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General warranty deed

A deed in which the grantor warrants title against all claims, offering the greatest guarantee of protection of any type of deed, and which is used in most real estate deed transfers of title

Ginnie Mae

The Government National Mortgage Association (GNMA), a United States corporation that guarantees privately issued securities backed by pools of mortgages insured by the Federal Housing Administration, the Farmers Home Administration, or the Veterans Administration

Graduated-payment mortgage (GPM)

A flexible-payment mortgage with monthly principal and interest payments that increase by a certain percentage each year for a certain number of years, and then level off for the remainder of the term

Grantee

The person who, by written document, receives title or an interest in real property from a grantor

Grantor

The person who, by written document, transfers title to or an interest in real property to a grantee

Gross Lease

The most common of residential leases, whereby the landlord pays for all property expenses incurred through ownership, such as taxes, insurance, repairs, etc.

Ground Lease

A long-term lease of land (usually 99 years) that allows the lessee to build and use the land as agreed in the lease, at the end of which, the land and any improvements revert to the owner

Ground rent

The payment made for the use of land when the title to the property is of a leasehold estate, rather than as a fee simple estate

Growing-equity mortgage (GEM)

A fixed-rate loan for which the monthly payments increase over a designated period of time, with the increased amount of the monthly payment being applied directly to the principal balance, thereby shortening the term of the loan

Guarantee mortgage, or Insured mortgage

A mortgage that is guaranteed against default by a third party (such as the FHA), and for which the borrower must pay an insurance premium

Guardian

An individual designated by the Court to protect and preserve the property of someone who is not able to manage his or her own affairs
See "Conservator"

Fair Credit Reporting Act

A federal law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies, and establishes procedures for rectifying errors on individuals' credit records

Fair Housing Act

A federal law which prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin

Fair market value

The highest price that a buyer, who is willing but not required to buy, would pay for a piece of property or home, and the lowest price that a seller, who is willing but not required to sell, would accept

Fannie Mae

The Federal National Mortgage Association (also FNMA), a private corporation which is federally chartered to provide financial products and services that increase the availability and affordability of housing, by purchasing mortgages from banks and other lending institutions; the FNMA is the largest non-bank financial services company in the world, as well as the largest resource for financing of home mortgages in the U.S.

Farmer's Home Administration (FmHA)

A federal agency that provides credit assistance to farmers and other individuals residing in rural areas of the U.S.

Federal Deposit Insurance Corporation (FDIC)

An independent federal agency that insures the deposits in commercial banks

Federal Home Loan Mortgage Corporation (FHLMC)

A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market

Federal Housing Administration (FHA)

An agency of the U.S. Department of Housing and Urban Development (HUD), whose function is the insuring of residential mortgage loans made by private lenders; while setting standards for construction and underwriting, the FHA itself does not lend money, or construct housing

FHA insurance

Mortgage insurance provided by the Federal Housing Administration to protect banks, savings and loans, and mortgage companies against loss on real estate loans

FHA loan

A loan insured by the Federal Housing Administration, and made by an approved lender in accordance with the FHA's regulations

Federal National Mortgage Association (FNMA)

A governmental agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders

Fee simple

The greatest interest in a parcel of land that is possible, or the total interest in real property

Fiduciary relationship

A relationship of trust and confidence, as between principal and agent, trustee and beneficiary, attorney and client

Finder's fee

A commission paid to a mortgage broker for sourcing a mortgage loan for a prospective borrower

First mortgage

A mortgage that is the primary lien against a property

Fixed-rate mortgage (FRM)

A mortgage in which the interest rate remains fixed over the duration of the term of the loan

Fixture

Any item of property that is attached to real property such that it becomes a permanent part of the real property, and therefore is usually sold with it

Foreclosure

A legal proceeding usually initiated by the lender or creditors, involving a forced sale of a property owned by a borrower who has defaulted on payment of, or on the terms of, a loan on said property, and whereby the borrower is deprived of his or her interest in the property

Forfeiture

The loss of money, property, rights, or privileges due to a breach of legal obligation

Forfeiture of Title

The provision in a deed that accounts for title being passed to another, should certain terms not be met or certain circumstances occur

Freddie Mac

The Federal Home Loan Mortgage Corporation (also FHLMC), a private corporation that is federally chartered to purchases and sells mortgage loans; a major player in the secondary market, along with the Federal National Mortgage Associate (FNMA)

Front ratio

The ratio of a potential borrower's monthly housing costs to their gross monthly income, utilized by lenders to qualify an applicant for a loan; typically 28-40 percent is acceptable

Fully amortized ARM

An adjustable-rate mortgage (ARM) with a monthly payment that is sufficient to pay off the remaining balance at the interest accrual rate over the amortization term

Fully indexed note rate

Te index value at the time of application for an adjustable rate mortgage (ARM) plus the gross margin stated in the note

Earnest money

A deposit made of a portion of the purchase price by the buyer to demonstrate his or her serious intent to purchase the property, usually accompanied by an agreement outlining the terms and conditions of the sale

Easement

The permanent or temporary right to use the property of another for a specific purpose -- e.g. for access over the property, putting up utility lines, etc.

Egress

The right to leave or exit over a piece of property

Eminent domain

The right of the government to take over private property for public purposes upon payment of its fair market value

Encroachment

A physical, illegal intrusion onto another's adjoining property; examples are a structure, driveway, fence

Encumbrance

Any claim against the fee simple title to a property, such as a lien, mortgage, or easement

Equal Credit Opportunity Act (ECOA)

A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs

Equity

The owner's financial interest in a property, over and above any indebtedness for that property; or the difference between the fair market value of the property, and the amount still owed on its mortgage

Equity Sharing

A form of joint ownership between an owner/occupant and an owner/investor, whereby the owner/investor receives depreciation deductions as his portion of interest in the property, and the owner/occupant receives some of the tax write-offs for interest and taxes, as well as part of his monthly payment being applied against his rent. If the property were sold, the co-owners would also divide the profit

Escheat

Property that reverts to state ownership when an individual dies without a will and without heirs

Escrow

A deed, contract, or something of value deposited with a disinterested third party, to be delivered upon the performance of certain conditions by the parties involved; e.g., an attorney or escrow agent taking custody of funds and documents upon the closing of a sale of real estate

Escrow account

An account established by an escrow agent to hold funds for the agent's principal until the consummation of the transaction

Escrow instructions

A document that outlines the duties of the escrow agent and the obligations of the parties involved in an escrow transaction

Escrow payment; also "impounds" or "reserves" in some states

The portion of a mortgagor's monthly payment that is retained by the escrow agent to cover the costs of taxes, hazard or mortgage insurance, lease payments, and other costs incurred in the course of the transaction

Estate

An individual's possessions and property, relevant particularly at the time of death

Eviction

The legally directed removal of an occupant from real property

Exclusive listing, or Exclusive agency listing, or Exclusive right-to-sell listing

A written contract giving a licensed real estate broker the exclusive right to sell a property for a designated period of time, on terms stated by the owner, for a fee, while also reserving the owner's right to sell the property himself, without paying anyone a commission

Executor

A person named in a will, or in the absence of such designation, appointed by the probate court, to administer an estate and carry out its terms

Extended Mortgage

A mortgage in which the due date of payment is extended, and is usually charged at a higher interest rate than the original mortgage

Deed

A written document that conveys the ownership of real estate from one person or party to another

Deed-in-lieu, or Deed-in-lieu of foreclosure

A deed given by a mortgagor to the mortgagee when the mortgage is in default, to avoid foreclosure

Deed of trust

A written document that grants a trustee, in the event of foreclosure, the full power to sell, mortgage and subdivide the property in question

Deed Restriction

A clause in a Deed that limits the uses of the property (e.g., types or quantities of structures permitted)

Default

The failure to meet the legal obligations in a contract; in real estate, failure to pay mortgage payments as scheduled or to comply with other stipulations of the mortgage

Deferred interest

Interest on a mortgage which is delayed because the monthly payment of the mortgage is not large enough to cover the entire principal and interest due, and therefore is added to the loan balance See "negative amortization"

Deficiency judgment

A claim made by the holder of a note against the maker, in the event that a foreclosure sale does not bring in enough proceeds to fully cover the note and the costs of sale, for the difference

Delivery

The final, unconditional and absolute transfer of a Deed from seller to buyer, such that the seller cannot revoke the transfer of ownership; the Deed itself does not pass title until the seller delivers it to the buyer

Depreciation

A decline in the value of property, due to any cause; the opposite of appreciation Also an expense deduction taken for tax purposes over the period of owning income property

Devise

To dispose or convey ownership of real property via a will

Disclosure

A statement of facts made by the buyer about the condition of a property being sold and its surrounding area, required by law in most US states

Discount point

A unit of measurement used for loan charges, with one point equaling 1 percent of the value of the loan

Dower

The rights of a spouse to the property of their deceased spouse

Down payment

The amount of the purchase price of a property paid in cash (i.e. not financed with a mortgage) that is required to secure the property; typically 20%

Dual agency

Representation of opposing parties in a transaction (e.g. when a realtor is the agent for both buyer and seller); requires consent of both parties to be allowed, and is illegal in some US states

Due-on-sale clause

A provision in a mortgage allowing the lender to demand payment of the entire balance of the note if the mortgagor sells or otherwise transfers the property

CC & R ' s

Covenants, Conditions and Restrictions; or the rights and obligations of individual owners of real property within a subdivision (or other tract of land where there is more than one owner of property) in relation to other owners, or to the organized association of owners, within the same subdivision, relative to the use and maintenance of the property commonly owned among them

Call option

A provision of a mortgage that allows the mortgagee, or lender, to require the mortgage to be due and payable for any reason at the end of a specified period of time

Cap

A limit placed on an adjustable-rate mortgage (ARM) as to how much the interest rate or mortgage payments may increase or decrease

Capital expenditure

The expense incurred making an improvement to a property in order to extend it useful life or to add to its value

Capital gain

Profit earned from the sale of an asset

Capitalization

A mathematical formula that estimates the value of a property, utilizing the rate of return on the investment and the annual net operating income expected

Capitalization rate

The rate of return a property will produce on the owner's investment

Cash-out refinance

A loan for refinancing a property which offers cash over and above what is needed to repay the first mortgage, closing costs, points and any other mortgage liens due. The additional cash can be used for any purpose

Caveat Emptor

Translation: "buyer beware", meaning that the buyer is responsible for inspecting any real estate or property before purchase for defects, as the seller is not required to disclose any problems to the buyer, though if asked outright, cannot conceal any defects

Certificate of deposit

A document provided by a bank or financial institution that is proof of a deposit of funds with that bank or institution, also promising to return the deposit plus earnings at a specified interest rate within a specified time period

Certificate of Eligibility

A document issued by the U.S. government certifying a veteran's eligibility for a VA guaranteed loan for a home or business

Certificate of occupancy

A city or county document certifying that a building is approved for occupancy, often required by insurance companies to insure the property

Certificate of Reasonable Value (CRV)

A document issued by the Department of Veterans Affairs (VA) establishing the maximum loan amount for a VA mortgage

Certificate of Satisfaction

A document recorded with land records and signed by the Noteholder of a property, showing release of a mortgage, deed of trust, or lien on that property

Certificate of title

A statement of opinion provided by a title company or attorney, based on examining public records, stating that the title to a piece of real estate is legally held by the current owner; because this certification does not cover matters not of record, it is no longer commonly used

Chain

A unit for measuring land equaling 66 feet in length

Chain of Title

The series of all historical title documents showing the succession of owners of a property, as evidenced in the land records, whereby it is proven that the present owner of that property in fact holds the title

Chattel

Personal property

Clear title

A document establishing ownership of a property that is free of any legal questions or controversies as to the current ownership

Closing

Also known as "escrow" or "settlement". The process of finalizing the sale of a property via a meeting of the buyer, seller and lender, at which legally binding documents are executed, money is dispersed, the deed is prepared, and ownership is formally transferred from the seller to the buyer

Closing costs

Expenses over and above the price of the property that are incurred by the buyers and sellers in transferring ownership of property, usually including property insurance, taxes, attorney's fees, an origination fee, an amount placed in escrow, title insurance, the mortgage insurance premium, points, and filing fees

Closing statement

A summary financial accounting of a real estate transaction disclosing all cash incoming, outgoing, and any charges or credits made

Clouded Title, or Cloud on Title

Any conditions revealed by a title search, usually during the sale of the property, that make the title to a piece of real estate controversial; can only be removed by a quitclaim deed, release, or court action

Coinsurance

A sharing of insurance risk between the insurer and the insured, and it depends on the amount of the policy and the actual value of the property insured at the time of the loss

Coinsurance

When more than one insurance company shares the risk of a particular transaction or series of transactions; lenders may require co-insurance on large commercial projects

Collateral

As asset pledged to secure a loan; collateral for a mortgage is typically the property itself

Co-maker

A person who takes on equal responsibility for the repayment of a loan by signing the promissory note along with the borrower

Commission

The fee charged by a broker or agent for negotiating a real estate or loan transaction, usually a percentage of the selling price of the property or amount of the loan

Commitment letter

A formal document issued by the lender, stating the terms under which the lender agrees to lend money to a homebuyer

Common area assessments

Fees levied against individual unit owners in a condominium or planned unit development project to generate additional capital to defray homeowners' association expenses, and to pay for repairs, maintenance and improvements to the common areas of the project

Common Interest Community (CIC)

An arrangement among property owners whereby they have mutual ownership of common areas of a property (e.g., condominiums, townhouses and planned unit developments) often through membership in an association

Common law

An unwritten body of law or ethical agreements, originating from general customs in England

Community Land Trust Mortgage Option

A financing option that enables lower or moderate-income buyers to purchase housing that has been improved by a nonprofit Community Land Trust, as well as to lease the land on which the property stands

Community property

In some US states, a recognized right of ownership, that any property acquired during a marriage as being jointly owned by both spouses, except that acquired as specifically personal for either individual

Comparables, or Comparable Properties

Properties that are similar in size, style, location and amenities to the property under consideration in an appraisal, which are used in the appraisal process to help determine the approximate fair market value of the subject property

Comparative market analysis (CMA)

A comparison of the sale prices of similar properties (e.g., size, style, location, amenities) in a given area, for the purpose of determining the fair market value of a property

Condemnation

The County or City determination that a building is dangerous for occupancy and must be demolished

Conditional-use permit

Written governmental permission given to allow a use of a property that is ordinarily inconsistent with existing zoning laws, but which is deemed necessary for the common good

Condominium

A system of individual ownership of units within a multi-unit structure, as well as joint ownership of certain common areas; each individual may sell or encumber his own unit within the structure

Conservator

An individual designated by the Court to protect and preserve the property of someone who is not able to manage his or her own affairs
See "Guardian"

Construction loan

A short-term loan for financing the cost of construction of a structure, whereby payments are made to the builder usually in increments as the work progresses

Contingency

A condition that must be met before a contract is legally binding, or where one event or agreement is dependent on the fulfillment or completion of another event

Contract

An oral or written, often legally-binding, agreement between two parties

Contract for Deed, or Land Contract

A method of financing whereby the ownership of a piece of property or real estate remains in the seller's name as security until the buyer pays the purchase price in full

Conventional loan, or Conventional mortgage

A real estate loan or mortgage that is not insured or guaranteed by a government agency, such as the VA or FHA

Convertibility clause

A provision offered in some adjustable-rate mortgages giving the borrower the option to change the ARM to a fixed-rate mortgage at a specified point in time after the loan originated

Convertible ARM

An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions

Conveyance

Any document by which the title to real property is transferred

Cooperative (co-op)

A system of multiple ownership in which the residents of a multi-unit housing complex own stock in a corporation that then owns the property, and whereby each resident is given the right to occupy a specific unit pursuant to a lease

Cost approach

A method used by appraisers to estimate the value of a property, in which the appraiser's estimate of the replacement cost of the building is added to the estimated land value, minus the depreciation

Cost of funds index (COFI)

An index used to determine changes in the interest rate for certain adjustable-rate mortgage plans, determined by the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco

Co-tenancy

Ownership of the same piece of property or real estate by more than one person

Counteroffer

A new offer, with different terms and conditions, made in rejection of an original offer received

Covenant

A clause written into mortgages, deeds or other real estate documents that obligates or restricts the borrower's actions, and which, if violated, can result in foreclosure of the property

Credit history, or Credit report

A record, prepared by an independent source, of an individual's debts and status of their payment, useful to a lender in qualifying a potential borrower for a loan

Credit life insurance

A type of insurance that can be purchased by mortgagors that will guarantee payment of the mortgage if the mortgagor dies while holding the policy

Abstract of title

A condensed history or summary of all transactions affecting a particular parcel of real estate, including the original grant, all conveyances and encumbrances affecting the property, and the abstractor's certification of the history's accuracy

Acceleration clause

A clause in a mortgage that gives the lender the right to require payment of the entire principal balance if the borrower defaults on an installment payment or other covenant

Acceptance

An offeree's consent to enter into, and be bound by the terms of, a contract

Access

The right to enter and exit a parcel of land from a public way, including the right to enter and exit via land belonging to others

Acknowledgment

The confirmation by which a party executing a legal document confirms his signature and voluntary agreement with the terms of the document, made before an authorized officer of the Court or notary public

Acre

43,560 square feet of land

Adjustable-rate mortgage (ARM)

A mortgage with interest rates that may fluctuate based on market conditions; the lender is permitted to adjust the mortgage's interest rate periodically, though most ARM's are limited in the amount that the interest rates can vary

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Adjusted basis

The total of the original cost of a property and the value of any capital expenditures for improvements done to it, minus any depreciation taken

Adjustment date

The date on which the interest rate changes for an adjustable-rate mortgage (ARM)

Adjustment period

The period of time between the adjustment dates for an adjustable-rate mortgage (ARM)

Administrator

A person appointed by a probate court to administer the estate of an individual who has died without a will

Adverse Possession

A claim made against the land titled to another person, by virtue of open and hostile possession and use of the land to the exclusion of the titled owner

Affidavit of title

A sworn statement that is made in writing under oath by a seller of real property, and certified by a notary public, in which the seller identifies himself or herself, indicates marital status, certifies that no defects have occurred in the title since the examination of the title on the date of the contract, and confirms that he or she is in possession of the property (if applicable)

Agency

The relationship between two or more persons wherein the agent is authorized to act on behalf of another person (or principal) in certain transactions

Agent

A person or company that acts on behalf of another to transact business, generally in exchange for payment. In real estate, it is a person or company with a real estate license working under the authority of a real estate broker

Alienation

The act of transferring property to another, either voluntarily (via a sale), or involuntarily (via adverse possession)

Alienation clause

The clause in a mortgage or deed of trust which asserts the lender's option to require that the balance of the secured debt becomes immediately due and payable if the property is sold by the borrower, preventing the borrower from assigning the debt without the lender's approval

ALTA

American Land Title Association, the national association of title insurance companies, abstractors and attorneys specializing in real property law, headquartered in Washington, D.C.

Amenity

A natural or manmade feature of real property that enhances its value and attractiveness, though it is not essential to the property's use

Amortization

The process of payment of a debt or mortgage loan over time by installments

Amortization schedule

A timetable for repayment of a debt or mortgage loan, showing the amount of each payment, what portion is applied to interest and principal, and the remaining balance

Amortization term

The amount of time required to repay the mortgage loan, expressed in number of months

Amortize

To pay off a loan or mortgage with periodic payments that cover both principal and interest

Amortized loan

A loan in which both the principal and interest are payable in monthly or other periodic installments over the term of the loan, with no balloon payment prior to maturity

Annual mortgagor statement

An annual report sent to the borrower (mortgagor) each year, showing the amount paid in taxes and interest during the year, as well as the remaining mortgage loan balance

Annual percentage rate (APR)

The overall cost of a mortgage, including interest, mortgage insurance, and loan origination fee (points), stated as a yearly percentage, thus allowing buyers to compare different types of mortgages based on the associated annual finance charges; the APR must be disclosed to borrowers by lenders, per the Truth-in-Lending Act

Annuity

The return, including interest, from an investment of capital, paid in a series of regular payments

Appraisal

A written estimate of the value of an asset or property prepared by a qualified, independent party, through which the asset or property value is determined

Appraised value

The estimate of a property's fair market value, based on an appraiser's analysis of the property

Appraiser

An individual educated to estimate the value of real property and personal property

Appreciation

An increase in the worth of a property due to changes in economic conditions or other causes; the opposite of depreciation

Appurtenance

Anything attached to, or used with, a parcel of land that will go to the new owner on conveyance of the land

ARM

Adjustable-rate Mortgage. Also see "Variable Rate Mortgage"

Assessment

A tax, charge or levy against a property made by the government, based on its value, and levied for a specific purpose, such as to finance sidewalks, a sewer, etc.

Assessment rolls

The public record of taxable property

Assessor

A public official who evaluates the value of a property for taxation purposes

Asset

Anything of monetary value owned by an individual, including real property, personal property, and enforceable claims against others (bank accounts, stocks, mutual funds, etc.)

Assign

To transfer interest

Assignee

One who receives an assignment or transfer of rights

Assignor

One who makes an assignment or transfer of rights to another

Assumable mortgage

A mortgage that allows a new owner to take over its obligations

Assumption

The process of transferring the seller's existing mortgage and liability for payments to the buyer when purchasing a property, which usually saves the buyer money, since assuming a new mortgage incurs additional closing costs and possibly higher interest charges

Assumption clause

The provision in an assumable mortgage that allows a buyer to take responsibility for that mortgage from the seller

Attachment

Seizure of property through Court process to force payment of a debt

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