Real Estate Vocabulary

Welcome to our real estate vocabulary library. Below you will find a comprehensive list of important terms in real estate listed conveniently in alphabetical order from A to Z.

Abstract of Title: A summary of the history of ownership and legal proceedings affecting a property.

Acceleration Clause: A clause in a mortgage or loan contract that allows the lender to demand full repayment if certain conditions are not met.

Acceptance: Agreement to the terms of an offer, forming a contract.

Accrued Interest: Interest that has accumulated but not yet been paid.

Adjustable-Rate Mortgage (ARM): A mortgage with an interest rate that can change periodically.

Adverse Possession: A method of acquiring title to property by possession for a statutory period under certain conditions.

Affidavit: A written statement sworn to be true under oath.

Amenity: A feature that enhances the value or desirability of a property.

Amortization: The process of gradually paying off a debt over time through regular payments.

Amortization Schedule: A table detailing each periodic payment on a loan over time.

Annual Percentage Rate (APR): The total yearly cost of a loan, including interest and other fees.

Annual Percentage Yield (APY): The effective annual rate of return, taking into account the effect of compounding interest.

Appraisal: An expert estimate of the value of a property.

Appraisal Report: A detailed report of a property's market value.

Appreciation: The increase in the value of a property over time.

As-Is Condition: Selling a property in its current state without repairs or improvements.

Assessment: The determination of the value of a property for tax purposes.

Assessed Value: The value assigned to a property by a public tax assessor for taxation purposes.

Assignment: The transfer of a property or contractual rights from one party to another.

Assumable Mortgage: A mortgage that can be transferred from the seller to the buyer.

Attorney-in-Fact: A person authorized to act on behalf of another through a power of attorney.

Balloon Mortgage: A mortgage that requires a larger-than-usual one-time payment at the end of the term.

Balloon Payment: A large payment due at the end of a loan term.

Beneficiary: The person or entity entitled to receive benefits from a trust or insurance policy.

Binder: A preliminary agreement, secured by a deposit, between a buyer and seller.

Breach of Contract: Failure to perform any term of a contract without a legitimate legal excuse.

Broker: A licensed professional who arranges real estate transactions.

Building Code: Regulations established by local governments prescribing standards for construction and safety.

Buyer's Market: Market conditions that favor buyers, with more properties for sale than buyers.

Capital Gains: The profit from the sale of a property or investment.

Capital Improvement: A structural improvement or restoration that enhances the value of a property.

Cash Flow: The net amount of cash generated by a property after expenses.

Certificate of Deposit (CD): A savings certificate with a fixed interest rate and maturity date.

Certificate of Occupancy: A document issued by a local government agency certifying that a building is in compliance with applicable codes and safe for occupancy.

Chain of Custody: The documentation or paper trail showing the seizure, custody, control, transfer, analysis, and disposition of evidence.

Chain of Title: The history of ownership transfers of a property.

Chattel: Personal property that is not affixed to real property.

Clear Title: A title free of liens or legal questions as to ownership of the property.

Closing: The final step in a real estate transaction where ownership is transferred.

Closing Costs: Fees and expenses associated with the finalization of a real estate transaction.

Closing Date: The date on which the sale of a property is finalized.

Cloud on Title: Any claim or potential claim that affects the title to a property.

Commercial Real Estate: Property used for business purposes, such as offices, stores, and warehouses.

Commission: The fee paid to a real estate agent or broker for their services.

Common Area: Areas of a property that are available for use by all owners or tenants.

Community Property: A form of joint ownership between spouses, where property acquired during the marriage is owned equally by both.

Comparative Market Analysis (CMA): An estimate of a property's value based on recent sales of similar properties.

Comparables: Properties similar to the subject property used for comparison in determining value.

Compound Interest: Interest calculated on both the initial principal and the accumulated interest from previous periods.

Condominium: A type of property ownership where individuals own units in a multi-unit building.

Condemnation: The legal process by which the government takes private property for public use under eminent domain.

Conforming Loan: A mortgage that meets the guidelines set by government-sponsored entities like Fannie Mae and Freddie Mac.

Construction Loan: A short-term loan used to finance the building of a property.

Consumer Protection Act: Laws designed to ensure fair trade competition and the free flow of truthful information in the marketplace.

Contingency: A condition that must be met for a contract to be binding.

Contract for Deed: A financing arrangement where the buyer makes payments to the seller until the total purchase price is paid.

Contractor: A person or company hired to perform work on a property.

Conventional Loan: A mortgage that is not insured or guaranteed by the government.

Conventional Mortgage: A loan not insured or guaranteed by a government agency.

Conveyance: The act of transferring ownership of a property.

Cooperative (Co-op): A form of homeownership where residents own shares in a corporation that owns the property.

Counteroffer: A response to an offer that modifies the terms of the original offer.

Covenant: A formal agreement or promise in a contract.

Covenant of Quiet Enjoyment: A promise that the tenant can quietly enjoy the leased premises without interference.

Credit Score: A numerical representation of a person's creditworthiness.

Curb Appeal: The visual attractiveness of a property as seen from the street.

Debt Service: The amount of money required to cover the repayment of interest and principal on a debt for a particular period.

Debt-to-Income Ratio: A measure of a borrower's monthly debt payments compared to their gross monthly income.

Deed: A legal document that transfers ownership of a property.

Deed in Lieu of Foreclosure: A deed given by a borrower to a lender to avoid foreclosure.

Deed Restriction: A limitation on the use of property imposed by a previous owner.

Default: Failure to fulfill an obligation, especially regarding loan payments.

Delinquency: Failure to make payments on time.

Depreciation: The decrease in the value of a property over time.

Disclosure: The act of providing important information about a property.

Disclosure Statement: A document that discloses all relevant information about a property.

Discount Points: Fees paid directly to the lender at closing in exchange for a reduced interest rate.

Distressed Property: Property under foreclosure or that is being sold by a lender.

Down Payment: The initial payment made when purchasing a property.

Dual Agency: A situation where a real estate agent represents both the buyer and the seller in a transaction.

Due Diligence: The process of investigating a property before finalizing a transaction.

Due-on-Sale Clause: A clause in a mortgage that requires the full balance to be paid if the property is sold.

Earnest Money: A deposit made by a buyer to show their commitment to a purchase.

Easement: A right to use someone else's property for a specific purpose.

Easement by Prescription: The right to use another's land, acquired by continuous use without the owner's permission for a legally defined period.

Effective Age: An appraiser's estimate of the age of a structure based on its condition, rather than its actual age.

Egress: A way to exit a property.

Eminent Domain: The right of the government to take private property for public use, with compensation.

Encroachment: An intrusion onto another person's property.

Encumbrance: A claim or lien on a property that affects its transferability.

Environmental Impact Statement (EIS): A document required by law detailing the impact of a proposed project on the environment.

Equity: The difference between the market value of a property and the amount owed on it.

Escrow: An arrangement where a third party holds funds or documents until certain conditions are met.

Escrow Account: An account where funds are held in trust while two or more parties complete a transaction.

Estoppel: A legal principle that prevents a person from arguing something contrary to a claim made or implied by their previous words or actions.

Estate: All the property owned by an individual at the time of their death.

Eviction: The legal process of removing a tenant from rental property.

Exclusive Listing: A listing agreement where only one agent or broker is authorized to sell the property.

Fair Housing Act: A federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, or national origin.

Fair Market Value: The price a property would sell for on the open market.

Fannie Mae: The Federal National Mortgage Association, a government-sponsored enterprise that buys and guarantees mortgages.

Fee Simple: The most complete form of property ownership, with unlimited duration and unrestricted usage rights.

FHA Loan: A mortgage insured by the Federal Housing Administration.

Fixture: An item that is permanently attached to a property.

Flood Insurance: Insurance that covers property damage due to flooding.

Forbearance: An agreement between lender and borrower to delay a foreclosure.

Foreclosure: The process by which a lender takes possession of a property due to the borrower's default.

Grace Period: An additional time period granted to make a payment without penalty.

Grantor: The person or entity transferring an interest in real property to another.

Gross Income: The total income generated by a property before any expenses are deducted.

Gross Rent Multiplier (GRM): A measure used to evaluate rental properties, calculated as the property's price divided by its gross annual rental income.

Ground Lease: A long-term lease agreement where the tenant is allowed to develop the property during the lease period.

Ground Rent: Rent paid for the use of land.

Guarantee: A promise to assume responsibility for the debt or obligation of another.

Hard Money Loan: A loan secured by real property, typically provided by private investors or companies.

Hazard Insurance: Insurance that protects property against damage from hazards such as fire, storms, and other natural events.

Home Equity Loan: A loan where the borrower uses the equity of their home as collateral.

Homeowners Association (HOA): An organization that enforces rules and maintains common areas for a residential community.

Homeowners Insurance: Insurance that covers a private residence.

Homeowners Warranty: An insurance policy covering repairs and replacements of home systems and appliances.

HUD-1 Settlement Statement: A document that lists all closing costs for a real estate transaction.

Improvements: Additions made to a property that increase its value.

Income Property: Property that generates rental income.

Indemnity: Security or protection against a loss or other financial burden.

Inflation: The rate at which the general level of prices for goods and services rises.

Ingress: The right to enter a property.

Interest: The cost of borrowing money, typically expressed as a percentage of the loan amount.

Interest Rate: The percentage of a loan amount charged for borrowing money.

Investment Property: Property purchased to generate rental income or profit from appreciation.

Joint Tenancy: A form of ownership where two or more parties hold equal shares and have equal rights to the property.

Judgment Lien: A lien on a property resulting from a court judgment.

Jumbo Loan: A loan that exceeds the conforming loan limits set by government-sponsored entities.

Land Contract: A contract for the sale of real estate where the buyer makes payments to the seller until the purchase price is paid in full.

Land Lease: A lease agreement that allows the tenant to use land for a specified period.

Landlord: The owner of rental property.

Lease: A contract granting use or occupation of property during a specified period in exchange for a specified rent.

Leasehold: The interest or rights a tenant has under a lease agreement.

Leasehold Estate: An estate for a limited duration, created by a lease agreement.

Legal Description: A formal description of a property that identifies its location, boundaries, and any easements.

Lender: A person or organization that lends money.

Lessee: A person who leases property from another; a tenant.

Lessor: A person who leases property to another; a landlord.

Liability Insurance: Insurance that provides protection against claims resulting from injuries and damage to people and property.

Lien: A legal right or interest that a lender has in a borrower's property, used as collateral for a debt.

Listing Agreement: A contract between a property owner and a real estate broker authorizing the broker to sell the property.

Loan: An amount of money borrowed that is expected to be paid back with interest.

Loan Origination Fee: A fee charged by a lender for processing a loan application.

Loan-to-Value Ratio (LTV): A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Lock-In: An agreement between a borrower and lender that guarantees a specified interest rate for a specified period.

Maintenance: The upkeep of property or equipment.

Market Value: The price at which a property would sell under normal conditions.

Mechanic's Lien: A lien on a property for unpaid labor or materials supplied during construction or improvement.

Metes and Bounds: A method of property description that uses physical features and distances to define boundaries.

Mortgage: A loan used to purchase real estate, with the property serving as collateral.

Mortgage Broker: A professional who assists in obtaining a mortgage loan.

Mortgage Insurance: Insurance that protects lenders against losses caused by a borrower's default on a mortgage loan.

Mortgage Lender: A bank or financial institution that provides mortgage loans.

Mortgage Rate: The interest rate charged on a mortgage loan.

Mortgage-Backed Securities (MBS): Investments that are secured by mortgages.

Multiple Listing Service (MLS): A service used by real estate brokers to share listings with other brokers.

Mutual Assent: Agreement by all parties to a contract.

Negative Amortization: A situation where the loan balance increases because the borrower is not making payments sufficient to cover the interest due.

Net Operating Income (NOI): The income generated by a property after operating expenses are deducted but before mortgage payments and taxes.

Non-Recourse Loan: A loan secured by collateral, typically real estate, where the borrower is not personally liable for repayment.

Note: A legal document that serves as an IOU from a borrower to a lender.

Notice of Default: A formal notice that a borrower has not met the terms of the loan agreement.

Offer: A proposal to enter into a contract.

Open House: A scheduled period when a property for sale is open for public viewing.

Origination Fee: A fee charged by a lender for processing a loan application.

Owner Financing: A transaction in which the seller provides financing to the buyer.

Partial Payment: A payment that is less than the full amount due.

Payoff Amount: The amount required to fully pay off a loan.

Per Diem: A daily allowance or payment.

Personal Property: Items that are not permanently attached to real estate and can be moved.

Piggyback Loan: A second mortgage that is taken out at the same time as the first mortgage to cover part of the down payment.

PITI: Acronym for Principal, Interest, Taxes, and Insurance, the components of a typical mortgage payment.

Plat: A map showing the division of a piece of land into lots.

Points: Fees paid to the lender at closing to reduce the interest rate on a loan.

Power of Attorney: A legal document authorizing one person to act on behalf of another.

Pre-Approval: A lender's written commitment to lend to a borrower a specified amount, based on an evaluation of the borrower's financial situation.

Pre-Qualification: An initial assessment by a lender of a borrower's ability to qualify for a loan.

Principal: The amount of money borrowed or remaining unpaid on a loan.

Private Mortgage Insurance (PMI): Insurance that protects the lender against loss if the borrower defaults on a loan.

Probate: The legal process of settling an estate after someone's death.

Property Management: The operation, control, and oversight of real estate.

Property Tax: A tax assessed on real estate by the local government.

Purchase Agreement: A contract between a buyer and seller outlining the terms of a property sale.

Quitclaim Deed: A deed that transfers the seller's interest in a property but does not guarantee that the title is clear.

Real Estate: Property consisting of land or buildings.

Real Estate Agent: A licensed professional who represents buyers or sellers in real estate transactions.

Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-producing real estate.

Real Property: Land and anything permanently attached to it.

Realtor: A real estate professional who is a member of the National Association of Realtors (NAR).

Refinance: To obtain a new mortgage to replace an existing one.

Repossession: The act of taking back property by a lender or seller from the borrower or buyer, typically due to default.

Rescission: The cancellation of a contract.

Reserve Fund: Money set aside for future repairs, maintenance, or improvements to a property.

Reverse Mortgage: A loan for homeowners 62 and older that allows them to convert part of the equity in their homes into cash.

Right of First Refusal: A contractual right that gives the holder the option to enter into a business transaction before anyone else can.

Right of Survivorship: A feature of joint tenancy where the surviving owner automatically inherits the share of a deceased owner.

Sale-Leaseback: A transaction in which the seller sells a property and then leases it back from the buyer.

Second Mortgage: A loan secured by a property that already has an existing mortgage.

Security Deposit: Money paid by a tenant to a landlord to cover potential damages or unpaid rent.

Seller Financing: A situation where the seller provides financing to the buyer.

Settlement: The final step in a real estate transaction where ownership is transferred and funds are disbursed.

Shared Equity Mortgage: A loan arrangement where the lender shares in the property's equity.

Short Sale: A sale of a property for less than the amount owed on the mortgage.

Single-Family Home: A residential property designed for one family.

Survey: A map or drawing that shows the boundaries and features of a property.

Tax Lien: A claim by the government on a property for unpaid taxes.

Tenancy in Common: A form of ownership where two or more parties own separate shares of the same property.

Title: Legal ownership of property.

Title Insurance: Insurance that protects against losses due to defects in the title.

Title Search: An examination of public records to determine the ownership and encumbrances on a property.

Transfer Tax: A tax on the transfer of property.

Trust Deed: A document that conveys legal title to a property to a trustee as security for a loan.

Trustee: A person or entity that holds legal title to a property on behalf of another.

Truth in Lending Act (TILA): A federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender.

Unsecured Loan: A loan that is not backed by collateral.

Usury: Charging an illegally high-interest rate on a loan.

VA Loan: A mortgage loan guaranteed by the U.S. Department of Veterans Affairs.

Vacancy Rate: The percentage of vacant rental units in a property or market.

Variable Rate Mortgage: A mortgage with an interest rate that can change periodically based on an index.

Warranty Deed: A deed in which the seller guarantees that they hold clear title to a piece of real estate and have the right to sell it.

Zoning: Local laws and regulations that control the use of land and buildings.

Zoning Ordinance: A law that defines how property in specific geographic zones can be used.

HOA Basics

HOA PROBLEMS

HOA REAL ESTATE

HOA BY STATE

HOA CRIMES AND COMEDY