Residential Real Estate:

Glossary of Terms

Acceptance: Consent to enter the contract and be bound by the terms of that offer

Adjustable rate mortgage: Mortgage loan whose interest rate changes according to the movement of an assigned index or market indicator

Adjustments: Money the buyer and seller credit each other at the closing

Affidavit: A written statement signed and sworn to before an authorized person to take an oath

Agency: The legal relationship between an agent and a principal

Agent: An individual authorized to act under the direction and for another when dealing with third parties

Amendment: Modifications to a contract, agreed on by all parties

Appraised value: Estimate of worth

Breach of contract: Failure to perform according to the contract

Brokerage: For a fee or commission, bringing parties together who are interested in selling, buying, leasing or exchanging real property

Chain of title: History of encumbrances and conveyances of a property from a starting point

Channeling: Directing people to or away from neighborhoods because of race. Channeling is illegal.

Clear title: A land title that does not have any liens against it

Closing: The end of a sales transaction where the seller transfers the title to the buyer

Closing cost: Costs the buyer has to pay at the closing in addition to the down payment

Contract for deed: A contract for the sale of real estate where the title of the property is transferred after all payments are made

Deduction: An amount you can subtract from the total amount on which you owe tax

Deed: Written instrument by which title to land is expressed

Deed in lieu: A way to escape a burdensome mortgage

Down payment: An amount of money the buyer pays. This is the difference between the mortgage amount and the purchase price.

Easement: The right to use another’s real estate for a specific purpose

Eminent Domain: The government’s right to take private property for public use

Escalator clause: The contract clause allowing payments to be adjusted

Fair House Laws: Federal, local and state laws that prohibit discrimination due to sex, color, race, religion or national origin in the rent and selling of homes or apartments

Federal Deposit Insurance Corporation: Maintains the stability of and public confidence in the country’s financial system

First mortgage: A mortgage in first lien position, taking property over all others

Fixed rate mortgage: A mortgage with an interest rate and monthly payment which does not vary for the term of the loan

Fixture: Personal property that is attached to the real estate, becoming part of the real property

Foreclosure: Legal process instituted by a lien creditor or mortgagee after the debtor’s default

Homeowner’s insurance: An insurance policy which protects homeowners from financial loss related to the ownership or real property

Inspection clause: This clause makes the sale contingent on the findings of the home inspector

Lien: Monetary claim against a property

Mortgage broker: An individual or company that contacts financial institutions or people wishing to invest in mortgages

Offer: Proposal to enter an agreement with another

Personal property: Tangible and movable property. This is property that is not fixed to land

Power of attorney: Written authorization to another person to act on their behalf

Principal: Amount owed to the lender, not including interest

Property taxes: Taxes paid annually on real property

Quit claim deed: A deed which transfers ownership interest the transferor has in a certain property

Real estate: Land and improvements and the rights to them

Real estate agent: An individual licensed to negotiate and transact the sale on behalf of the property owner

Real property: The right to own land and improvements

Refinancing: Applying for a new mortgage to gain better terms

Title insurance: Protection for homeowners or lenders against financial loss ensuing from legal defects in the title resulting

Zoning: Exercise of police power of cities in controlling and regulating the character or use or property