Glossary of Real Estate Legal Terms – Over the years, we put together a list of real estate legal terms that can help our readers navigate real estate transactions.
A
Abstract (of Title) A summary of the public records affecting the title to a particular piece of land. An attorney or title insurance company officer creates the abstract of title by examining all recorded instruments (documents) relating to a specific piece of property, such as easements, liens, mortgages, etc.
Acceleration Clause A provision in a loan agreement that allows the lender to require the balance of the loan to become due immediately if mortgage payments are not made or there is a breach in your obligation under your mortgage or note.
Addendum Any addition to, or modification of, a contract. Also called an amendment or rider.
Adjustable-Rate Mortgage (ARM) A type of loan whose prevailing interest rate is tied to an economic index (like one-year Treasury Bills or LIBOR, the London Inter-Bank Offered Rate), which fluctuates with the market. There are various types of ARMs, including one-year ARMs, which adjust every year; three-year ARMs, in which the interest rate is fixed for three years and then varies each year thereafter; and five-year ARMs, in which the interest rate is fixed for five years and adjusts every year thereafter. When the loan adjusts, the lender tacks a margin onto the index rate to come up with your loan’s new rate. ARMs are considered far riskier than fixed-rate mortgages, but their starting interest rates can be quite lower than fixed rate mortgages, and in the past five to ten years, people have done very well with them.
Agency A term used to describe the relationship between a seller and a broker, or a buyer and a broker.
Agency Closing The lender’s use of a title company or other party to act on the lender’s behalf for the purposes of closing on the purchase of a home or refinancing of a loan.
Agent An individual who represents a buyer or a seller in the purchase or sale of a home. Licensed by the state, an agent must work for a broker or a brokerage firm.
Agreement of Sale This document is also known as the contract of purchase, purchase agreement, purchase and sale agreement or sales agreement. It is the agreement by which the seller agrees to sell you his or her property if you pay a certain price. It contains all the provisions and conditions for the purchase and sale, must be written, and is signed by both parties.
Amortization A payment plan which enables the borrower to reduce his debt gradually through monthly payments of principal and interest. Amortization tables allow you to see exactly how much you would pay each month in interest and how much you repay in principal (the amount you owe on the loan), depending on the amount of money borrowed at a specific interest rate.
Application A series of documents you must fill out when you apply for a loan.
Application Fee A one-time fee charged by the mortgage company for processing your application for a loan. Sometimes the application fee is applied toward certain costs, including the appraisal and credit report.
Appraisal The opinion of an appraiser, who estimates the value of a home at a specific point in time.
Articles-of-Agreement For Deed A type of seller financing which allows the buyer to purchase the home in installments over a specified period of time. The seller keeps legal title to the home until the loan is paid off. The buyer receives an interest in the property—called equitable title—but does not own it. However, because the buyer is paying the real estate taxes and paying interest to the seller, it is the buyer who receives the tax benefits of home ownership.
Assumption of Mortgage If you assume a mortgage when you purchase a home, you undertake to fulfill the obligations of the existing loan agreement the seller made with the lender. The obligations are similar to those that you would incur if you took out a new mortgage. When assuming a mortgage, you become personally liable for the payment of principal and interest. The seller, or original mortgagor, is released from the liability, and should get that release in writing. Otherwise, he or she could be liable if you don’t make the monthly payments.
B
Balloon Mortgage A type of mortgage which is generally short in length, but is amortized over twenty-five or thirty years so that the borrower pays a combination of interest and principal each month. At the end of the loan term, the entire balance of the loan must be repaid at once.
Broker An individual who acts as the agent of the seller or buyer. A real estate broker must be licensed by the state.
Building Line or Setback The distance from the front, back, or side of a lot beyond which construction or improvements may not extend without permission by the proper governmental authority. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds, by building codes, or by zoning ordinances.
Buy Down An incentive offered by a developer or seller that allows the buyer to lower his or her initial interest rate by putting up a certain amount of money. A buy down also refers to the process of paying extra points up front at the closing of your loan in order to have a lower interest rate over the life of the loan.
Buyer Broker A buyer broker is a real estate broker who specializes in representing buyers. Unlike a seller broker or conventional broker, the buyer broker has a fiduciary duty to the buyer, because the buyer accepts the legal obligation of paying the broker. The buyer broker is obligated to find the best property for a client, and then negotiate the best possible purchase price and terms.
Buyer’s Market Market conditions that favor the buyer. A buyer’s market is usually expressed when there are too many homes for sale, and a home can be bought for less money.
C
Certificate of Title A document or instrument issued by a local government agency to a homeowner, naming the homeowner as the owner of a specific piece of property. At the sale of the property, the certificate of title is transferred to the buyer. The agency then issues a new certificate of title to the buyer.
Chain of Title The lineage of ownership of a particular property.
Closing The day when buyers and sellers sign the papers and actually swap money for title to the new home. The closing finalizes the agreements reached in the sales agreement. Also called the settlement.
Closing Costs This phrase can refer to a lender’s costs for closing on a loan, or it can mean all the costs associated with closing on a piece of property. Considering all closing costs, it’s easy to see that closing can be expensive for both buyers and sellers. A home buyer’s closing costs might include: lender’s points, loan origination or loan service fees; loan application fee; lender’s credit report; lender’s processing fee; lender’s document preparation fee; lender’s appraisal fee; prepaid interest on the loan; lender’s insurance escrow; lender’s real estate tax escrow; lender’s tax escrow service fee; cost for the lender’s title policy; special endorsements to the lender’s title policy; house inspection fees; title company closing fee; deed or mortgage recording fees; local municipal, county, and state taxes; and the attorney’s fee. A seller’s closing costs might include: survey (which in some parts of the country is paid for by the buyer); title insurance; recorded release of mortgage; broker’s commission; state, county, and local municipality transfer taxes; credit to the buyer for unpaid real estate taxes and other bills; attorney’s fees; FHA fees and costs.
Cloud (on Title) An outstanding claim or encumbrance that adversely affects the marketability of a property.
Commission The amount of money paid to the broker by the seller (or, in some cases, the buyer), as compensation for selling the home. Usually, the commission is a percentage of the sales price of the home, and generally hovers in the 5 to 7 percent range. There is no “set” commission rate. It is always and entirely negotiable.
Condemnation The government holds the right to “condemn” land for public use, even against the will of the owner. The government, however, must pay fair market price for the land. Condemnation may also mean that the government has decided a particular piece of land, or a dwelling, is unsafe for human habitation.
Condominium A dwelling of two or more units in which you individually own the interior space of your unit and jointly own common areas such as the lobby, roof, parking, plumbing, and recreational areas.
Contingency A provision in a contract that sets forth one or more conditions that must be met prior to the closing. If the contingency is not met, usually the party who is benefiting from the contingency can terminate the contract. Some common contingencies include financing, inspection, attorney approval, and toxic substances.
Contract to Purchase Another name for Agreement of Sale.
Contractor In the building industry, the contractor is the individual who contracts to build the property. He or she erects the structure and manages the subcontracting (to the electrician, plumber, etc.) until the project is finished.
Conventional Mortgage A conventional mortgage means that the loan is underwritten by banks, savings and loans, or other types of mortgage companies. There are also certain limitations imposed on conventional mortgages that allow them to be sold to private institutional investors (like pension funds) on the secondary market.
Co-op Cooperative housing refers to a building, or a group of buildings, that is owned by a corporation. The shareholders of the corporation are the people who live in the building. They own shares—which gives them the right to lease a specific unit within the building—in the corporation that owns their building and pay “rent” or monthly maintenance assessments for the expenses associated with living in the building. Co-ops are relatively unknown outside of New York, Chicago, and a few other cities. Since the 1970s, condominiums have become much more popular.
Counteroffer When the seller or buyer responds to a bid. If you decide to offer $100,000 for a home listed at $150,000, the seller might counter your offer and propose that you purchase the home for $140,000. That new proposal, and any subsequent offer, is called a counteroffer.
Covenant Assurances or promises set out in the deed or a legally binding contract, or implied in the law. For example, when you obtain title to a property by warranty, there is the Covenant of Quiet Enjoyment, which gives you the right to enjoy your property without disturbances.
Credit Report A lender will decide whether or not to give you a loan based on your credit history. A credit report lists all of your credit accounts (such as charge cards), and any debts or late payments that have been reported to the credit company.
Cul de Sac A street that ends in a U-shape, leading the driver or pedestrian back to the beginning. The cul de sac has become exceptionally popular with modern subdivision developers, who use the design technique to create quiet streets and give the development a nonlinear feel.
Custom Builder A home builder who builds houses for individual owners to the owners’ specification. The home builder may either own a piece of property or build a home on someone else’s land.
D
Debt Service The total amount of debt (credit cards, mortgage, car loan) that an individual is carrying at any one time.
Declaration of Restrictions Developers of condominiums (or any other type of housing unit that functions as a condo) are required to file a condominium declaration, which sets out the rules and restrictions for the property, the division of ownership, and the rights and privileges of the owners. The “condo dec” or “home owner’s dec,” as it is commonly called, reflects the developer’s original intent, and may only be changed by unit-owner vote. There are other types of declarations, including homeowners’ association and town house association. Co-op dwellers are governed by a similar type of document. Sometimes referred to as the CCR.
Deed T he document used to transfer ownership in a property from seller to buyer.
Deed of Trust A deed of trust or trust deed is an instrument similar to a mortgage that gives the lender the right to foreclose on the property if there is a default under the trust deed or note by the borrower.
Deposit Money given by the buyer to the seller with a signed contract to purchase or offer to purchase, as a show of good faith. Also called the earnest money.
Down Payment The cash put into a purchase by the borrower. Lenders like to see the borrower put at least 20 percent down in cash, because lenders generally believe that if you have a higher cash down payment, it is less likely the home will go into foreclosure.
Dual Agency When a real estate broker represents both the buyer and the seller in a single transaction it creates a situation known as dual agency. In most states, brokers must disclose to the buyer and to the seller whom they are representing. Even with disclosure, dual agency presents a conflict of interest for the broker in the transaction. If the broker is acting as the seller broker and the subagent for the seller (by bringing the buyer), then anything the buyer tells the broker must by law be brought to the seller’s attention. If the broker represents the seller as a seller broker and the buyer as a buyer broker in the same transaction, the broker will receive money from both the buyer and the seller, an obvious conflict of interest.
Due on Sale Clause Nearly every mortgage has this clause, which states that the mortgage must be paid off in full upon the sale of the home.
E
Earnest Money The money the buyer gives the seller up front as a show of good faith. It can be as much as 10 percent of the purchase price. Earnest money is sometimes called a deposit.
Easement A right given by a landowner to a third party to make use of the land in a specific way. There may be several easements on your property, including for passage of utility lines or poles, sewer or water mains, and even a driveway. Once the right is given, it continues indefinitely, or until released by the party who received it.
Eminent Domain The right of the government to condemn private land for public use. The government must, however, pay full market value for the property.
Encroachment When your neighbor builds a garage or a fence, and it occupies your land, it is said to “encroach on” your property.
Encumbrance A claim or lien or interest in a property by another party. An encumbrance hinders the seller’s ability to pass good, marketable, and unencumbered title to you.
Escrow Closing A third party, usually a title company, acts as the neutral party for the receipt of documents for the exchange of the deed by the sellers for the buyer’s money. The final exchange is completed when the third party determines that certain preset requirements have been satisfied.
Escrow (for Earnest Money) The document that creates the arrangement whereby a third party or broker holds the earnest money for the benefit of the buyer and seller.
Escrow (for Real Estate Taxes and Insurance) An account in which monthly installments for real estate taxes and property insurance are held—usually in the name of the home buyer’s lender.
F
Fee Simple The most basic type of ownership, under which the owner has the right to use and dispose of the property at will.
Fiduciary Duty A relationship of trust between a broker and a seller or a buyer broker and a buyer, or an attorney and a client.
First Mortgage A mortgage that takes priority over all other voluntary liens.
Fixture Personal property, such as a built-in bookcase, furnace, hot water heater, and recessed lights, that becomes “affixed” because it has been permanently attached to the home.
Foreclosure The legal action taken to extinguish a home owner’s right and interest in a property, so that the property can be sold in a foreclosure sale to satisfy a debt.
G
Gift Letter A letter to the lender indicating that a gift of cash has been made to the buyer and that it is not expected to be repaid. The letter must detail the amount of the gift, and the name of the giver.
Good Faith Estimate (GFE) Under RESPA, lenders are required to give potential borrowers a written Good Faith Estimate of closing costs within three days of an application submission.
Grace Period The period of time after a loan payment due date in which a mortgage payment may be made and not be considered delinquent.
Graduated Payment Mortgage A mortgage in which the payments increase over the life of the mortgage, allowing the borrower to make very low payments at the beginning of the loan. Also called an Option ARM.
H
Hazard Insurance Insurance that covers the property from damages that might materially affect its value. Also known as homeowner’s insurance.
Holdback An amount of money held back at closing by the lender or the escrow agent until a particular condition has been met. If the problem is a repair, the money is kept until the repair is made. If the repair is not made, the lender or escrow agent uses the money to make the repair. Buyers and sellers may also have holdbacks between them, to ensure that specific conditions of the sale are met.
Homeowner’s Association A group of home owners in a particular subdivision or area who band together to take care of common property and common interests.
Homeowner’s Insurance Coverage that includes hazard insurance, as well as personal liability and theft.
Home Warranty A service contract that covers appliances (with exclusions) in working condition in the home for a certain period of time, usually one year. Home owners are responsible for a per-call service fee. There is a home owner’s warranty for new construction. Some developers will purchase a warranty from a company specializing in new construction for the homes they sell. A home owner’s warranty will warrant the good working order of the appliances and workmanship of a new home for between one and ten years; for example, appliances might be covered for one year while the roof may be covered for several years.
Housing and Urban Development, Department of Also known as HUD, this is the federal department responsible for the nation’s housing programs. It also regulates RESPA, the Real Estate Settlement Procedures Act, which governs how lenders must deal with their customers.
I
Inspection The service an inspector performs when he or she is hired to scrutinize the home for any possible structural defects. May also be done in order to check for the presence of toxic substances, such as leaded paint or water, asbestos, radon, or pests, including termites.
Installment Contract The purchase of property in installments. Title to the property is given to the purchaser when all installments are made.
Institutional Investors or Lenders Private or public companies, corporations, or funds (such as pension funds) that purchase loans on the secondary market from commercial lenders such as banks and savings and loans. Or, they are sources of funds for mortgages through mortgage brokers.
Interest Money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds.
Interest-Only Mortgage A loan in which only the interest is paid on a regular basis (usually monthly), and the principal is owed in full at the end of the loan term.
Interest Rate Cap The total number of percentage points that an adjustable-rate mortgage (ARM) might rise over the life of the loan.
J
Joint Tenancy An equal, undivided ownership in a property taken by two or more owners. Under joint tenancy there are rights of survivorship, which means that if one of the owners dies, the surviving owner rather than the heirs of the estate inherits the other’s total interest in the property.
L
Landscape The trees, flowers, planting, lawn, and shrubbery that surround the exterior of a dwelling.
Late Charge A penalty applied to a mortgage payment that arrives after the grace period (usually the 10th or 15th of a month).
Lease with an Option to Buy When the renter or lessee of a piece of property has the right to purchase the property for a specific period of time at a specific price. Usually, a lease with an option to buy allows a first-time buyer to accumulate a down payment by applying a portion of the monthly rent toward the down payment.
Lender A person, company, corporation, or entity that lends money for the purchase of real estate.
Letter of Intent A formal statement, usually in letter form, from the buyer to the seller stating that the buyer intends to purchase a specific piece of property for a specific price on a specific date.
Leverage Using a small amount of cash, say a 10 or 20 percent down payment, to purchase a piece of property.
Lien An encumbrance against the property, which may be voluntary or involuntary. There are many different kinds of liens, including a tax lien (for unpaid federal, state, or real estate taxes), a judgment lien (for monetary judgments by a court of law), a mortgage lien (when you take out a mortgage), and a mechanic’s lien (for work done by a contractor on the property that has not been paid for). For a lien to be attached to the property’s title, it must be filed or recorded with local county government.
Listing A property that a broker agrees to list for sale in return for a commission.
Loan An amount of money that is lent to a borrower, who agrees to repay it plus interest.
Loan Commitment A written document that states that a mortgage company has agreed to lend a buyer a certain amount of money at a certain rate of interest for a specific period of time, which may contain sets of conditions and a date by which the loan must close.
Loan Modification A loan modification occurs when a mortgage lender agrees to modify the terms of an existing loan by changing the interest rate, length of the loan or other payment terms. The loan modification is completed with a written document outlining the change in loan terms. Frequently, homeowners must apply to the lender for the loan modification.
Loan Origination Fee A one-time fee charged by the mortgage company to arrange the financing for the loan.
Loan-to-Value Ratio The ratio of the amount of money you wish to borrow compared to the value of the property you wish to purchase. Institutional investors (who buy loans on the secondary market from your mortgage company) set up certain ratios that guide lending practices. For example, the mortgage company might only lend you 80 percent of a property’s value.
Location Where property is geographically situated. “Location, location, location” is a broker’s maxim that states that where the property is located is its most important feature, because you can change everything about a house, except its location.
Lock-In The mechanism by which a borrower locks in the interest rate that will be charged on a particular loan. Usually, the lock lasts for a certain time period, such as 30, 45, or 60 days. On a new construction, the lock may be much longer.
M
Maintenance Fee The monthly or annual fee charged to condo, co-op, or townhouse owners, and paid to the homeowner’s association, for the maintenance of common property. Also called an assessment.
Mortgage A document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home.
Mortgage Banker A company or a corporation, like a bank, that lends its own funds to borrowers in addition to bringing together lenders and borrowers. A mortgage banker may also service the loan (i.e., collect the monthly payments).
Mortgage Broker A company or individual that brings together lenders and borrowers and processes mortgage applications.
Mortgagee A legal term for the lender.
Mortgagor A legal term for the borrower.
Multiple Listing Service (MLS) A computerized listing of all properties offered for sale by member brokers. Buyers may only gain access to the MLS by working with a member broker.
N
Negative Amortization A condition created when the monthly mortgage payment is less than the amount necessary to pay off the loan over the period of time set forth in the note. Because you’re paying less than the amount necessary, the actual loan amount increases over time. That’s how you end up with negative equity. To pay off the loan, a lump-sum payment must be made.
O
Option When a buyer pays for the right or option to purchase property for a given length of time, without having the obligation to actually purchase the property.
Origination Fee A fee charged by the lender for allowing you to borrow money to purchase property. The fee—which is also referred to as points—is usually expressed as a percentage of the total loan amount.
Ownership The absolute right to use, enjoy, and dispose of property. You own it!
P
Package Mortgage A mortgage that uses both real and personal property to secure a loan.
Paper Slang usage that refers to the mortgage, trust deed, installment, and land contract.
Personal Property Moveable property, such as appliances, furniture, clothing, and artwork.
PITI An acronym for Principal-Interest-Taxes-and-Insurance. These are usually the four parts of your monthly mortgage payment.
Pledged Account Borrowers who do not want to have a real estate tax or insurance escrow administered by the mortgage servicer can, in some circumstances, pledge a savings account into which enough money to cover real estate taxes and the insurance premium must be deposited. You must then make the payments for your real estate taxes and insurance premiums from a separate account. If you fail to pay your taxes or premiums, the lender is allowed to use the funds in the pledged account to make those payments.
Point A point is one percent of the loan amount.
Possession Being in control of a piece of property, and having the right to use it to the exclusion of all others.
Power of Attorney The legal authorization given to an individual to act on behalf of another individual.
Prepaid Interest Interest paid at closing for the number of days left in the month after closing. For example, if you close on the 15th, you would prepay the interest for the 16th through the end of the month.
Prepayment Penalty A fine imposed when a loan is paid off before it comes due. Many states now have laws against prepayment penalties, although banks with federal charters are exempt from state laws. If possible, do not use a mortgage that has a prepayment penalty, or you will be charged a hefty fee in some cases if you sell your property before your mortgage has been paid off.
Prequalifying for a Loan When a mortgage company tells a buyer in advance of the formal application approximately how much money the buyer can afford to borrow.
Principal The amount of money you borrow.
Private Mortgage Insurance (PMI) Special insurance that specifically protects the top 20 percent of a loan, allowing the lender to lend more than 80 percent of the value of the property. PMI is paid in monthly installments by the borrower.
Property Tax A tax levied by a county or local authority on the value of real estate.
Proration The proportional division of certain costs of home ownership. Usually used at closing to figure out how much the buyer and seller each owes for certain expenditures, including real estate taxes, assessments, and water bills.
Purchase Agreement An agreement between the buyer and seller for the purchase of property.
Purchase Money Mortgage An instrument used in seller financing, a purchase money mortgage is signed by a buyer and given to the seller in exchange for a portion of the purchase price.
Q
Quit-claim Deed A deed that operates to release any interest in a property that a person may have, without a representation that he or she actually has a right in that property. For example, Sally may use a quit-claim deed to grant Bill her interest in the White House, in Washington, D.C., although she may not actually own, or have any rights to, that particular house.
R
Real Estate Land and anything permanently attached to it, such as buildings and improvements.
Real Estate Agent An individual licensed by the state, who acts on behalf of the seller or buyer. For his or her services, the agent receives a commission, which is usually expressed as a percentage of the sales price of a home and is split with his or her real estate firm. A real estate agent must either be a real estate broker or work for one.
Real Estate Attorney An attorney who specializes in the purchase and sale of real estate.
Real Estate Broker An individual who is licensed by the state to act as an agent on behalf of the seller or buyer. For his or her services, the broker receives a commission, which is usually expressed as a percentage of the sales price of a home.
Real Estate Settlement Procedures Act (RESPA) This federal statute was originally passed in 1974, and contains provisions that govern the way companies involved with a real estate closing must treat each other and the consumer. For example, one section of RESPA requires lenders to give consumers a written Good Faith Estimate within three days of making an application for a loan. Another section of RESPA prohibits title companies from giving referral fees to brokers for steering business to them.
Realtist A designation given to an agent or broker who is a member of the National Association of Real Estate Brokers.
Realtor A designation given to a real estate agent or broker who is a member of the National Association of Realtors.
Recording The process of filing documents at a specific government office. Upon such recording, the document becomes part of the public record.
Redlining The slang term used to describe an illegal practice of discrimination against a particular racial group by real estate lenders. Redlining occurs when lenders decide certain areas of a community are too high risk and refuse to lend to buyers who want to purchase property in those areas, regardless of their qualifications or creditworthiness.
Regulation Z Also known as the Truth in Lending Act. Congress determined that lenders must provide a written Good Faith Estimate of closing costs to all borrowers and provide them with other written information about the loan.
Reserve The amount of money set aside by a condo, co-op, or homeowners’ association for future capital improvements.
S
Sale-Leaseback A transaction in which the seller sells property to a buyer, who then leases the property back to the seller. This is accomplished within the same transaction.
Sales Contract The document by which a buyer contracts to purchase property. Also known as the purchase contract or a Contract to Purchase.
Second Mortgage A mortgage that is obtained after the primary mortgage, and whose rights for repayment are secondary to the first mortgage.
Seller Broker A broker who has a fiduciary responsibility to the seller. Most brokers are seller brokers, although an increasing number are buyer brokers, who have a fiduciary responsibility to the buyer.
Settlement Statement A statement that details the monies paid out and received by the buyer and seller at closing.
Shared Appreciation Mortgage A relatively new mortgage used to help first-time buyers who might not qualify for conventional financing. In a shared appreciation mortgage, the lender offers a below-market interest rate in return for a portion of the profits made by the home owner when the property is sold. Before entering into a shared appreciation mortgage, be sure to have your real estate attorney review the documentation.
Special Assessment An additional charge levied by a condo or co-op board in order to pay for capital improvements, or other unforeseen expenses.
Subagent A broker who brings the buyer to the property. Although subagents would appear to be working for the buyer (a subagent usually ferries around the buyer, showing him or her properties), they are paid by the seller and have a fiduciary responsibility to the seller. Subagency is often confusing to first-time buyers, who think that because the subagent shows them property, the subagent is “their” agent, rather than the seller’s.
Subdivision The division of a large piece of property into several smaller pieces. Usually a developer or a group of developers will build single family or duplex homes of a similar design and cost within one subdivision.
T
Tax Lien A lien that is attached to property if the owner does not pay his or her real estate taxes or federal income taxes. If overdue property taxes are not paid, the owner’s property might be sold at auction for the amount owed in back taxes.
Tenancy by the Entirety A type of ownership whereby both the husband and wife each own the complete property. Each spouse has an ownership interest in the property as their marital residence and, as a result, creditors cannot force the sale of the home to pay back the debts of one spouse without the other spouse’s consent. There are rights of survivorship whereby upon the death of one spouse, the other spouse would immediately inherit the entire property.
Tenants in Common A type of ownership in which two or more parties have an undivided interest in the property. The owners may or may not have equal shares of ownership, and there are no rights of survivorship. However, each owner retains the right to sell his or her share in the property as he or she sees fit.
Title Refers to the ownership of a particular piece of property.
Title Company The corporation or company that insures the status of title (title insurance) through the closing, and may handle other aspects of the closing.
Title Insurance Insurance that protects the lender and the property owner against losses arising from defects or problems with the title to property.
Trust Account An account used by brokers and escrow agents, in which funds for another individual are held separately, and not commingled with other funds.
U
Underwriter One who underwrites a loan for another. Your lender will have an investor underwrite your loan.
V
Variable Interest Rate An interest rate that rises and falls according to a particular economic indicator, such as Treasury Bills.
Void A contract or document that is not enforceable.
Voluntary Lien A lien, such as a mortgage, that a homeowner elects to grant to a lender.
W
Waiver The surrender or relinquishment of a particular right, claim, or privilege.
Warranty A legally binding promise given to the buyer at closing by the seller, generally regarding the condition of the home, property, or other matter.
Z
Zoning The right of the local municipal government to decide how different areas of the municipality will be used. Zoning ordinances are the laws that govern the use of the land.
There are other real estate legal terms commonly used by attorneys and real estate professionals but not usually by consumers or home buyers or sellers.