Just like most of you reading this, I’m new to the real estate world. Besides watching my mom buy a house when I was 13, I haven’t had a lot of exposure. But this summer, I was hired on to be an assistant to a real estate agent. All of a sudden I’m handling all of these legal documents with all of these words and phrases I’ve heard but never comprehended. There is one thing I know for sure at this point: Real estate lingo is complicated.
Here I have compiled an A to Z of 84 essential terms to navigate the real estate world. Read through it all to be a master, or just use it as a quick reference anytime you need to!
Abstract of Title:
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
All parties have signed the offer.
A measure of land equal to 43,560 square feet.
An addendum is a referenced addition of supplement to a contract before said contract is binding and there’s no going back
An occurrence or condition that generally reduces the value of the real estate in question by a significant amount. This could also mean the structural integrity of the property is reduced in value, or a significant health risk is found.
When someone possesses another’s property under a claim or title with specifically open, hostile and continuous intentions.
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.
Any changes to the original terms of a contract.
An estimate of the quantity, quality or value or something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
A right, privilege or improvement that passes with the land.
The transfer or rights and/or duties under a contract.
A contract in which each party in the contract promises to perform some act or duty in exchange for the promise of the other party.
A short contract used to secure a real estate transaction until a more formal contract can be signed.
Failing to fulfill one’s duties as required by law, or failing to comply with the terms of a contract.
The bringing together of parties interested in making a real estate transaction.
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.
“Let the buyer beware”
Chain of Title:
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
An item of personal property
An event where promises made in a sales contract are fulfilled and mortgage loan funds are distributed to the buyer.
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
A provision in a homeowner’s insurance policy which usually requires the owner to maintain insurance equal to at least 80 percent of the replacement cost of a dwelling.
Competitive Market Analysis (CMA):
A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style and amenities.
Ownership by two or more persons at the same time.
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offerer.
Provisions set in a deed to control how future owners may or may not use the property.
Department of Housing and Urban Development (HUD):
Governmental department that has established rules and regulations that further interpret the practices affected by the law. In addition, HUD distributes an equal housing opportunity poster.
(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence. (2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.
Representing both parties in a transaction.
A provision in the mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.
A building or some portion of it- a wall or fence for instance- that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
An impediment to a clear title, such as a lien or lease.
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.
The market value of a property less the debt against it.
An oral or written contract in which the parties state the contract’s terms and express their intentions in words.
Fair Housing Act:
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.
The greatest and most complete interest in land with absolute ownership of real property.
One who acts in a position of trust or confidence and has a special legal relationship with the beneficiary.
An item of personal property that has been converted to real property by being permanently affixed to the realty.
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage agreement.
Deception intended to cause a person to give up property or a lawful right.
A present ownership interest or possibility of interest in land, with the right of possession postponed to the future.
One who is authorized to represent the principal in a range of matters and may bind the principal to any contracts within the scope of his/her authority.
General Warranty Deed:
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
Original survey of the state by the U.S. government.
Homeowner’s Insurance Policy:
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.
An estate in land occupied as a resident.
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
The ability to enter a parcel of land.
A form of co-ownership of property with rights of survivorship.
An employment contract generally between an owner and a real estate broker where the broker is employed to find a buyer for the owner’s real estate.
Dwellings that are built offsite and trucked to a building lot where they are installed or assembled.
Mixing marital property with individual property.
Property owned but not used as the owner’s dwelling place.
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or external.
Offer and Acceptance:
Two essential components of a valid contract; a “meeting of the minds.”
A principal gives a third party reason to believe another person is his/her agent; other person is unaware of the appointment.
The government’s right to impose laws, statutes and ordinances, including zoning ordinances and building codes to protect the public health, safety, and welfare.
Power of Attorney:
A written instrument authorizing a person. The attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.
A main party to a transaction, the person for whom the agent works. The principal is the client.
A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are.
The effort that brings about the desired result.
Document received by the owner of a cooperative giving him/her right to the unit.
Ready, Willing and Able Buyer:
One who is prepared to buy the property on the seller’s terms and is ready to take positive steps to consummate the transaction.
Land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
Real Estate Settlement Procedures Act (RESPA):
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
Real estate plus the bundle of rights.
One who is authorized by a principal to perform a single act or transaction. A real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular buyer.
The substitution of one creditor for another with the substituted person succeeding the legal rights and claims of the original claimant.
The process by which a parcel of land is measured and its area is ascertained.
A court-ordered sale of real property to raise money to cover delinquent taxes.
(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.
A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel or real estate, other than encumbrances, defects and matters specifically excluded by the policy.
The examination of public records relating to real estate to determine the current state of the ownership.
Title to property is held by a trustee who controls and manages it for the benefit of another, called a beneficiary.
Ownership by two or more persons that gives each the right to use the entire property.
A contract that has no legal force or effect because it does not meet the essential elements of a contract.
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 an additional mortgage in which another lender refinances a borrower by lending the amount over the existing first mortgage amount without disturbing the existence of the first mortgage.
An exercise of police power by a municipality to regulate and control the character and use of property.