4. Real Estate Glossary

Here is a list of terms you find relating to real estate:

Acre - A measure of land equal to 43,560 square feet, 4,840
square yards, or 4,047 square meters. 

Adjustable Rate Mortgage (ARM) - A mortgage loan in which
the interest rate may increase or decrease in specific
intervals, following an economic indicator. 

Amortized Loan - A loan in which the principal as well as
the interest is payable in monthly or other periodic
installments over the term of the loan. 

Appraisal - An estimate of a properties valuation by an
Appraiser who is usually presumed to be expert in this work.


Assignment - The transfer in writing of interest in a bond,
mortgage, lease, or other instrument. 

Assumption of Mortgage - Acquiring the title to a property
on which there is an existing mortgage and agreeing to be
personally liable for the terms and conditions of the
mortgage, including payments. 

Balloon Payment - The final payment of a mortgage loan that
is considerably larger than the required periodic payments
because the loan amount was not fully amortized. 

Beneficiary - The person who receives or is to receive
benefits resulting from certain acts. 

Bill of Sale - A written instrument given to pass title of
personal property from vendor to vendee. 

Capital Gains - Profits realized from the sale of assets
such as real estate. 

Certificate of occupancy (C of O) - Document issued by a
municipal authority stating that a building complies with
building, health, and safety codes and may be occupied. 

Chain of Title - The conveyance of real property to one
owner from another, reaching back to the original grantor. 

Chapter 7, Chapter 11, Chapter 13 - Different forms of
bankruptcy. 

Cloud on the Title - An outstanding claim or encumbrance
that, if valid, would affect or impair the owner’s title. 

Comparables (also called comps) - Properties listed in an
appraisal report that are substantially equivalent to the
subject property. 

Contract - An agreement entered into by two or more legally
competent parties by the terms of which one or more of the
parties, for a consideration, undertakes to do or refrain
from doing some legal act or acts. 

Corporation - An entity or organization created by operation
of law whose rights of doing business are essentially the
same as those of an individual. 

Deed - A written document that, when executed and delivered,
conveys title to or an interest in real estate. 

Earnest Money Deposit - Money deposited by a buyer under the
terms of a contract, to be applied to the purchase price if
the sale is closed. 

Escrow - The closing of a transaction through a third party
called an "escrow agent". Also can refer to earnest money
deposits or to mortgagees trust account for insurance and
tax payments. 

Eviction - A legal process to oust a person from possession
of real estate. 

Foreclosure - A procedure whereby property pledged as
security for a debt is sold to pay the debt in the event of
default in payments or terms. 

Grantee - A person who receives a conveyance of real
property from the grantor. 

Grantor - The person transferring title to or an interest in
real property to a grantee. 

Judgment - The formal decision of a court regarding the
respective claims of the parties to an action. 

Lease - A written or oral contract between a landlord (the
lessor) and a tenant (the lessee) that transfers the right
to exclusive possession and use of the landlords real
property to the lessee for a specified period of time and
for a stated consideration (rent). 

Lien - A right given by law to certain creditors to have
their debt paid out of the property of a defaulting debtor,
usually by means of a court sale. 

Lis pendens - A recorded legal document giving constructive
notice that an action affecting a particular property has
been filed in court. 

Listing Agent - The broker with whom a seller enters into a
valid listing agreement for the sale of his or her real
estate. 

Mortgage - A conditional transfer or pledge of real estate
as security for the payment of a debt. Also, the document
creating a mortgage lien. 

Notary Public - A public officer who is authorized to take
acknowledgments to certain classes of documents such as
deeds, contracts, and mortgages and before whom affidavits
may be sworn. 

Note - An instrument of credit given to attest to a debt. 

PITI - Principal, interest, taxes and insurance; components
of a regular mortgage payment. 

PMI - Private mortgage insurance. 

Point - A unit of measurement used for various loan charges;
one point equals 1 percent of the amount of the loan. 

Power of Attorney - A written instrument authorizing a
person, the "attorney-in-fact" to act as agent on behalf of
another person. 

Prepayment Penalty - A charge imposed on a borrower who pays
off the loan principal early. 

Quitclaim Deed - A conveyance by which the grantor transfers
whatever interest he or she has in the real estate, if any,
without warranties or obligations. 

Real Estate Contract - A contract for the sale of real
estate, in which the purchaser promises to pay the agreed
purchase price and the seller agrees to deliver title to the
property. 

Subject to a Mortgage - When a property is taken "subject
to" a mortgage, the purchaser is not personally liable to
the mortgagee for satisfaction of the pre-existing debt. 

Tax Lien - A charge against property created by operation of
law. Tax liens and assessments take priority over all other
liens. 

Termites - Wood-boring insects whose presence causes
structural damage. 

Title - Evidence that the owner of land is in lawful
possession thereof; evidence of ownership. 

Title Insurance - A policy insuring the owner or mortgagee
against loss by reason of defects in the title to a parcel
of real estate, other than the encumbrances, defects and
matters specifically excluded by the policy. 

Title Search - An examination of the public records to
determine the ownership and encumbrances affecting real
property. 

Transfer Tax - Tax stamps required to be affixed to a deed
by state and/or local law. 

Trust - A fiduciary arrangement whereby property is conveyed
to a person or an institution, called trustee, to be held
and administered on behalf of another person, called
beneficiary. 

Warranty Deed - A deed in which the grantor fully warrants
good clear title to the premises. 

Wraparound Loan - A method of refinancing in which the new
mortgage is placed in a secondary, or subordinate, position;
the new mortgage includes both the unpaid principal balance
of the first mortgage and whatever additional sums are
advanced by the lender. In essence, it is additional
mortgage in which another lender refinances a borrower by
lending an amount over the existing first mortgage amount
without disturbing the existence of the first mortgage. 

Wraparound Mortgage - An additional mortgage in which
another lender refinances a borrower by lending an amount
including the existing first mortgage. 

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