Real Estate Terms

NATURE AND DESCRIPTION OF REAL ESTATE

• Fixture- an object that has been attached to land so as to become real estate
• Improvements– any form of land development such as buildings, roads, fences, pipelines, etc.
• Personal Property- a right or interest in things of a temporary or movable nature; anything not classed as real property.
• Real Estate- land and improvements in a physical sense as well as the rights to own or use them

RIGHTS AND INTERESTS IN LAND

• Easement- the right or privilege one part has to use land belonging to another for a special purpose not inconsistent with the owner’s use of the land
• Eminent Domain- the right of government to take privately held land for public use provided fair compensation is paid
• Fee Simple- the largest, most complete bundle of rights one can hold in land; land ownership
• Lien- a hold or claim which one person has on the property of another to secure payment of a debt or other obligation
• Title- the right to or ownership of something; also the evidence of ownership, such as a deed or bill of sale

TRANSFERRING TITLE

• Cloud on the Title- any claim, lien or encumbrance that impairs title to property
• Deed- a written document that when properly executed and delivered conveys title to land
• Quitclaim Deed- a legal instrument used to convey whatever title the grantor has; it contains no covenants, warranties nor implication of the grantor’s ownership

RECORDATION, ABSTRACTS, AND TITLE INSURANCE

• Abstract- a summary of all recorded documents affecting the title to a given parcel of land
• Acknowledgement- a formal declaration by a person signing a document that he or she, in fact, did sign the document
• Chain of Title- the linkage of property ownership that connects the present owner and the original source of title
• Marketable Title- title that is free from reasonable doubt as to who the owner is
• Quiet Title Suit- court- ordered hearings held to determine land ownership
• Title Insurance- an insurance policy against defects in title not listed in the title report or abstract

CONTRACT LAW

• Specific Performance- contract performance according to the precise terms agreed upon

REAL ESTATE SALES CONTRACTS

• Default- failure to perform a legal duty; such as failure to carry out the terms of a contract
• Earnest Money Deposit- money that accompanies an offer to purchase as evidence of good faith
• “Time is of the Essence”- a phrase that means that the time limits of a contract must be faithfully observed or the contract is voidable

MORTGAGE AND NOTE

• Subordination- voluntary acceptance of a lower mortgage priority than one would otherwise be entitled to.

DEED OF TRUST

• Deed of Trust- a document that conveys legal title to a neutral third party (a trustee) as security for a debt.

LENDING PRACTICES

• Amortized Loan- a loan requiring periodic payments that include both interest and partial repayment of principal
• Balloon Loan- any loan in which the final payment is larger than the preceding payments
• Loan-to-Value Ratio– a percentage reflecting what a lender will lend divided by the market value of the property

SOURCES AND TYPES OF FINANCING

• Option– a right for a given period of time; to buy, sell, or lease property at specified price and terms

TAXES AND ASSESSMENTS

• Assessed Value- a value places on a property for the purpose of taxation
• Basis- the paid price for property; used in calculating income taxes
• Capital Gain- the gain (profit) on the sale of an appreciated asset
• Mill Rate- property tax rate that is expressed in tenths of a cent per dollar of assessed valuation
• Tax Lien- a charge or hold by the government against property to insure the payment of taxes

TITLE CLOSING AND ESCROW

• Closing Meeting- meeting at which the buyer pays for the property and receives a deed to it and all other matters pertaining to the sale are conclude
• Escrow Agent- the person placed in charge of an escrow
• Escrow Closing- the deposit of documents and funds with a neutral third party along with instructions as to how to conduct the closing
• Prorating– the division of ongoing expenses and income items between the buyer and the seller

REAL ESTATE LEASES

• Assignment- the total transfer of the lessee’s rights to another party
• Gross Lease- tenant pays a fixed rent and the land lord pays all property expenses
• Net Lease- Tenant pays a base rent plus maintenance, property taxes, and insurance
• Option- the right at some time in the future to purchase or lease a property at a predetermined price