Real Estate and Legal Glossary
Some common real estate and legal terms are listed below. This list is by no means complete and we will be adding terms and definitions constantly so check back often. If there is a term that you have come across that you find interesting or you feel it should be included here, please use the feedback form to let us know.
A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.
An offeree’s consent to enter into a contract and be bound by the terms of the offer.
The possession of land, without legal title, for a period of time sufficient to become recognized as legal owner. The more common word for this is "squatters."
A feature of real property that enhances its attractiveness and increases the occupant’s or user’s satisfaction although the feature is not essential to the property’s use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.
The gradual repayment of a mortgage loan by installments.
A timetable for payment 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.
The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.
To repay a mortgage with regular payments that cover both principal and interest.
A written analysis of the estimated value of a property prepared by a qualified appraiser.
An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.
A person qualified by education, training, and experience to estimate the value of real property and personal property.
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
Something that, although detached, stands as part of another thing. An attachment or appendage to something else. Used often in a real estate context where an "appurtenance" may be, for example, a right-of-way over water, which, although physically detached, is part of the legal rights of the owner of another property.
The valuation placed on property by a public tax assessor for purposes of taxation.
The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.
The public record of taxable property.
A public official who establishes the value of a property for taxation purposes.
Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).
The transfer of a mortgage from one person to another.
A mortgage that can be taken over ("assumed") by the buyer when a home is sold.
The transfer of the seller’s existing mortgage to the buyer. See assumable mortgage.
A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.
A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.
The final lump sum payment that is made at the maturity date of a balloon mortgage.
A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.
A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.
A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold.
A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. See mortgage broker.
Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.
Chain of Title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.
Moveable items of property which are neither land nor permanently attached to land or a building, either directly or vicariously through attachment to real property. A piano is chattel but an apartment building, a tree or a concrete building foundation are not. The opposite of chattel is real property which includes lands or buildings. All property which is not real property is said to be chattel. "Personal property" or "personalty" are other words sometimes used to describe the concept of chattel. The word "chattel" came from the feudal era when "cattle" was the most valuable property besides land.
A title that is free of liens or legal questions as to ownership of the property.
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs.
Cloud on title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.
The fee charged by a broker or agent for negotiating a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."
An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
An oral or written agreement to do or not to do a certain thing.
A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.
A written document which transfers property from one person to another. In real-estate law, the conveyance usually refers to the actual document which transfers ownership, between persons living (i.e. other than by will), or which charges the land with another's interest, such as a mortgage.
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.
A person to whom money is owed.
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
A sum of money given to bind the sale of real estate, or a sum of money given to ensure payment or an advance of funds in the processing of a loan. See earnest money deposit.
A decline in the value of property; the opposite of appreciation.
The permanent residence of a person; a place to which, even if he or she were temporary absent, they intend to return. In law, it is said that a person may have many residences but only one domicile.
The part of the purchase price of a property that the buyer pays in cash and does not finance with a mortgage.
An improvement that intrudes illegally on another’s property.
Anything that affects or limits the fee simple title to a property, such as mortgages, leases, easements, or restrictions.
A homeowner's financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage.
Where property is returned to the government upon the death of the owner, because there is nobody to inherit the property. Escheat is based on the Latin principle of dominion directum as was often used in the feudal system when a tenant died without heirs or if the tenant was convicted of a felony.
When the performance of something is outstanding and a third party holds onto money or a written document (such as shares or a deed) until a certain condition is met between the two contracting parties.
A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner’s right to sell the property alone without the payment of a commission.
Canada: the forced sale of land to a public authority. Synonymous to the USA doctrine of "eminent domain".
Fair market value
The highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept.
The greatest possible interest a person can have in real estate.
Personal property that becomes real property when attached in a permanent manner to real estate.
The technical meaning of the word is to wipe out a right of redemption on a property. Generally, this is what happens when someone does not pay their mortgage. Even though there has been no payments, the borrower retains a equitable right of redemption if, some day, he or she were able to find the money and try to exercise their right of redemption. To clear the title of this potential, a lender goes to court, demonstrates the default, requests that a date be set where the entire amount becomes payable after which, in the absence of payment, the lender is automatically relieved of the requirement to redeem the property back to the borrower; the debtor's right of redemption is said to be forever barred and foreclosed. This cancels all rights a borrower would have in the property and the property then belongs entirely to the lender, who is then free to possess or sell the property. The word is frequently used to generally refer to the lender's actions of repossessing and selling a property for default in mortgage payments.
A special right granting the full use of real estate for an indeterminate time. It differs from leasehold, which allows possession for a limited time. There are varieties of freehold such as fee simple and fee tail.
The person to whom an interest in real property is conveyed.
The person conveying an interest in real property.
A mortgage that is guaranteed by a third party.
Home equity line of credit
A mortgage loan, which is usually in a subordinate position, that allows the borrower to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower's equity in a property.
A thorough inspection that evaluates the structural and mechanical condition of a property. A satisfactory home inspection is often included as a contingency by the purchaser. Contrast with appraisal.
An insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents.
A contract that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy, and the periodic payment is known as an insurance premium.
The fee charged for borrowing money.
Interest accrual rate
The percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments, although it is not used for an adjustable-rate mortgage (ARM) with payment change limitations.
The rate of interest in effect for the monthly payment due.
A property that is not occupied by the owner.
When two or more persons are equally owners of some property. The unique aspect of joint tenancy is that as the joint tenancy owners die, their shares accrue to the surviving owner(s) so that, eventually, the entire share is held by one person. A valid joint tenancy is said to require the "four unities": unity of interest (each joint tenant must have an equal interest including equality of duration and extent), unity of title (the interests must arise from the same document), unity of possession (each joint tenant must have an equal right to occupy the entire property) and unity of time: the interests of the joint tenants must arise at the same time.
A land or building owner who has leased the land, the building or a part of the land or building, to another person.
A special kind of contract between a property owner and a person wanting temporary enjoyment and use of the property, in exchange for rent paid to the property owner. Where the property is land, a building, or parts of either, the property owner is called a landlord and the person that contracts to receive the temporary enjoyment and use is called a tenant.
Real property held under a lease.
A person's financial obligations. Liabilities include long-term and short-term debt, as well as any other amounts that are owed to others.
A legal claim against a property that must be paid off when the property is sold.
A right to use and to enjoy land and/or structures on land only for the life of the life tenant. The estate reverts back to the grantor (or to some other person), at the death of the person to whom it is given. A property right to last only for the life of the life tenant is called the estate "pur sa vie." If it is for the duration of the life of a third party, it is called an estate "pur autre vie". The rights of the life tenant are restricted to conduct which does not permanently change the land or structures upon it.
The beneficiary of a life estate.
An interest given on a piece of land, in writing, to guarantee the payment of a debt or the execution of some action. It automatically becomes void when the debt is paid or the action is executed. In some jurisdictions, it entails a conveyance of the land until the debt is paid in full. The person lending the money and receiving the mortgage is called the mortgagee; the person who concedes a mortgage as security upon their property is called a mortgagor.
The lender in a mortgage agreement.
A contract that insures the lender against loss caused by a mortgagor's default on a government mortgage or conventional mortgage. Mortgage insurance can be issued by a private company or by a government agency. Depending on the type of mortgage insurance, the insurance may cover a percentage of or virtually all of the mortgage loan.
The borrower in a mortgage agreement.
Notice of default
A formal written notice to a borrower that a default has occurred and that legal action may be taken.
Power of attorney
A legal document that authorizes another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
The amount borrowed or remaining unpaid. The part of the monthly payment that reduces the remaining balance of a mortgage.
The outstanding balance of principal on a mortgage. The principal balance does not include interest or any other charges.
Property is commonly thought of as a thing which belongs to someone and over which a person has total control. But, legally, it is more properly defined as a collection of legal rights over a thing. These rights are usually total and fully enforceable by the state or the owner against others. It has been said that "property and law were born and die together. Before laws were made there was no property. Take away laws and property ceases." before laws were written and enforced, property had no relevance. Possession was all that mattered. There are many classifications of property, the most common being between real property or immoveable property (real estate such as land or buildings) and "chattel", or "moveable" (things which are not attached to the land such as a bicycle, a car or a hammer) and between public (property belonging to everybody or to the state) and private property.
Purchase and sale agreement
A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
A deed that transfers without warranty whatever interest or title a grantor may have at the time the conveyance is made.
Immoveable property such as land or a building or an object that, though at one time a chattel, has become permanently affixed to land or a building.
This is the consideration paid by a tenant to a landlord in exchange for the exclusive use and enjoyment of land, a building or a part of a building. Under normal circumstances, the rent is paid in money and at regular intervals, such as the first of every month. The word has also come to be used as a verb as in to "rent an apartment", although the proper legal term would be to "lease an apartment."
A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
A person to whom a landlord grants temporary and exclusive use of land or a part of a building, usually in exchange for rent. The contract for this type of legal arrangement is called a lease. The word "tenant" originated under the feudal system, referring to land "owners" who held their land on tenure granted by a lord.
Tenants in common
Similar to joint tenants. All tenants in common share equal property rights except that, upon the death of a tenant in common, that share does not go to the surviving tenants but is transferred to the estate of the deceased tenant. Unity of possession but distinct titles.
Property that could be subject to tenure under English land law; usually land, buildings or apartments. The word is rarely used nowadays except to refer to dominant or servient tenements when qualifying easements.
A right of holding or occupying land or a position for a certain amount of time. The term was first used in the English feudal land system, whereby all land belonged to the king but was lent out to lords for a certain period of time; the lord never owning, but having tenure in the land. Used in modern law mostly to refer to a position a person occupies such as in the expression "a judge holds tenure for life and on good behavior."
Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against loss arising from disputes over ownership of a property.
A check of the title records to ensure that the seller is the legal owner of the property and that there are no liens or other claims outstanding.