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REAL ESTATE TERMINOLOGY
The following terms and definitions are provided by Reovest, Inc. They are not to be considered a definitive resource as some terms have subjective meanings or may have entirely different meaning from region to region.
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80-10-10
	A type of blended mortgage loan which avoids private mortgage insurance (PMI). It consists of an 80% - 30 year first lien at market rates, a 10% - 15 year second lien at a slightly higher interest rate, and a 10% down payment. Instead of having to come up with a 20% down payment, a buyer is able to avoid PMI with only 10% down. While the interest rate on the second note is a bit higher, the total monthly payment is usually lower than a 90% mortgage with PMI. In addition, the extra interest paid for the second lien is tax deductible, whereas PMI is not. It is also possible to payoff just the second lien, thereby lowering the future monthly payments. Some lenders also offer 75-15-10 and 80-15-5 programs. This type of mortgage also gives the consumer the option of having a non-escrowing loan without a 20% down payment.
Abstract of Title
	A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.
Abutting
	The joining, reaching, or touching of adjoining land. Abutting pieces of land have a common boundary.
Acceleration Clause
	A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interest may be declared to be due and payable at once.
Addendum
	An attachment to a contract.
Amortization
	Paying off a debt in periodic installments that are equal or nearly equal.
Appraisal
	A written estimate of the value of a property based upon factual analysis.
Appreciation
	An increase in the value of real estate.
Assessed Value
	The value of property for tax purposes.
Balloon Payment
	The final payment on a loan that is greater than preceding payments and pays the loan in full.
Bill of Sale
	A written document in which the buyer agrees to purchase personal property from the seller at a specified price. Personal property may consist of items such as appliances or furniture.
Chain of Title
	A history of conveyances and encumbrances affecting the title of real property.
Clear Title
	Title to real estate that is free of any disputes.
Closing
	The act of transferring ownership of a property from seller to buyer. Closing may also refer to the date on which this transfer takes place.
Closing Costs
	Various fees and expenses payable by the buyer and seller at the time of closing.
Cloud on Title
	An encumbrance that affects the owner's title. This must be resolved prior to closing.
Collateral
	Anything pledged as security for a debt.
Comparables
	Properties that are similar to the one being sold.
Contiguous
	Properties having a common boundary.
Contract
	A signed agreement between two parties.
Conveyance
	The transfer of property title from one person to another.
Counter Offer
	A substitute offer to buy or sell which replaces the original offer.
Deed
	A properly signed document that conveys title to real property.
Depreciation
	A deduction in the value of an asset to account for wear and tear.
Distressed Property
	Real estate that is facing foreclosure due to a default in monthly mortgage payments.
Down Payment
	The amount of money paid for real estate in addition to the loan amount.
Earnest Money
	A deposit made by the purchaser of real estate to show good faith.
Easement
	The right or privilege to use another person's property.
Encroachment
	A structure or part of a structure that trespasses upon another person's property.
Encumbrance
	Anything that affects the value of real estate such outstanding mortgage loans and unpaid taxes.
Equity
	The interest or value that an owner has in real estate over and above any liens against the property.
Escrow
	The deposit of instruments or funds with a neutral third party to ensure that the provisions of a contract are carried out to the satisfaction of all parties involved.
Execute
	The act of signing a contract by all parties involved.
Fair Market Value
	The price at which a property is most likely to sell when compared to similar properties in the same general area.
Fiduciary
	A person who acts in a legal capacity in behalf of others.
Fixtures
	Any improvements or attachments that have become a part of the real property such as landscaping, ceiling fans, etc.
FSBO
	For Sale by Owner properties that are not listed with a realtor.
Good Faith
	Honest intentions.
Grace Period
	The period during which a party may back out of a deal without being in default.
Grant
	Indicates a transfer of property from one to another.
Grantee
	The person to whom real estate is transferred.
Grantor
	The person from whom real estate is transferred.
Home Equity Loan
	A second mortgage loan on a primary residence that may be used to make property improvements.
Homestead
	A status provided to a homeowner's principal residence that protects it against judgments up to a specified amount.
HUD
	Department of Housing and Urban Development
Income Property
	Real estate that generates income such as rental property.
Inflation
	A loss in the purchasing power of money which results in an increase in price.
Instrument
	A written legal document created to outline the rights and liabilities of the parties involved.
Interest
	The cost of borrowing money or the amount of ownership in a property.
Joint Tenancy
	Ownership by two or more persons in a property where each has the right of survivorship.
Judgment
	A court declaration stating that one individual is indebted to another by a certain amount.
Land Contract
	A contract which allows a person to use another person's property without benefit of title.
Landlord
	A property owner who allows another to use his property for a specific time and a specific amount.
Lead-Based Paint
	Paint containing a hazardous material which is determined to be poiosonous.
Lease
	A contract for the payment of rent.
Lease Option
	A lease which gives the tenant the right to purchase the property in a specified amount of time at a specified price.
Legal Description
	The recorded identification of real property which includes either lot and block number, metes and bounds, or a government rectangular survey.
Lessee
	The person who rents property from another. A tenant.
Lessor
	The person who rents property to another. A landlord.
Lien
	An encumbrance against a property for payment of debt related to the proeprty.
Listing
	A written agreement between a homeowner and a real estate agent authorizing the agent to sell the homeowner's property.
Loan Application
	A document supplied to a lender by a potential home buyer to provide information regarding the buyer's financial and employment history.
LTV
	Loan to Value Ratio. The amount borrowed compared to the value of the purchased property.
Market Value
	The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale.
Maturity
	The due date of a loan.
MLS
	Multiple Listing Service is an association of real estate brokers that share listings and commissions in order to market properties to a larger area.
Mortgage
	The lien created as security on real estate to insure payment of debt.
Mortgagee
	The person or entity who holds a lien on a property as security for payment of debt.
Mortgagor
	The person who pledges a property as security for payment of debt.
Notarize
	To attest to the genuineness of a signature by a notary public.
Notary Public
	A person authorized to acknowledge certain types of documents and before whom affidavits may be sworn.
Null and Void
	A contract provision that is not in conformance with the law and cannot be legally enforced.
Open House
	A home that is left open for viewing by interested parties.
Owner Occupant
	A person who resides in a property in which he/she owns.
PITI
	Principal, Interest, Taxes, and Insurance that are combined to make the loan payment on real estate.
PMI
	Private Mortgage Insurance
Points
	A point equals 1% of the mortgage loan principal and is paid to the lender.
Power of Attorney
	A document which allows a person to sign documents on behalf of another person.
Prepayments
	Advance payment of expenses such as insurance and taxes.
Principal
	The person who owns or will use the property.
Promissory Note
	A note signed by the borrower whereby the borrower promises to repay the loan.
Punch List
	A list of things that need to be fixed prior to or immediately following closing.
Real Property
	Land and anything that is made a part of it either by nature or by mankind.
Realtor
	An individual who is licensed to sell real estate.
Recording
	The act of entering instruments affecting title to real property in a book of public records.
Release of Lien
	The act of freeing real estate from a mortgage loan.
Renegotiate
	To legally revise the terms of a contract
RESPA
	Real Estate Settlement Procedures Act
Sales Contract
	A document which outlines the terms of the sale and is signed by the buyer and seller.
Sweat Equity
	Worked performed by the owner of real estate property in order to improve its value.
Title Search
	An examination of public records to determine ownership history and any liens affecting the property.
Warranty Deed
	A document that conveys real property to a new owner and which assures that the title is free from encumbrances.