Terms and Definitions
Abstract of Title A condensed history summarizing all recorded documents affecting a particular piece of real estate, including ownership changes, liens, and encumbrances, to verify the chain of title and clear ownership.
Access The right to legally enter and exit a property from a public road or across another person's land, often crucial for landlocked properties.
Accretion The gradual natural increase of land, usually due to deposits of soil from a river, stream, or other body of water, which can affect property boundaries over time.
Adjustable Rate Mortgage (ARM) A mortgage with an interest rate that may change periodically based on a financial index, potentially resulting in lower initial payments but possible rate increases in the future.
Administrator / Administratrix A person appointed by the court to settle a deceased person's estate when there is no will, managing debts, assets, and property distribution according to state law.
Adverse Possession A legal doctrine that allows a person who openly occupies another's land without permission to claim ownership after a legally prescribed period.
Affidavit A voluntary, sworn written statement used as evidence in legal proceedings, certified by a notary or official.
Agent An individual or company authorized to act on behalf of another, often a real estate agent representing a buyer or seller in a transaction.
Agreement A legally enforceable arrangement between two or more parties detailing specific rights, obligations, and terms, common in property sales.
ALTA (American Land Title Association) An organization that sets national standards for title insurance policies and practices, promoting professionalism and consumer protection.
Amortization The gradual reduction of a loan balance through scheduled, periodic payments that cover both principal and interest.
Appraisal An unbiased professional assessment of a property's market value, often required by lenders before approving a mortgage loan.
Appurtenance A right, privilege, or improvement belonging to and passing with a property, such as a driveway or water access rights.
Assessment An official valuation of a property for taxation or special improvement purposes, such as road or sewer installation costs.
Assumption of Mortgage The process by which a buyer takes over the seller's existing mortgage under the original terms, often saving on new loan fees.
Attorney-in-Fact A person authorized by a Power of Attorney to act for another in business or legal transactions, such as signing closing documents.
Balloon Mortgage A type of loan that requires small regular payments and one large final payment to cover the remaining balance at the end of the term.
Bankruptcy A federal legal process for individuals or businesses unable to repay debts, which may involve liquidating assets or creating repayment plans.
Binder A preliminary commitment providing temporary insurance coverage or confirming an agreement until a formal contract is finalized.
Bridge Loan (Bridge Financing) A short-term loan used to finance the purchase of a new property before selling an existing one, often carrying higher interest rates.
Chain of Title A historical record of property ownership and transfers, verifying legal ownership over time and identifying any claims against the property.
Chattels Movable personal property items, like furniture or appliances, distinguished from fixtures that are permanently attached to real estate.
Closing The final step in a real estate transaction when ownership is legally transferred, funds are disbursed, and documents are recorded.
Closing Disclosure A federally mandated form summarizing all final loan terms and settlement costs, provided to borrowers at least three business days before closing.
Closing Protection Letter (CPL) A document from a title insurer providing indemnity to lenders (and sometimes buyers) against settlement agent errors or fraud.
Cloud on Title An unresolved claim, lien, or dispute affecting property ownership that must be cleared before a sale can proceed.
Commitment to Insure A title company's written promise to issue title insurance once listed requirements are satisfied, based on a title search.
Commission A fee paid to a real estate professional for services rendered, typically calculated as a percentage of the property's sale price.
Condominium A property structure where individuals own separate units and share ownership of common areas, governed by association rules.
Consummation The moment when a borrower legally obligates themselves to the terms of a loan, typically at the closing of a transaction.
Contingent Offer A purchase offer that depends on specific conditions being met, such as securing financing or completing a satisfactory inspection.
Contract of Sale A legal document outlining the terms, price, and conditions agreed upon by a buyer and seller in a property transaction.
Conveyance The legal process of transferring property ownership from one party to another, often through a deed.
Covenant A binding promise within a deed or legal contract requiring or preventing certain uses of the property.
Deed A written legal document that officially transfers ownership of real property from a seller to a buyer.
Deed Restriction A limitation written into a deed specifying how the property may or may not be used, often to preserve community standards.
Easement A non-possessory right to use another person's land for a specified purpose, such as installing utilities or providing access.
Earnest Money A deposit demonstrating a buyer's serious intent to purchase a property, typically credited toward the purchase price at closing.
Encroachment An unauthorized intrusion of a structure or improvement onto a neighboring property, potentially leading to disputes.
Encumbrance Any claim, lien, or liability attached to real estate that may diminish its value or restrict its use, such as mortgages or easements.
Equity The financial difference between a property's current market value and the amount still owed on any loans secured by the property.
Escrow A neutral third-party service holding money, documents, or instructions until all conditions of a real estate transaction are met.
Estoppel Certificate A signed statement by a tenant or property owner confirming lease terms and property details, often required during sales or financing.
Fixed-Rate Mortgage A mortgage loan with a locked interest rate that remains unchanged for the life of the loan, offering predictable monthly payments.
Homeowners Insurance An insurance policy covering loss or damage to a home and its contents, as well as liability for accidents occurring on the property.
Inclusions Personal property items agreed to be part of a real estate sale, such as kitchen appliances, window treatments, or light fixtures.
Inspections Professional evaluations of a property's condition, including structure, systems, and potential issues like pests or water damage.
Joint Tenancy with Right of Survivorship A co-ownership arrangement where, upon one owner's death, their share automatically transfers to the surviving owner(s).
Lien A legal right or interest a creditor holds in a property as security for a debt, typically requiring satisfaction before sale or refinancing.
Loan Estimate A detailed disclosure provided early in the mortgage process showing estimated loan terms, monthly payments, and closing costs.
Mortgage A legal instrument by which a borrower pledges real estate as security for repayment of a loan.
Multiple Listing Service (MLS) A shared database among real estate professionals where property listings are posted to increase exposure to potential buyers.
Negative Amortization A situation where a loan balance increases over time because monthly payments do not cover all interest owed.
Origination Fee A charge by lenders for processing a new loan application, often expressed as a percentage of the total loan amount.
Owner's Title Insurance Policy A policy protecting a property owner against title defects, liens, or encumbrances that could affect ownership rights.
PITI An acronym for Principal, Interest, Taxes, and Insurance — the four components typically included in a monthly mortgage payment.
Power of Attorney (POA) A legal document authorizing one individual to act on another's behalf in personal, business, or real estate matters.
Principal The original sum of money borrowed in a loan, excluding interest, or the outstanding balance remaining to be paid.
Private Mortgage Insurance (PMI) Insurance required by lenders when a borrower's down payment is less than 20%, protecting the lender against loan default.
Prorations The fair division of financial responsibilities like property taxes or homeowners association dues between buyer and seller at closing.
Quit Claim Deed A deed transferring any interest a grantor may have in a property without warranties or guarantees about title status.
Recording The official filing of real estate documents with a government office, making them part of the public record and giving legal notice.
Restrictions (Deed Restrictions) Binding rules or limitations imposed on a property, often to maintain the quality, appearance, or use within a community.
Settlement The formal conclusion of a real estate transaction where all legal documents are signed, funds are distributed, and ownership is transferred.
Survey A detailed, professional map of a property's boundaries, dimensions, and features, often used to verify legal descriptions.
Title Insurance Insurance protecting property owners or lenders against losses arising from title defects, liens, or disputes over ownership.
Title Search A detailed examination of public records to confirm a property's legal ownership and identify any potential title issues.
Underwriting The process lenders use to evaluate the risk of offering a loan to a potential borrower based on creditworthiness, income, and property details.