Basic Real Estate Glossary

ABSTRACT OF TITLE
A summary of the history of the legal title to a piece of property; all changes in ownership, liens, mortgages or any other matter that might affect the title.

AGREEMENT OF SALE; OR PURCHASE AND SALE AGREEMENT
A written agreement by which a buyer agrees to purchase and a seller agrees to sell according to terms set forth in that agreement.

AMORTIZATION
The reduction of a loan or debt by periodic payments according to agreed upon terms.

APPRAISAL
A procedure in which a qualified individual estimates the value of a piece of property.

ATTORNEY IN FACT
One who holds a power of attorney from another, allowing him to execute legal documents on behalf of the grantor of power.

CLOSING
The final meeting at which the transfer of title of property passes from the seller to the buyer.

CLOSING COSTS
Includes all the charges attached to closing. These one-time fees include charges for title search and insurance, attorney’s fee, survey, and points charged by lender of mortgage. These are also known as settlement costs.

DEED
A legal document whereby title to real estate is transferred from one person to another.

EARNEST MONEY
Advance payment of part of the purchase price to bind a contract for property.

EQUITY
The difference between the market value of a house and the balance owed on the mortgage, usually referring to the owner’s interest or value on real estate.

ESCROW
A procedure where a third party handles legal documents and funds on behalf of a seller, buyer, and lender.

LEASE
A written document containing the conditions for the exclusive possession of real estate by the owner to another for a definite period of time.

LIEN
A claim or charge upon property for payment of a debt, obligation or duty.

LIS PENDENS
A notice recorded in the official county property records indicating the existence of a lawsuit affecting specific real property.

MARKET VALUE
The highest price that a buyer will pay and the lowest price a seller will accept for a property.

MECHANIC’S LIENS
A lien allowed by statute to contractors and laborers on structures where work has been performed or materials supplied.

MORTGAGE
An instrument used to encumber land as security for a debt.

POINTS
The one-time fee charged by a lending institution for making a loan expressed as a percentage of the final amount of the loan.

REFINANCE
Process of paying off an existing loan with proceeds from another.

SECOND MORTGAGE
Financing real estate with a loan or loans that are subordinate to the first mortgage. It usually calls for a higher interest rate and a shorter repayment period.

SURVEY
An exact measurement of a parcel of land to ascertain boundaries, size, location, and improvements.

TITLE
Evidence, usually in the form of a deed, that a person has the right to ownership of the property in question.

TITLE INSURANCE
A policy that protects the buyer against any loss or damage resulting from a defective title.

TITLE SEARCH
A detailed investigation of public records to ensure that any property is purchased from the legal owner and that there are no liens or special assessments against it.

ZONING
Procedure that classifies real property for a number of different users: residential, commercial, industrial, etc., in accordance with a land-use plan. Ordinances are enforced by a governing body or locality.