A

Abandonment -

The voluntary relinquishment of rights of ownership or another form of interest
(an easement) by failure to use the property over an extended period of time.

ABR -

The Accredited Buyer Representative designation indicates a real estate agent
specializing in representing buyers in the real estate transaction. The ABR is
conferred by the Real Estate Buyer’s Agent Council (REBAC).

Abstract (Of Title) -

A summary of the public records relating to the title to a particular piece of
land. An attorney or title insurance company reviews an abstract of title to
determine whether there are any title defects, which must be cleared before a
buyer, can purchase clear, marketable and insurable title.

Acceleration Clause -

Condition in a mortgage that may require the balance of the loan to become due
immediately, if regular mortgage payments are not made or for breach of other
conditions of the mortgage.

Acceptance -

Refers to a legal term denoting acceptance of an offer. A buyer offers to buy
and the seller accepts the offer.

Accrued Weeks -

(Relating to Time-Shares) Weeks that have accumulated from the prior year and
are available for use in the current calendar year.

Acre -

A measure of land, equal to 160 sq. rods (43,560 sq. ft. ). An acre is
approximately 209′ x 209′.

Acknowledgment -

A formal declaration before an authorized official (usually a notary public) by
a person who has executed a document, that he did in fact execute (sign) the
document.

Addendums -

Additions to a contract, sometimes called attachments or exhibits. A list or
other items added to a document, letter, contract, and escrow instructions,
etc.

Adverse Possession -

Methods of acquiring title by open and notorious possession usually vary with
each state.

Agency -

(a) The relationship that exists when a person, known as the principal,
contracts to another, the agent, to perform an act in that person’s stead. (b)
Common term for a firm offering representation.

Agency Disclosure -

A state mandated form that describes representation options available to the
buyer and must be presented to all buyers at the first “meaningful meeting. ”

Agent -

A person authorized by another to act on his or her behalf.

Agreement of Sale -

Known by various names, such as contract of purchase, purchase agreement, or
sales agreement according to location or jurisdiction. A contract in which a
seller agrees to sell and a buyer agrees to buy, under certain specific terms
and conditions spelled out in writing and signed by both parties.

Alienation Clause -

A clause within a loan instrument calling for a debt in its entirety upon the
transfer of ownership of the secured property. Also called a “due on sale”
clause.

Amortization -

A payment plan that enables the borrower to reduce his debt gradually through
monthly payments of principal.

Amortization Schedule: -

A table that lists what percentage of each payments consist of interest and
principal.

Application Deadline -

The date by which the buyer must formally apply for a mortgage in order to
validate the mortgage contingency.

Appraisal -

An expert judgment or estimate of the quality or value of real estate as of a
given date.

Asking Price -

The price that a seller is requesting for their property, specified in a
listing contract.

Assessed Value -

Value placed on property by the tax assessor.

Assessment -

The valuation of property for the purpose of levying a tax or the amount of the
tax levied.

Assessor -

One appointed to assess property for taxation.

Assignment -

A transfer or making over to another the whole of any property, real or
personal, or of any Estate or right therein. To assign is to transfer.

Assumption of Mortgage -

An obligation undertaken by the purchaser of property to be personally liable
for payment of an existing mortgage. In an assumption, the purchaser is
substituted for the original mortgagor in the mortgage instrument and the
original mortgagor is to be released from further liability in the assumption,
the mortgagee’s consent is usually required

Attachment -

Seizure of property by court order, usually done in a pending law suit to make
property available in case of judgment.

B

Balloon Payment -

The final installment paid at the end of the term of a note; used only when preceding installments were not
sufficient to pay off the note in full.

Bill of Sale -

An instrument used to transfer personal property.

Binder -

(a) A written statement from the insurance company showing that the homeowners
insurance has been paid for and will be in place after closing. (b) A sum of
money used as a deposit to show good faith and commitment to the purchase of
the real property.

Blanket Mortgage (Trust Deed) -

A single mortgage or trust deed, which covers more than one piece of real estate

Bond -

An insurance agreement by which one party is insured against loss or default by
a third party. In the construction business a performance bond ensures the
interested party that the contractor will complete the project. A bond can also
be a method of financing debt by a government or corporation, which is
interest-bearing and has priority over stock in terms of security.

Bonus Time -

(Relating to Time-Shares) Use of your resort in addition to your regular allocated time on a space available basis.

Breach -

Violation of an obligation in a contract.

Binder or “Offer to Purchase” -

A preliminary agreement, secured by the payment of earnest money, between a
buyer and seller as an offer to purchase real estate. A binder secures the
right to purchase real estate upon agreed terms for a limited period of time.
If the buyer changes his mind or is unable to purchase, the earnest money is
forfeited unless the binder expressly provides that it is to be refunded.

Broker, Real Estate -

An agent licensed by the state to carry on the business of operating in real
estate. He usually receives a commission for his services of bringing together
buyers and sellers, owners and tenants in exchange agreements.

Building Code -

A set of stringent laws that control the construction of buildings, design, materials and other similar factors.

Broker’s Commission -

A section of the offer to purchase, and the purchase and sale agreement outlining the cooperating real estate broker’s fees.

Building Line or Setback -

Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of
subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

Built-Ins -

Items that are not movable, such a stoves, ovens, microwave ovens or dishwashers.

Buyer Broker -

A real estate agent who specializes in representing the purchaser. Some agents
who specialize in this area are referred to as Exclusive Buyers Agents and do
not list properties. Most real estate agents throughout the USA who work with
many of the more commonly known franchises do both – list property and sell it
as well. For clarification, have each agent detail out to you their position in
the transaction.

Buyers Market -

A market condition that occurs in real estate where more homes are for sale than there are interested buyers.

C

Camping Membership -

(Relating to Time-Shares) A membership to a resort or resort community catering
to campers, some of which are affiliated with national organizations providing
camping locations for members in many states and other countries.

Capital Gains -

A term used for income tax purposes, which represents the gain realized from
the sale of an asset less the purchase price and deductible expense.

Capitalization -

An appraising term used in determining value by considering net operating
income and a percentage of reasonable return on investment.

Cash Flow -

The owner’s “spendable” income after operating expenses and debt service is
deducted.

CCIM -

The highest designation of commercial specialists is the CCIM, Certified
Commercial Investment Member, conferred by the Commercial Investment Real
Estate Institute of NAR.

Certificate of Title -

A certificate issued by a title company or a written opinion rendered by an
attorney that the seller has good marketable and insurable title to the
property, which he is offering for sale. A certificate of title offers no
protection against any hidden defects in the title, that an examination of the
records could not reveal. The issuer of a certificate of title is liable only
for damages due to negligence. The protection offered a homeowner under a
certificate of title is not as great as that offered in a title insurance
policy.

Cesspool -

A private sewerage system consisting of a pit underground where sewerage flows
into and allows the waste water to leach through the sides of the pit leaving
the sludge to be pumped regularly.

Chain Of Title -

A history of conveyances and encumbrances affecting the title as far back as
records are available.

Client -

A buyer or seller who is represented by a real estate salesperson or broker as
the buyer’s or seller’s agent and subject to that buyer’s or seller’s control.
The terms of their agency agreement should be in writing.

Closing -

In the sale of real estate it is the final moment when all documents are
executed and recorded and the sale is complete. Also, a general selling term
where a sales person is attempting to sell something and the buyer agrees to
purchase.

Closing Costs -

The expenses which buyers and sellers normally incur to complete a transaction
in the transfer of ownership of real estate. These costs are in addition to
price of the property and are items prepaid at the closing day.

Closing Date -

The date on which the title to the property changes hands.

Closing Statement -

A list of the final accounting of all funds and disbursement of both buyer and
seller prepared by an escrow agent, which notes all costs each, must pay at the
completion of a real estate transaction.

Cloud (On Title) -

An outstanding claim or encumbrance which adversely affects the marketability
of title.

Club Membership -

(Relating to Time-Shares) Year-round usage of resort facilities with purchase,
on a space available basis.

Code of Ethics -

The rules and regulations required by all members of the National Association
of Realtors.

CMA -

(Comparative Market Analysis) A service normally provided by real estate agents
prior to either listing a property or prior to making an offer to purchase a
property on the behalf of a purchaser. The true purpose of a CMA is to
establish a current estimated market price of a property. This is accomplished
by researching both: the currently listed properties and the most recently sold
properties, in the same area, with as similar characteristics as the property
in question. This information is usually provided to the homeowner to help them
establish a fair market selling price or it may be given to a prospective
purchaser to help guide them in a proper offer to make the owner. Some real
estate agents perform this service for free others may charge as much as $300
for this information. A lot depends on both who is doing the CMA and also how
detailed the information that is provided.

Commission -

Money paid to a real estate agent or broker by the seller as compensation for
finding a buyer and completing the sale. Usually it is a percentage of the sale
price- – 6 to 7 percent on houses, 10 percent on land.

Commitment Letter -

A letter from the lending institution giving formal approval for a mortgage
loan.

Common Area -

That area owned in common by owners of condominiums and planned sight
development homes within a subdivision.

Community Property -

Both real and personal property accumulated by a husband and wife after
marriage through joint efforts of both living together.

Condemnation -

A declaration by governing powers that a structure is unfit for use.

Conditional Sales Contract -

A contract for the sale of property where the buyer has possession and use, but
the seller retains title until the conditions of the contract have been
fulfilled. Also known as a land contract.

Co-Op Housing -

An apartment building or a group of dwellings owned by a corporation, the
stockholders of which, are the residents of the dwellings. It is operated for
their benefit by their elected board of directors. In a cooperative, the
corporation or association owns title to the real estate. A resident purchases
stock in the corporation, which entitles him to occupy a unit in the building
or property owned by the cooperative. While the resident does not own his unit,
he has an absolute right to occupy his unit for as long as he owns the stock.

Condominium -

Individual ownership of a dwelling unit and an individual interest in the
common areas and facilities that serve the multi-unit project.

Consideration -

Anything of value given to induce someone into entering into a contract.

Construction Loan -

The short-term financing of improvements on real estate. Once the improvements
are completed a ‘take out’ loan for a longer term is usually issued.

Contingency -

A condition upon which a valid contract is dependent. Typically found in the
offer to purchase and the purchase and sale agreement. For example, the sale of
a house is contingent upon the buyer obtaining adequate financing.

Contract -

An agreement between two or more parties, written or oral, to do or not to do
certain things.

Conveyance -

The transfer of the title to land from one to another.

Contractor -

In the construction industry, a contractor is one who contracts to erect
buildings or portions of them. There are also contractors for each phase of
construction: heating, electrical, plumbing, air conditioning, road building,
bridge and dam erection, and others.

Conventional Mortgage -

A mortgage loan not insured by HUD or guaranteed by the Veterans’
Administration. It is subject to conditions established by the lending
institution and State statutes. The mortgage rates may vary with different
institutions and between States. (States have various interest rate limits. )

Counter Offer -

An offer in response to an offer. ‘A’ offers to by ‘B’s’ house for $20,000,
which is listed for $22,000. ‘B’ counter offers ‘A’s’ offer by stating that he
will sell the house to ‘A” for $21,000. The $21,000 is the counter offer.

Covenants -

Agreements written into deeds and other instruments stating performance or
non-performance of certain acts or noting certain uses or non-uses of property.

CRP -

(The Certified Relocation Professional) certification is conferred by the
Employee Relocation Council (E-R-C). The designation denotes relocation
professionals who specialize in relocation and who pass.

CRS -

The Certified Residential Specialist designation, offered through NAR, denotes
an agent who specializes in residential real estate. Only about three percent
of the members of NAR have earned this designation.

Credit Report -

A report on a buyer’s credit history required by the lender before approval.

Credit Score -

A potential borrower’s composite of available credit, outstanding credit and
payment history.

Customer -

A buyer who is working with a real estate salesperson or broker who is the
agent or subagent of the seller. It could also be a seller of an unlisted
property who is working with a buyer’s agent, although this situation is less
common.

D

Debt Service -

The total amount of the load payment, including principal and interest.

Deed -

A formal written instrument by which title to real property is transferred from
one owner to another. The deed should contain an accurate description of the
property being conveyed, should be signed and witnessed according to the laws
of the State where the property is located, and should be delivered to the
purchaser at closing day. There are two parties to a deed: the grantor and the
grantee. (See also deed of trust, general warranty deed, quitclaim deed, and
special warranty deed. )

Default -

Failure to make mortgage payments as agreed to in a commitment based on the
terms and at the designated time set forth in the mortgage or deed of trust. It
is the mortgagor’s responsibility to remember the due date and send the payment
prior to the due date, not after. Generally, thirty days after the due date if
payment is not received, the mortgage is in default. In the event of default,
the mortgage may give the lender the right to accelerate payments, take
possession and receive rents, and start foreclosure. Defaults may also come
about by the failure to observe other conditions in the mortgage or deed of
trust.

Deposit -

A sum of money sometimes referred to as earnest money, binder or escrow, which
is presented with the offer to purchase and the purchase and sale agreement.
This money is held in escrow and goes towards the buyer’s closing costs.

Depreciation -

Decline in value of a house due to wear and tear, adverse changes in the
neighborhood or any other reason.

Developer’s Price -

(Relating to Time-Shares) Estimated developer’s current or market price. Full
retail price.

Documentary Stamps -

A State tax, in the forms of stamps, required on deeds and mortgages when real
estate title passes from one owner to another. The amount of stamps required
varies with each state.

Down-Payment -

The amount of money to be paid by the purchaser to the seller upon the signing
of the agreement of sale. The agreement of sale will refer to the down payment
amount and will acknowledge receipt of the down-payment. The down-payment is
the difference between the sales price and maximum mortgage amount. The
down-payment may not be refundable if the purchaser fails to buy the property
without good cause. If the purchaser wants the down-payment to be refundable,
he should insert a clause in the agreement of sale specifying the conditions
under which the deposit will be refunded, if the agreement does not already
contain such clause. If the seller cannot deliver good title, the agreement of
sale usually requires the seller to return the down-payment and to pay interest
and expenses incurred by the purchaser.

Dual Representation (Agency) -

A broker or salesperson representing both buyer and seller in the same
transaction.

E

Earnest Money -

The deposit money given to the seller or his agent by the potential buyer upon
the signing of the agreement of sale to show that he is serious about buying
the house. If the sale goes through, the earnest money is applied against the
down-payment. If the sale does not go through, the earnest money will be
forfeited or lost unless the binder or offer to purchase expressly provides
that it is refundable.

Easement Rights -

A right-of-way granted to a person or company authorizing access to or over the
owner’s land. An electric company obtaining a right-of-way across private
property is a common example.

Economic Obsolescence -

Loss of useful life and desirability of a property through economic forces,
such as change in zoning, changes in traffic flow, etc. – rather than
deterioration.

Encroachment -

An obstruction, building, or part of a building that intrudes beyond a legal
boundary onto neighboring private or public land, or a building extending
beyond the building line.

Encumbrance -

A legal right or interest in land that affects a good or clear title, and
diminishes the lands value. It can take numerous forms, such as zoning
ordinances, easement rights, claims, mortgages, liens, charges, a pending legal
action, unpaid taxes, or restrictive covenants. An encumbrance does not legally
prevent transfer of the property to another. A title search is all that is
usually done to reveal the existence of such encumbrances, and it is up to the
buyer to determine whether he wants to purchase with the encumbrance, or what
can be done to remove it.

Equity -

The residual value of real property beyond any mortgage thereon.

Escalation Clause -

A clause in a lease providing for an increased rent at a future time due to
increased costs to lessor, as in cost of living index, tax increases, etc.

Escheat -

The reverting of property to the state in the absence of heirs.

Estate -

The ownership interest of a person in real property. Is also used to refer to a
deceased person’s property. And often used to describe a large home with
spacious grounds.

Equity -

The value of a homeowner’s unencumbered interest in real estate. Equity is
computed by subtracting from the property’s fair market value the total of the
unpaid mortgage balance and any outstanding liens or other debts against the
property. A homeowner’s equity increases as he pays off his mortgage or as the
property appreciates in value. When the mortgage and all other debts against
the property are paid in full the homeowner has 100% equity in his property.

Escrow -

Funds paid by one party to another (the escrow agent) to hold until the
occurrence of a specified event, after which the funds are released to a
designated individual. In FHA mortgage transactions an escrow account usually
refers to the funds a mortgagor pays the lender at the time of the periodic
mortgage payments. The money is held in a trust fund, provided by the lender
for the buyer. Such funds should be adequate to cover yearly anticipated
expenditures for mortgage insurance premiums, taxes, hazard insurance premiums
and special assessments.

Escrow Account -

(a) An account maintained by a real estate broker, attorney, escrow agent in an
insured bank for the deposit of other people’s money. (b) An account maintained
by the borrower with the lender in certain mortgage loans to accumulate the
funds to pay an annual insurance premium, real estate tax, or a home owner’s
association assessment.

Exchange Company -

(Relating to Time-Shares) Organization, which for a fee provides vacation
exchange services and will assist timeshare and camping membership owners in
exchanging for other resorts worldwide.

Exclusions -

A section of the offer to purchase designed to exhibit anything the buyer or
seller would not like included with the real estate (i. e. debris in the yard
or a chandelier).

Exclusive Buyer Representation -

An agency relationship between a buyer and a broker that cannot result in dual
agency.

Executed Contract -

An agreement that has been fully performed.

Expiration Date and Time -

A section of the offer to purchase designed to give the offer a time limit
after which the offer is withdrawn.

Extensions -

Written or verbal extensions of dates in the offer to purchase and the purchase
and sale agreement.

F

Fair Market Value -

That price a property will bring given that both buyer and seller are fully
aware of market conditions and comparable properties.

Fee Simple -

Ownership of title to property without any limitation, which can be sold, left
at will, or inherited.

Fiduciary Duties -

An obligation of trust imposed on an agent toward his/her principal. These
duties include loyalty, disclosure, confidentiality, obedience, reasonable
care, due diligence, and accountability for funds and documents under the
agent’s control. Every agent has a fiduciary responsibility to the principal,
once they are engaged.

Financing Acceptance Deadline -

The date in the offer to purchase that the buyer expects to have the loan
commitment from the bank and may be used to nullify the sale contract if the
mortgage is not obtained.

Fixed -

(Relating to Time-Shares) A time period that is fixed for each calendar year,
either by date or by calendar weeks; most in numerical sequence 1-52. With a
week number, your actual start date may vary slightly from year to year.

Fixed Rate Loan -

A loan that has an unchanging interest rate.

Fixtures -

Items affixed to buildings or land usually in such a way that they cannot be
moved without damage to themselves or the property, such as plumbing,
electrical fixtures, trees, etc.

Floating -

(Relating to Time-Shares) Your time period is defined by a season and your week
period is not fixed. You reserve your time period within the appropriate season
annually. Most resorts have a High, Medium and Low Season.

Foreclosure -

A legal term applied to any of the various methods of enforcing payment of the
debt secured by a mortgage, or deed of trust, by taking and selling the
mortgaged property, and depriving the mortgagor of possession.

FSBO (For Sale By Owner) -

A home that is being sold by the owner of the property without the
representation of a broker.

Fractional -

(Relating to Time-Shares) Multiple week ownership at the same resort – two or
more weeks of timeshare ownership for use in one calendar year.

Front Footage -

The linear measurement along the front of a parcel. That portion of the parcel,
which fronts the street or walkway.

Functional Obsolescence -

Loss in value due to out-of-date or poorly designed equipment while newer
equipment and structures have been invented since its construction.

G

General Warranty Deed -

A deed which conveys not only all the grantor’s interests in – and title to –
the property to the grantee, but also warrants that if the title is defective
or has a “cloud” on it (such as mortgage claims, tax liens, title claims,
judgments, or mechanic’s liens against it) the grantee may hold the grantor
liable.

Good Faith Estimate -

A required statement from the lender that shows all of the expected closing
costs.

Grantee -

That party in the deed that is the buyer or recipient.

Grantor -

That party in the deed that is the seller or giver.

Gross Estimate -

All money coming into a household on a regular basis.

Ground Lease -

A lease of vacant land.

H

Hard Credit Report -

A report on one’s credit history that is a compilation of the three credit
bureaus.

Hazard Insurance -

Protects against damages caused to property by fire, windstorms and other
common hazards.

Home Owners Association -

An association of homeowners within a community formed to improve and maintain
the quality of the community. An association formed by the developer of
condominiums or planned developments.

Homeowner’s Insurance -

An insurance policy protecting against a variety of hazards.

HUD -

U. S. Department of Housing and Urban Development. Office of Housing/Federal
Housing Administration within HUD insures home mortgage loans made by lenders
and sets minimum standards for such homes.

I

Inclusions -

A section of the offer to purchase designed to exhibit any extra items the
buyer or seller would like to be included with the real estate (i. e. personal
property).

Inspections -

The analysis of the home to find defects that may exist.

Interest -

Money paid to a lender as compensation for money that is borrowed.

Intestate -

A person who dies without making a will.

Involuntary Lien -

A lien that attaches to property without the consent of the owner such as tax
liens as opposed to voluntary liens (mortgages).

J

Joint Tenancy -

Joint ownership by two or more persons with
right of survivorship. Upon the death of a joint tenant, his interest
does not go to his heirs, but to the remaining joint tenants.

L

Lease -

A contract between the owner of real property, called the lessor, and another
person referred to as the lessee, covering all conditions by which the lessee
may occupy and use the property.

Lease With Option To Purchase -

A lease where the lessee has the option to purchase the leased property. The
terms of the purchase option must be set forth in the lease.

Legal Description -

The geographical identification of a parcel of land.

Lessee -

One who contracts to rent property under a specified lease.

Lessor -

An owner who contracts into a lease with a tenant (lessee).

Lien -

A claim by one person on the property of another as security for money owed.
Such claims may include obligations not met or satisfied, judgments, unpaid
taxes, materials, or labor. (See also special lien. )

Life Estate -

An estate in real property for the life of a person.

Listing -

(a) A property included in the multiple listing service. (b) A written
agreement between a seller and a broker authorizing the broker to procure a
buyer or tenant for his/her real estate.

Listing Agent -

The broker employed by the principal to market the property.

Listing Agent Questionnaire -

A form to be filled out by the listing agent or the seller answering typical
questions regarding the condition of the property.

Living Trust -

A trust agreement, which the title to property and assets can be transferred
into, thereby avoiding probate. The Living Trust was the first of the Trusts. A
Trust is created when a living person (the Trustor) agrees to let someone (the
Trustee) hold title to property for the benefit of someone (the Beneficiary).

Loan Fee -

Also known as points, discount points or origination fee, this is a one time
charge by a lender as compensation for their services. 1 point equals 1% of the
mortgage amount.

Loan Originator -

A person who works for the lending institution whose job it is to meet with
potential borrowers to discuss loan options, rates, etc.

M

Maintenance Fee -

(Relating to Time-Shares) Maintenance fees are established and collected by the
Homeowners Association or Resort Management Company to maintain the property,
pay insurance, utilities, refurbishing and taxes.

Market Analysis -

An analysis performed to determine the current value of a property based on
recently sold comparable properties, comparable properties that are currently
for sale and the current overall market conditions.

Marketable Title -

A title that is free and clear of objectionable liens, clouds, or other title
defects. A title that enables an owner to sell his property freely to others
and one which others will accept without objection.

Mechanic’s Lien -

A lien created by statute on a specific property for labor or materials
contributed to an improvement on that property.

Money Market Accounts -

These are like a savings account usually offered through Securities Brokerage
houses and some banks, which usually pay higher interest rates, have
checkwriting features, along with a variety of other features. In most cases, a
great place to put funds from the closing of a real estate transaction. Check
with a Mutual Funds Registered Representative for details.

Mortgage -

A legal document that pledges property to a creditor for the repayment of the
loan, and is the term used to describe the loan itself. Some states use the
term First Trust Deeds to refer to mortgage loans.

Mortgage (Open- End) -

A mortgage with a provision that permits borrowing additional money in the
future without refinancing the loan or paying additional financing charges.
Open- end provisions often limit such borrowing to no more than would raise the
balance to the original loan figure.

Mortgagee -

The lender in a mortgage agreement.

Mortgagor -

The borrower in a mortgage agreement.

Mortgage Commitment -

A written commitment from the lending institution to provide a mortgage to the
buyer for a specific property.

Mortgage Contingency -

A contingency in the offer to purchase and/or the purchase and sale agreement
which protects the buyers in case they are unable to get a mortgage commitment
by a date specified in the contract. In this case, the buyers would be able to
cancel the contract to purchase and receive back all deposits made.

Multiple Listing -

A listing taken by a member of an organization of brokers, whereby all members
have an opportunity to find a buyer.

Multiple Listing Service -

A service provided to real estate agents that lists homes under a seller’s
representation agreement and may be available for sale. A computerized database
of all homes listed by real estate agents.

N

Negative Amortization -

When monthly payments are not enough to cover interests costs, they are added
to the principal balance, and you may end up owing more than when you started.
This is most likely to occur with ARMs that have payment caps.

Notary Public -

One who is authorized by federal or local government to attest authentic
signatures and administer oaths.

Note -

A written instrument acknowledging a debt and promising payment.

O

Odd & Even Years -

(Relating to Time-Shares) Timeshare ownership usage every other year – some
odd-numbered, some even.

P

Personal Property -

All property that is not land and is not permanently attached to land;
everything that is moveable.

PITI -

Principal, interest, taxes, and insurance. This is your monthly house payment.

Plot -

A map or chart of a lot, subdivision or community drawn by a surveyor showing
boundary lines, buildings, improvements on the land and easements.

Points -

Sometimes called “discount points. ” A point is one percent of the amount of
the mortgage loan. For example, if a loan is for $25,000, one point is $250.
Points are charged by a lender to raise the yield on his loan at a time when
money is tight, interest rates are high, and there is a legal limit to the
interest rate that can be charged on a mortgage. Buyers are prohibited from
paying points on HUD or Veterans’ Administration guaranteed loans (sellers can
pay, however). On a conventional mortgage, points may be paid by either buyer
or seller or split between them.

P.M.I.(Private Mortgage Insurance) -

Private mortgage insurance, required by many lenders when a borrower’s down
payment is less then 20% of the purchase price.

Pre-approval -

A pre-commitment from a lending institution to a buyer based on background
checks, hard credit reports and review by an underwriter.

Prequalifying -

The lender’s process of judging if a borrower is creditworthy and capable of
making payments on a loan.

Prepayment -

Payment of mortgage loan – or part of it – before due date. Mortgage agreements
sometimes restrict the right of prepayment either by limiting the amount that
can be prepaid in any one year or charging a penalty for prepayment. The
Federal Housing Administration does not permit such restrictions in FHA insured
mortgages.

Prepayment Penalty -

A penalty within a note, mortgage, or deed of trust imposing a penalty if the
debt is paid in full before the end of its terms.

Principal -

The basic element of the loan as distinguished from interest and mortgage
insurance premium. In other words, principal is the amount upon which interest
is paid.

Promissory Note -

A written promise to pay a debt as set forth in writing.

Property Tax and Insurance Escrow -

Money collected monthly by the lender and held to pay taxes and insurance when
due.

Purchase and Sale Agreement -

A detailed document(s) regarding the agreement between the buyer and seller on
the price and other terms and conditions of the transaction written in
“legalese. ”

Q

Quartershare -

(Relating to Time-Shares) 3-month interval ownership with rotating schedule.

R

Real Estate -

Land and everything permanently attached to land; sometimes used
interchangeably with the terms real property and realty.

Real Estate Broker -

A person or organization who negotiates real estate sales, exchanges, or
remittals for others for compensation or a promise of compensation. Supervisor
of real estate salespeople.

Real Estate Salesperson -

A person performing any of the acts included in the definition of real estate
broker but while associated and supervised by a real estate broker.

Recording Deed -

Entering the deed (owner’s title) in public records to protect against
subsequent claimants.

Representation Agreement -

A mutual contractual agreement between the agency and the client committing
services and fiduciary duties to the client.

RAC -

The Nationwide Organization of Independent Appraisers Who Are Trained
Professionals In Relocation Appraising. Each member of RAC must: 1) Have
attended a minimum of 10 hours of relocation-related courses within the last
three years. 2) Provide at least three references from management level
relocation clients. 3) Provide three ERC or equivalent appraisal to demonstrate
the member’s understanding and ability to apply ERC appraisal guidelines,
including forecasting.

Real Estate Agent -

A licensed person who works under the direction of a broker selling and renting
real estate.

Real Estate Broker -

A middle-man or agent who buys and sells real estate for a company, firm, or
individual on a commission basis. The broker does not have title to the
property, but generally represents the owner.

Realtor -

A real estate broker holding membership in a real estate board affiliated with
the National Association Of Realtors.

Refinancing -

The process of the same mortgagor paying off one loan with the proceeds from
another loan.

RREI -

Residential Real Estate Inspector (RREI) or Commercial Real Estate Inspector
(CREI) both are members of the Foundation of Real Estate Appraisers (FREA).

Restrictive Covenants -

Private restrictions limiting the use of real property. Restrictive covenants
are created by deed and may “run with the land,” binding all subsequent
purchasers of the land, or may be “personal” and binding only between the
original seller and buyer. The determination whether a covenant runs with the
land or is personal is governed by the language of the covenant, the intent of
the parties, and the law in the State where the land is situated. Restrictive
covenants that run with the land are encumbrances and may affect the value and
marketability of title. Restrictive covenants may limit the density of
buildings per acre, regulate size, style or price range of buildings to be
erected, or prevent particular businesses from operating or minority groups
from owning or occupying homes in a given area. (This latter discriminatory
covenant is unconstitutional and has been declared unenforceable by the U. S.
Supreme Court. )

Right-To-Use -

(Relating to Time-Shares) Occupancy rights for a specified number of years,
with no ownership interest in the property.

S

Sales Agreement -

See agreement of sale.

Season -

(Relating to Time-Shares) Designated season of the year denoting period of
ownership for exchange or usage value.

Second Deposit -

The additional deposit made at the signing of the purchase and sale agreement.

Seller Representation -

Offered by firms representing sellers (might offer buyer representation as
well)

Seller’s Market -

More buyers than sellers.

Special Assessments -

A special tax imposed on property, individual lots or all property in the
immediate area, for road construction, sidewalks, sewers, street lights, etc.

Septic System -

A private sewerage system consisting of a tank, distribution box and leaching
field. The sewerage flows into the tank, the wastewater rises and goes out a
pipe to the distribution box. From this point the waste water is diverted into
the leaching field consisting of three perforated pipes which allow the waste
water to leach into the ground. The sludge remains in the tank and must be
pumped regularly.

Setback -

The distance from the front or interior property line to the point where a
structure can be located.

Smoke Detector Certificate -

Written verification from a municipality that the smoke detectors in a home
meet the necessary standards.

Soft Credit Report -

A report on one’s credit history from one of the credit bureaus.

Special Conditions -

A section of the offer to purchase designed to exhibit any special
circumstances, contingencies or addendums desired by the buyer or seller.

Special Lien -

A lien that binds a specified piece of property, unlike a general lien, which is
levied against all one’s assets. It creates a right to retain something of
value belonging to another person as compensation for labor, material, or money
expended in that person’s behalf. In some localities it is called “particular”
lien or “specific” lien. (See lien. )

Special Warranty Deed -

A deed in which the grantor conveys title to the grantee and agrees to protect
the grantee against title defects or claims asserted by the grantor and those
persons whose right to assert a claim against the title arose during the period
the grantor held title to the property. In a special warranty deed the grantor
guarantees to the grantee that he has done nothing during the time he held
title to the property which has, or which might in the future, impair the
grantee’s title.

State Stamps -

See documentary stamps.

Sub-agent -

A real estate agent working for a principal through another real estate agent or
agency.

Survey -

A map or plot made by a licensed surveyor showing the results of measuring the
land with its elevations, improvements, boundaries, and its relationship to
surrounding tracts of land. A survey is often required by the lender to assure
him that a building is actually sited on the land according to its legal
description.

T

Tax -

As applied to real estate, an enforced charge imposed on persons, property or
income, to be used to support the State. The governing body in turn utilizes
the funds in the best interest of the general public.

Term -

The length of time in which a loan is to be paid off.

Terms and Conditions -

The negotiable issues outlined in the offer to purchase and / or the purchase
and sale agreement.

Title -

Possessing ownership of real estate. As generally used, the rights of ownership
and possession of particular property. In real estate usage, title may refer to
the instruments or documents by which a right of ownership is established
(title documents), or it may refer to the ownership interest one has in the
real estate.

Title Insurance -

Protects lenders or homeowners against loss of their interest in property due
to legal defects in title. Title insurance may be issued to a “mortgagee’s
title policy. ” Insurance benefits will be paid only to the “named insured” in
the title policy, so it is important that an owner purchase an “owner’s title
policy”, if he desires the protection of title insurance. In most cases Title
Companies and Escrow Companies are one in the same, both providing the same
services. It is simply a different name for the services, used in various parts
of the country.

Title V Examination -

A test put together by the state EPA that must be performed on all private
sewerage systems.

Title Search or Examination -

A check of the title records, generally at the local courthouse, to make sure
the buyer is purchasing a house from the legal owner and there are no liens,
overdue special assessments, or other claims or outstanding restrictive
covenants filed in the record, which would adversely affect the marketability
or value of title.

Trustee -

A party who is given legal responsibility to hold property in the best interest
of or “for the benefit of” another. The trustee is one placed in a position of
responsibility for another, a responsibility enforceable in a court of law.
(See deed of trust. )

U

Underwriter -

The person in the lending institution whose job it is to review loan
documentation and evaluate the borrower’s ability and willingness to repay the
loan.

Undisclosed Dual Agency -

An illegal situation that arises when a real estate broker represents both
parties but does not inform one or more of the parties.

V

Variable Interest Rate -

A fluctuating interest rate that can go up or down depending on the going market
rate.

Voluntary Lien -

A voluntary lien by the owner such as a mortgage, as opposed to involuntary
liens (taxes).

W

Waive -

To relinquish, or abandon. To forego a right to enforce or require anything.

Walk-through -

A final inspection of the property before closing to see that all agreed to
repairs, etc. have been completed and that the property is in the condition the
buyer expects.

Warranties and Representations -

A section of the offer to purchase designed to exhibit representations or
warranties made by the real estate brokers or the seller.

Wrap-Around Mortgage -

A second mortgage, which is subordinate to but includes the face value of the
first mortgage.

Z

Zoning Ordinances -

The acts of an authorized local government establishing building codes, and
setting forth regulations for property land usage.