Real Estate Glossary

This list is provided for reference only. Each state has it's own real estate laws, terms and regulations for Realtors. In Arizona, your Realtor and Title Company handle most real estate transaction activities that involve attorneys in many other states. However, you have the right to seek the advice of an attorney or other professional counsel in any real estate transaction.

Abstract - The notes made by a title examiner based on his examination of the land records. These notes are a concise summary of the transactions affecting the property.

Abstract of Title - A summary of the public records relating to the title - to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

Abutting - The joining, reaching, or touching of adjoining land. Abutting pieces of land have a common boundary.

Acceleration Clause - A condition in a real estate financing instrument giving the lender - the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as the sale of the property, or a delinquency in the repayment of the note.

Accidental Agency - See Implied Agency -

Accounting - An agent is obligated to account for all money or property that belongs to his/her principal entrusted to that agent. The duty compels a real estate broker to safeguard any money, deeds, or other documents entrusted to them relative to their client's transactions of affairs. See also Fiduciary Duties. -

Accretion - An addition to land through natural causes, such as the building up of a beach through natural wave action.

Acknowledgment - A declaration made by a person to a notary public, or other public official authorized to take acknowledgements, that the instrument was executed by him and that it was his free and voluntary act.

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

Action to Quiet Title - A court action to establish ownership to real property. Although technically not an action to remove a cloud on a title - , the two actions are usually referred to as "Quiet Title" actions.

Adjustable Rate Mortgage - (ARM) A mortgage loan whose interest rate fluctuates according to the movements of an assigned index - . You may also see ARM's referred to as AML's or VRM's.

Adjustments - Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.

Administrator/Administratrix - A person appointed by a court to settle the estate of a deceased person who dies without a will. Also see Executor/Executrix - .

Ad Valorem - Designates an assessment of taxes against property. Literally, according to value.

Adverse Possession - The right of an occupant of land to acquire title - against the real owner, where possession has been actual, continuous, hostile, visible, and distinct for the statutory period.

Affidavit - Written statement signed and sworn to before some person authorized to take an oath.

Agency - A relationship in which the agent is given the authority to act on behalf of another person ( principal - ). In real estate transactions, usually the seller is the principal, and the broker is the agent. In an agency relationship, the principal delegates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has a fiduciary - relationship with the principal and owes to that principal the duties of Loyalty - , Obedience - , Disclosure - , Confidentiality - , Reasonable Care and Diligence - , and Accounting - . Also see Buyer's Broker - , Exclusive Buyer's Broker - , Seller's Broker - .

AgentA licensed representative who assists the buyer or seller with advice, information about current market conditions, and helps to negotiate the sale.

Agreement - A meeting of minds. A change to the correct or alteration to the original document/agreement without changing its principal essence.

Agreement of Sale - A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties. Usually (but not always) secured by the payment of earnest money - . In some states it is known as a Purchase Agreement, Land Contract, or Earnest Money Contract.

Alienation Clause - A clause in a mortgage which gives the lender the right to call the entire loan balance due if the property is sold; also know as due-on-sale clause.

Amenities - Nonmonetary benefits and satisfactions derived from property ownership, such as a pleasant view, pride in home ownership, etc.

Amortization - To reduce a debt by regular payments of both principal and interest, as opposed to interest only payment. The operation of paying off indebtedness, such as a mortgage, by installments. The conventional amortization periods are15 or 30 years. Also see Term - .

Amortized Mortgage - A mortgage which requires periodic payments which include both interest and principal. Also see Self Amortized Loan - .

Annual Percentage Rate - (A.P.R.) The interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. the APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.

Antitrust Laws - Federal and state laws prohibiting, among other things, monopolies, monopolistic practices, restraint of trade, and price fixing.

Appointed Agency Also known as Split Agency - , Designated Agency - . Agency relationship where the Broker appoints one agent in the office to represent the seller and another agent in the same office to represent the Buyer. Caution: This is a relatively new concept and has not been tested in the Courts yet. Prior relationships or conversatins between the 2 agents appointed could possibly create a conflict of interest. Example: Agent A (representing the buyer) tells Agent B (not involved at this point) that he has a Client that has financially qualified for up to $150,000. Later, the Buyer decides to make a $125,000 offer on a property listed by the same agency. The Broker appoints Agent B to represent the Seller. Since Agent B already knows the Buyer can qualify for $150,000 must he tell the Seller? Remember, he is obligated to reveal any information that he knows that would help the Seller.

Application - An initial statement of personal and financial information which is required to approve your loan.

Application Fee - Fees that are paid upon application. Charges for property appraisal and a credit report are usually included in the application fee.

Appraisal - An opinion by a licensed appraiser of the fair market value of a property. An expert judgment or estimate of the quality or value of real estate, made by an appraiser, as of a given date. Most states require licenses for appraisers. Various lenders have their own lists of approved appraisers.

Appraisal fee - The charge for estimating the value of property offered as security.

Appraised Value - An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.

Appreciation - An increase in value or worth of property. Opposite of depreciation.

Approved attorney - An attorney authorized by a title insurance company to handle closings and render title opinions.

Appurtenance - Anything attached to the land or used with it passing to the new owner.

Arrears - Payment made after its due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.

Asking (list) price - The price placed on property for sale.

Assessed ValuationValue placed on real estate by governmental assessors as a basis for levying property taxes; not identical with appraised or market value.

Assessment - A local tax levied against a property for a specific purpose, such as a sewer or street lights.

Assessment Base - The total assessed value of all property in a given assessment district.

Assessor - A local government official who determines the value of the property for taxation purposes.

Asset - Any possession that has value in an exchange.

Assign - To transfer interest.

Assignee - One who receives an assignment or transfer of rights. An assignment of a contract transfers the right to buy property.

Assignor - The one who assigns to another person.

Assignment - Transfer of one's rights to another.

Assumability - When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means that the mortgage may not be transferable to the new buyer. Instead, the lender may make you pay the entire balance that is due when you sell the home. Assumability can help you attract buyers if you sell your home.

Assumable Mortgage - An existing mortgage that can be taken over by the buyer on the same terms given to the original borrower.

Assumption of Mortgage - The transfer of title to property to a grantee wherein he assumes liability for payment of an existing note secured by a mortgage against the property; should the mortgage be foreclosed and the property sold for a lesser amount than that due, the grantee-purchaser who has assumed and agreed to pay the debt secured by the mortgage is personally liable for the deficiency. Before a seller may be relieved of liability under the existing mortgage, the lender must accept the transfer of liability for payment of the note. Also known as simple assumption. Also see Subject to Mortgage - .

Attached Homes - A home that has one or more common walls adjoining another home. Condominiums and row houses are attached homes.

Attachment - Method by which a debtor's property is placed in the custody of the law and held as security pending outcome of a creditor's suit.

Attorney in fact - A type of agency relationship where one person holds a power of attorney allowing him to execute legal documents on behalf of another. Decisions made by the attorney in fact are binding on the principal.

Attorney's Opinion of Title - An instrument written and signed by the attorney who examines the abstract of title, stating his opinion as to whether a seller may convey good title.

Auction - A public sale of property to the highest bidder.