Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Abstract of judgment, law
The summary of a court judgment that creates a lien against a property when filed with the county recorder.

Accelerated cost recovery system
A tax calculation that provides greater depreciation in the early years of ownership of real estate or personal property.

Accelerated depreciation
A bookkeeping method that depreciates property faster in the early years of ownership.

Acceleration clause
A provision that gives a lender the right to collect the balance of a loan if a borrower misses a payment.

Acceptance
The seller's written approval of a buyer's offer.

Access
Any means by which a person can enter property.

Accessibility
The degree to which a building or site allows access to people with disabilities.

Accretion
The gradual addition to the shore or bank of a waterway by deposits of sand or silt.

Acknowledgment
A written declaration affirming that a person acted voluntarily.

Acre
A measurement of land equal to 43,560 square feet.

Addendum
An addition or change to a contract.

Administrator
A person given authority to manage and distribute the estate of someone who died without leaving a will.

Adverse possession
The acquisition of title to property through possession without the owner's consent for a certain period of time.

Adverse use
The access and use of property without the owner's consent.

Aeolian soil
Soil that is composed of materials deposited by the wind.

Affiant
A person who makes a sworn statement.

Agency
The relationship of trust that exists between sellers and buyers and their agents. The agency is formed through a written

Agency closing
The process by which a lender uses a title company or other firm as an agent to complete a loan.

Agent
A person licensed by the state to conduct real estate transactions.

Agreed boundary
A compromise boundary to which property owners agree in order to resolve a dispute.

Agreement of sale
A document the buyer initiates and the seller approves that details the price and terms of the transaction.

Allowances
Budgets offered by builders of new homes for the purchase of carpeting and fixtures.

Amenities
Parks, swimming pools, health-club facilities, party rooms, bike paths, community centers and other enticements offered by builders of planned developments.

Americans with Disabilities Act
A law passed in 1990 that outlaws discrimination against a person with a disability in housing, public accommodations, employment, government services, transportation and telecommunications.

Anticipatory breach
A communication that informs a party that the obligations of the original contract will not be fulfilled.

Appraisal
An opinion of the value of a property at a given point in time.

Appraised value
An opinion of the current market value of a property.

Arbitration
A method of resolving a dispute in which a third party renders a decision.

As-is condition
The purchase or sale of a property in its existing condition.

Asking price
A seller's initial price for a property.

Assessed value
A tax assessor's determination of the value of a home in order to calculate a tax base.

Assessment
The estimated value of a piece of real estate or a levy placed on property in addition to taxes.

Assets
Items of value which include cash, real estate, securities and investments.

Assignor
A person who transfers rights and interests of a property.

Average price
The price of a home determined by totaling the sales prices of all houses sold in an area and dividing that number by the
number of homes.

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Back title letter
A letter that a title insurance company gives to an attorney who then examines the title for insurance purposes.

Backup offer
A secondary bid for a property that the seller will accept if the first offer fails.

Boundary
The dividing line between two adjacent properties.

Breach of contract
The failure to perform provisions of a contract without a legal excuse.

Breach of covenant
The failure to obey a legal agreement.

Breach of warranty
A seller's inability to pass clear title to a buyer.

Broker
A person licensed by the state to deal in real estate.

Brokerage
The act of bringing together two or more parties in exchange for a fee or commission.

Broom clean
The ideal condition of a building when it is turned over to an owner or tenant.

Builder upgrades
Extra house features or better finishing materials that a builder offers.

Building line or setback
Guidelines that limit how close an owner can build to the street or an adjacent property.

Built-ins
Appliances or other items that are framed into a home or permanently attached.

Buyer broker
A real estate broker who exclusively represents the buyer's interests in a transaction and whose commission is paid by the buyer rather than the seller.

Buyer's market
A slow real estate market in which buyers have the advantage.

Buyer's remorse
An emotion felt by first-time homebuyers after signing a sales contract or closing the purchase of a house.

Bylaws
The rules and regulations that a homeowners association or corporation adopts to govern activities.

Cancellation clause
A clause that details the conditions under which each party may terminate the agreement.

Cape Cod style
A wood-frame or shingled house with a steep roof and several windows projecting from the second floor.

Capital gains
Profits an investor makes from the sale of real estate or investments.

Capital gains tax
A tax placed on the profits from the sale of real estate or investments.

Capital improvement
Any improvement that extends the life or increases the value of a piece of property.

Capitalization rate
The percentage rate of return estimated from the net income of a piece of property.

Caravan
A group of real estate agents who tour a house that has been recently listed for sale.

Cashier's check
A check the bank draws on itself rather than on a depositor's account.

Certificate of eligibility
A document issued by the Veterans Administration that verifies the eligibility of a veteran for a loan program.

Certificate of occupancy
A document which states that a home or other building has met all building codes and is suitable for habitation.

Certificate of sale
A document issued at a judicial sale, which entitles the buyer to receive a deed after court confirmation of the purchase of the

Certificate of title
A written opinion on the status of a piece of property based on an examination of the public record.

Change order
A modification of the construction contract to authorize a change in the work, an adjustment in the amount of the contract or a change in the contract time. The owner, architect and contractor must sign the change.

Clear title
A property that does not have liens, defects or other legal encumbrances.

Closing
The final procedure in which documents are signed and recorded, and the property is transferred.

Closing costs
Expenses incidental to the sale of real estate, including loan, title and appraisal fees.

Closing statement
A document which details the final financial settlement between a buyer and seller and the costs paid by each party.

Cloud on title
An invalid encumbrance on real property.

Commercial property
An area that is zoned for businesses.

Commingling
The mixing of money held in trust with other funds.

Commission
The negotiable percentage of the sales price of a home that is paid to the agents of the buyer and seller.

Commitment
A promise by a lender to make a loan with specific terms for a specified period.

Commitment fee
The fee a lender charges for promising to make a loan.

Common area
An area inside a housing development that is owned by all residents.

Common law
A body of laws based on custom, usage and rulings by courts in various jurisdictions.

Common-area assessments
Fees paid by the owners of a condominium project or planned-unit development to maintain, repair, improve or operate common

Comparables
Properties used as comparisons to determine the value of a certain property.

Comparative market analysis
An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

Conditional commitment
A promise by a lender to make a loan if the borrower meets certain conditions.

Consideration
Anything that is legal, has value and induces a person to enter into a contract.

Contingency
A condition specified in a purchase contract, such as a satisfactory home inspection.

Contract
An agreement between two or more parties that creates or modifies an existing relationship.

Contract to purchase
A contract the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller. Also known as an agreement of sale.

Conveyance
The transfer of title of property.

Cooperating broker
A real estate broker who finds a buyer for a property that another broker has listed.

Co-signer
A second party who signs a promissory note and takes responsibility for the debt.

Counteroffer
A response to an offer.

Covenant
A legal assurance or promise in a deed or other document, or implied by the law.

Covenants, conditions and restrictions (CC&Rs)
Rules and regulations for a development, such as acceptable landscaping or improvements that can be made to individual

Days on the market
The period of time a property is listed for sale until it is sold or taken off the market

Deed
The legal document that transfers ownership of a piece of property.

Deed of trust
A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.

Default
The failure to fulfill a duty or promise or discharge an obligation, such as making monthly mortgage payments.

Deposit
Money given by the buyer with an offer to purchase property. Also called earnest money.

Disclosure
A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.

Dual agency
A relationship in which a real estate agent or broker represents both parties in a transaction.

Dutch colonial style
A design that features barn-like gambrel roof, a ground-level front porch, and dormers.

Early occupancy
The condition in which buyers can occupy the property before the sale is completed.

Earnest money
Money a buyer gives with an offer to purchase a property. Also called a deposit.

Easement
A right given to a third party to use a portion of the property for certain purposes, such as power lines or water mains.

Effective age
The age of a structure estimated by its condition rather than its actual age.

Eminent domain
The government's right to condemn private land for public use, such as the routing of a public highway.

Encroachment
Fences or other structures that extend into the property of another owner.

Encumbrance
A claim or lien on a property which complicates the title process.

English Tudor style
An architectural design that features stone or brick exterior walls and exposed beams.

Equity
A determination of the value of a property after existing liens are deducted.

Errors and omissions insurance
A policy that pays for any mistakes a builder or architect makes in a project.

Escrow
A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met.. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.

Escrow account
An account that a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes. Also known as an impound account.

Escrow agent
A neutral third party who ensures that all conditions of a real estate transaction are met.

Escrow closing
Escrow closes when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer.

Escrow company
Firms that act as neutral third parties to ensure that all conditions that the buyer, seller and lender establish in a real estate transaction are met.

Estate
The total assets of a person, including real property, at the time of death.

Examination of title
An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Exclusive listing
A contract that gives an agent the exclusive right to market a property for a specific period of time.

Executor
A person appointed to carry out the instructions in a will. If there is no will, a probate court will appoint an executor.

Fair Housing Act
Landmark federal law passed in 1965 and amended in 1988 that makes it illegal to deny rent or refuse to sell to anyone based on race, color, religion, sex or national origin. The 1988 amendment expanded the protections to include family status and

Fee simple
This type of ownership is the maximum interest a person can have in a piece of real estate. It entitles the owner to use the property in any manner they see fit, in accordance with state and local laws.

Fiduciary duty
The relationship of trust that buyers and sellers expect from a real estate agent. The term also applies to legal and business relationships.

Fixture
Personal property permanently attached to a house, such as drapery rods, toilets, built-in bookcases or a furnace.

Flat fee
A set fee charged by a broker instead of a commission.

Flood insurance
Hazard coverage that is required in designated flood areas.

Flood plain
Flat, flood-prone areas located along waterways.

Grantee
A person conveyed an interest in a piece of property.

Grantor
The person who conveys an interest in a piece of property to another person.

Greenbelt
Any stretch of park, open space or other natural setting in a community.

Hazard insurance
This provision of homeowners insurance covers damage by fire, wind or other disaster. It is required by all lenders before a loan is approved.

Home inspection
An examination of a home's construction, condition and internal systems by an inspector or contractor prior to purchase.

Home warranty
A type of insurance that covers repairs to certain parts of a house and some fixtures.

Homeowners' association
A group that governs a modern subdivision or planned community. An association collects monthly fees from all owners to pay for maintenance of common areas, handle legal and safety issues, and enforce the covenants, conditions and restrictions set by the developer.

Homeowners' insurance
This insurance includes hazard coverage for any damages that may affect the value of a house, in addition to personal liability and theft coverage.

Homeowners' warranty
Special insurance policies that cover certain home repairs for a specified amount of time.

HUD-1 Uniform Settlement Statement
A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.

Impact fees
Fees collected from developers of new homes to pay for schools, parks and other facilities.

Incurable defect
A defect in a property that cannot be fixed, such as an adjacent hazardous waste site, or that would cost too much to repair relative to the value of the property.

Inspection report
An examination of a home's exterior, foundation, framing, plumbing, electrical system, heating, air conditioning, fireplace, kitchen, bathroom, roofing and interior.

Insurance
Owners and buyers can purchase various types of insurance: hazard, private mortgage and earthquake. The policies guarantee compensation for specific losses.

Judgment
The decision of a court or law. If a court decides that a person must repay a debt, a lien may be placed against that person's

Lead
A metallic chemical element present in older dwellings, primarily in the form of lead-based paint and lead plumbing. Exposure to lead has been found to be a health risk.

Legal blemish
Blemishes on a piece of property, such as a zoning violation or fraudulent title claim.

Legal description
A specific way of identifying and locating a piece of real estate that is acceptable to a court.

Lender
A bank, savings institution or mortgage company that offers home loans.

Letter of intent
A formal statement that the buyer intends to purchase the property for a certain price on a certain date.

Liability insurance
A policy that protects owners against any claims of negligence, personal injury or property damage.

Listing
A piece of property placed on the market by a listing agent.

Listing inventories
The known number of houses for sale within a given market.

Low-ball offer
An offer made to a seller that is substantially below market value. The longer a property stays on the market, the more likely there are to be such offers.

Manufactured housing
Prefabricated homes that can range from simple trailers to larger dwellings.

Market conditions
Factors affecting the sale and purchase of homes at a particular point in time.

Market value
The price that a piece of property sells for at a particular point in time.

Master-planned community
A suburban plan that includes homes and commercial, work, educational and community facilities.

Mediation
A dispute-resolution process in which a neutral party works to resolve contract differences.

Metes and bounds
A time-honored land surveying method of describing land in terms of shape and boundary dimensions.

Mortgage
A legal document specifying a certain amount of money to purchase a home at a certain interest rate, and using the property as collateral.

Motivated buyer
Any buyer with a strong incentive to make a purchase.

Motivated seller
Any seller with a strong incentive to make a deal.

Move-in condition
A house that is ready for a new occupant.

Multiple listing service (MLS)
The service combines the listings for all available homes in an area, except For-Sale-By-Owner (FSBO) properties, in one directory or database.

Multiple offers
Multiple purchase offers occur in hot markets or hot neighborhoods.

Online real estate listings
Properties listed for sale on the Internet.

Open house
A marketing tool in which a listing agent opens a house for view.

Open listing
A property given to a number of brokers to market at the same time.

Parcel
An officially described piece of land.

Personal property
Any moveable property in a house such as furniture or appliances.

Pest-control inspection
A common pest-control inspection is a termite inspection, which is required in some states, such as California.

Planned-unit development
Residents own the home and the land, and share the use and financial responsibility for common areas.

Possession
When a buyer signs the papers and receives the keys to the house, the buyer officially takes possession.

Power of attorney
A document that authorizes an individual to act on behalf of someone else.

Price range
The range of how much a buyer is willing to pay for a home.

Property line
The official dividing line between properties.

Property tax
Property taxes are calculated at about 1.5 percent of the current market value.

Property value
The value of a piece of property is based on the price a buyer will pay at a certain time.

Proration
Agreed-upon percentages of certain expenses associated with a piece of property that must be paid by the buyer or the seller at the time of closing.

Purchase agreement
A document which details the purchase price and conditions of the transaction.

Quit-claim deed
A document that releases a party from any interest in a piece of real estate.

Radon
A ground-generated radioactive gas that seeps into some homes through sump pumps, cracks in the foundation and other inlets. A leading cause of lung cancer , radon is found in mostly the northern half of the country.

Real estate
Land and anything permanently affixed to it, including buildings, fences and other items attached to the structure.

Real estate agent
A real estate agent has a state license to represent a buyer or a seller in a real estate transaction in exchange for a commission. Most agents work for real estate brokers.

Real estate attorney
A lawyers who specializes in real estate transactions.

Real estate broker
A real estate agent who is licensed by the state to represent a buyer or seller in a real estate transaction in exchange for a commission. Most brokers also have agents working for them, and are entitled to a portion of their commissions.

Real Estate Settlement Procedures Act (RESPA)
A federal law designed to make sellers and buyers aware of settlement fees and other transaction-related costs. RESPA also outlaws kickbacks in the real estate business.

Real property
Land and any permanent fixtures on it, including buildings, trees and minerals.

Realtor
A designation for an agent or broker who is a member of the National Association of Realtors.

Recording
The filing of a specific document to the appropriate government entity.

Recording fee
A fee charged by real estate agents for conveying the sale of a piece of property into the public record.

Redlining
The practice by a bank or insurance company to deny credit or insurance to people based on ethnic background

Sales contract
A contract signed by the buyer and seller that details the terms of a home purchase.

Seller broker
A seller broker represents the interest of the seller.

Seller's market
A hot real estate market in which sellers have the advantage and multiple offers are common.

Septic system
A self-contained sewage treatment system that distributes wastewater to an underground storage area and relies on bacterial action to decompose solid waste matter.

Setback
The minimum distance a house or buildings must be from the lot line.

Settlement statement
A document that details who has paid what to whom.

Soils test
A test of the subsoil to ensure that foundations can be safely constructed.

Special assessment
When a homeowners' association needs or wants extra funds, it levies a special assessment upon the owners.

Square footage
The number of square feet of livable space in a home or building.

Subagent
When an agent brings a buyer to a property, they in effect act as a subagent to the listing agent.

Tenancy by the entirety
When a married couple owns a home, it is usually considered tenancy by the entirety If the property must be sold to pay the debts of one spouse, both must agree.

Tenants in common
Two or more owners who share interest in a specific property.

The 72-hour clause
When a buyer has a house to sell before they can purchase another home, most sellers insist on a 72-hour clause. In the event of a better offer coming in before the contingency is settled, this clause entitles the seller to give the buyer 72 hours to remove the contingency or lose the house.

Title
The actual legal document conferring ownership of a piece of real estate.

Title company
Firms that ensure that the title to a piece of property is clear and provide title insurance.

Title insurance
A policy issued to lenders and buyers to protect any losses because of a dispute over the ownership of a piece of property.

Title risk
Possible impediments to the transfer of a title from one owner to another.

Title search
A check of public title records to ascertain that the seller is the legal owner and that there are no claims or liens against the

Transfer tax
An assessment by state or local authorities at the time a piece of property changes hands.

U.S. Department. of Housing and Urban Development (HUD)
A federal agency that oversees the Federal Housing Administration and a variety of housing and community development

Walk-through
A buyer's final inspection of the home to determine if conditions in the purchase agreement have been satisfied.

Warranty
A legally binding promise to do something in the future.

Zero-lot lines
Houses built without space between them and with little or no yard.

Zoning
Regulations that control the use of land within a jurisdiction..

Zoning variance
A one-time modification of existing zoning law.