property insurance that covers loss and damage. It covers the home and individual assets in the home. It can also provide liability coverage for accidents in the home or on the property.

Housing and Community Development Act (Housing and Community Development Act): The Housing and Community Development Act of 1974 added sex as a protected class in the Fair Housing Act and funded community development for low-income families.

HUD Department of Housing and Urban Development (HUD): The Department of Housing and Urban Development (HUD) is a U.S. government agency that deals with housing and urban development issues.

Hypothecate (Hypothecate)Pledge a thing as collateral without the need to physically deliver it.

Real Estate Terms Beginning with I

Income approach (Income Method): The income method is a process used by appraisers to determine the market value of a property based on its income. The approach is based on the financial concept of discounted cash flow analysis. Under the income method, the current value of the property is the present value of the future cash flows that the owner can expect to receive. One of three methods of the appraisal process generally applied to income properties. It involves a three-step process: (1) find annual net income, (2) establish an appropriate capitalization rate or "present value factor," and (3) capitalize the income by dividing the net income by the capitalization rate.

Implied contract (Implied contract): An implied contract is a legally enforceable obligation that arises from one or more parties due to the party's actions, conduct or circumstances. It has the same legal effect as an express contract, a contract between two or more parties that is voluntarily entered into and agreed to orally or in writing. An implied contract is presumed to exist but does not require written or oral confirmation. An agreement that has not been expressed in words, but is inferred from the actions of the parties.

Implied grant (Implied grant): Implied concessions are used to create an easement.

Improvement (Improvement): An addition or complement to a property or real estate.

Index lease (Indexed Rental Agreement): A lease that determines rental prices by evaluating the annual consumption index and determining the fair rental price.

Inspection contingency (Inspection Contingency): If a home inspection reveals problems, the buyer may request repairs, compensation for the problem or simply cancel the offer altogether.

Ingress (Income): The right to enter a property.

Insurance (Insurance): Insurance is a contract in which a person receives legal protection or reimbursement for predetermined losses. A contract between the insurer and the insured.

Intercontinental Exchange London Interbank Offered Rate (LIBOR) (Intercontinental Exchange London Interbank Offered Rate)A reference rate that some of the world's major banks charge each other for short-term loans.

Interest (Interest): Money regularly paid or owed at a specified rate.

Interest RateThe percentage of a sum of money charged for its use. The rent or fee paid for the use of money, expressed as a monthly or annual percentage of the sum borrowed.

Interim financing (Interim Financing): A short-term loan.

Interpleader (Interpleader Demand)An equitable proceeding brought by a third party acting as custodian, in which there are rival claimants for the same money and/or property, and requests the court to determine the disposition of such property.

Intestate (No Testament): Failure to make a will before death.

Inverse condemnation (Reverse expropriation): The event in which the government takes private property but does not pay compensation or just compensation.

Investment (Investment): An investment is the legal acquisition of something that is not consumed today but will be in the future to generate profits.

Involuntary alienation (Involuntary alienation): Involuntary alienation occurs when property is transferred without the owner's consent.

Involuntary liens (Involuntary Liens): Involuntary liens are not created by the owner. It is a claim imposed against a property without the consent of its owner. A lien imposed against a property without the owner's consent (e.g., taxes, special assessments, federal income tax liens, etc.).

Real Estate Terms Beginning with J