person acting on behalf of another, called the principal.
An expert judgment or estimate of the quality or value of real estate
as of a given date.
The valuation placed upon property by a public tax assessor as the
basis for taxes.
Bill of Sale-
An instrument which transfers title to personal property (chattels);
a "Deed" transfers real property.
Covenants, conditions and restrictions- A document that controls
the use, requirements and restrictions of a property.
Certificate of Reasonable Value (CRV)-
A document that establishes the maximum value and loan amount for
a VA guaranteed mortgage.
Certificate of Title- A document signed by a title examiner or attorney stating
that the seller has a good marketable and insurable title.
Closing Statement (Settlement)- The computation of financial adjustments between buyer and
seller as of the day of closing a sale to determine the net amount
of money which buyer must pay to seller to complete purchase of
the real estate and seller's net proceeds. Also, "settlement sheets,"
Payment to a real estate broker for services performed.
A form of real estate ownership where the owner receives title to
a particular unit and has a proportionate interest in certain common
areas. The unit itself is generally a separately owned space whose
interior surfaces (walls, floors and ceilings) serve as its boundaries.
A condition that must be satisfied before a contract is binding.
For instance, a sales agreement may be contingent upon the buyer
Deed- A formal
written instrument by which title to real property is transferred
from one owner to another. Also, "conveyance".
Deed of Trust-
Like a mortgage, a security instrument whereby real property is
given as security for a debt. However, in a deed of trust there
are three parties to the instrument; the borrower, the trustee,
and the lender (or beneficiary).
Due-On-Sale Clause- An acceleration clause that requires full payment of a mortgage
or deed of trust when the secured property changes ownership.
The portion of the down payment delivered to the seller or escrow
agent by the purchaser with a written offer as evidence of good
interest or value which owner has in real estate over and above
the debts against it. (Sales Price - Mortgage Balance - Equity).
procedure in which a third party acts as a stakeholder for both
the buyer and the seller, carrying out both parties' instructions
and assumes responsibility for handling all of the paperwork and
distribution of funds.
Federal National Mortgage Association (FNMA)-
Popularly known as Fannie Mae. A privately owned corporation created
by Congress to support the secondary mortgage market. It purchases
and sells residential mortgages insured by FHA or guaranteed by
the VA, as well as conventional home mortgages.
An estate in which the owner has unrestricted power to dispose of
the property as he wishes, including leaving by will or inheritance.
It is the greatest interest a person can have in real estate.
What was formerly personal property which is now permanently attached
to real property and goes with the property when it is sold.
Graduated Payment Mortgage- A residential mortgage with monthly payments that start
at a low level and increase at a predetermined rate.
Protects against damages caused to property by fire, windstorms,
and other common hazards.
Home Inspection Report- A qualified inspector's report on a property's overall condition.
The report usuallyincludes an evaluation of both the structure and
Home Warranty Plan- Protection against failure of mechanical systems within
the property. Usually includes plumbing, electrical, heating systems
and installed appliances.
An equal undivided ownership of property by two or more persons.
Upon the death of any owner, the survivors take the decedent's interest
in the property.
Lien- A legal
hold or claim on property as security for a debt or charge.
Between a home owner (as principal) and a licensed real estate broker
(as agent) by which the broker is employed to market the real estate
within a given time for which service the owner agrees to pay a
commission. Also, "listing agreement".
A written promise to make a loan for a specified amount on specified
Loan-To-Value Ratio- The relationship between the amount of the mortgage and
the appraised value of the property, expressed as a percentage of
the appraised value.
The highest price which a buyer, ready, willing and able but not
compelled to buy, would pay, and the lowest price a seller, ready,
willing and able but, not compelled to sell, would accept. Basis
for "listing price', or "asking price".
A lien or claim against real property given by the buyer to the
lender as security for money borrowed.
Mortgage Life Insurance- A type of term life insurance often bought by mortgagors.
The coverage decreases as the mortgage balance declines. If the
borrower dies while the policy is in force, the debt is automatically
covered by insurance proceeds.
A written agreement to repay a loan. The agreement is secured by
a mortgage, serves as proof of an indebtedness, and states the manner
in which it shall be paid. Also, "deed of trust note."
Negative Amortization- Negative amortization occurs when monthly payments fail
to cover the interest cost. The interest that isn't covered is added
to the unpaid principal balance, which means that even after several
payments you could owe more than you did at the beginning of the
loan. Negative amortization can occur when an ARM has a payment
cap that results in monthly payments that aren't high enough to
cover the interest.
A fee or charge for work involved in evaluating, preparing, and
submitting a proposed mortgage loan. The fee is limited to 1 percent
of FHA and VA loans.
interest, taxes and insurance.
Planned Unit Development (PUD)- A zoning designation for property developed at the same
or slightly greater overall density than conventional development,
sometimes with improvements clustered between open, common areas.
Uses may be residential, commercial or industrial.
amount equal to 1 percent of the principal amount of the investment
or note. The lender assesses loan discount points at closing to
increase the yield on the mortgage to a position competitive with
other types of investments.
Prepayment Penalty- A fee charged to a mortgagor who pays a loan before it is
due. Not allowed for FHA or VA loans.
This word has several meanings:
- a) to denote the most important;
- b) a capital sum lent on interest;
- c) one who appoints an agent to act on their
- d) either party to a contract.
Private Mortgage Insurance (PMI)- Insurance written by a private company protecting the lender
against loss if the borrower defaults on the mortgage.
To allocate between seller and buyer their proportionate share of
an obligation paid or due. For example a prorate on real property
taxes, fire insurance, or condominium fee.
Purchase Agreement- A written document in which the purchaser agrees to buy
certain real estate and the seller agrees to sell under stated terms
and conditions. Also called a sales contract, earnest money contract,
or agreement for sale.
A real estate broker or associate active in a local real estate
board affiliated with the National Association of Realtors®.
Redhibition - The annulling of a sale, and the return by
the buyer of the article sold, on account of some defect.