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License
No. 244402
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Glossary
This glossary is
for informational purposes only and should not be used without
legal counsel for the purpose of reading/understanding a
contract.
- Abandonment
- The voluntary
relinquishment of rights of ownership or another form of
interest (an easement) by failure to use the property
over an extended period of time.
- ABR
- The Accredited Buyer
Representative designation indicates a real estate agent
specializing in representing buyers in the real estate
transaction.
- 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.
- Acceleration
Clause
- Condition in a mortgage
that may require the balance of the loan to become due
immediately, if regular mortgage payments are not made
or for breach of other conditions of the mortgage.
- Acre
- A measure of land, equal
to 160 sq. rods (43,560 sq.ft.). An acre is
approximately 209' x 209'.
- Acknowledgment
- A formal declaration
before an authorized official (usually a notary public)
by a person who has executed a document, that he did in
fact execute (sign) the document
- Addendum
- Something added. A list
or other items added to a document, letter, contract,
escrow instructions, etc.
- Adverse
Possession
- A method of acquiring
title by open and notorious possession usually vary with
each state.
- Agent
- Acts of behalf of
another, representing that person's interests and
serving as an intermediary.
- Agreement of
Sale
- Known by various names,
such as contract of purchase, purchase agreement, or
sales agreement according to location or jurisdiction. 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.
- Alienation
Clause
- A clause within a loan
instrument calling for a debt in its entirety upon the
transfer of ownership of the secured property. Also
called a "due on sale" clause.
- Amortization
- A payment plan which
enables the borrower to reduce his debt gradually
through monthly payments of principal.
- Appraisal
- An expert judgment or
estimate of the quality or value of real estate as of a
given date.
- Assessed Value
- Value placed on property
by the tax assessor.
- Assignment
- A transfer or making
over to another the whole of any property, real or
personal, or of any estate or right therein. To assign
is to transfer.
- Assumption of
Mortgage
- An obligation undertaken
by the purchaser of property to be personally liable for
payment of an existing mortgage. In an assumption, the
purchaser is substituted for the original mortgagor in
the mortgage instrument and the original mortgagor is to
be released from further liability in the assumption,
the mortgagee's consent is usually required
- Attachment
- Seizure of property by
court order, usually done in pending law suit to make
property available in case of judgment.
- Balloon Payment
- The final installment
paid at the end of the term of a note; used only when
preceding installments were not sufficient to pay off
the note in full.
- Bill of Sale
- An instrument used to
transfer personal property
- Binder or "Offer
to Purchase"
- A preliminary agreement,
secured by the payment of earnest money, between a buyer
and seller as an offer to purchase real estate. A binder
secures the right to purchase real estate upon agreed
terms for a limited period of time. If the buyer changes
his mind or is unable to purchase, the earnest money is
forfeited unless the binder expressly provides that it
is to be refunded.
- Blanket Mortgage
(Trust Deed)
- A single mortgage or
trust deed which covers more than one piece of real
estate
- Bond
- An insurance agreement
by which one party is insured against loss or default by
a third party. In the construction business a
performance bond ensures the interested party that the
contractor will complete the project. A bond can also be
a method of financing debt by a government or
corporation which is interest-bearing and has priority
over stock in terms of security.
- Breach
- Violation of an
obligation in a contract
- Broker, Real
Estate
- An agent licensed by the
state to carry on the business of operating in real
estate. He usually receives a commission for his
services of bringing together buyers and sellers, owners
and tenants, in exchange agreements.
- Building Code
- A set of stringent laws
that control the construction of buildings, design,
materials and other similar factors
- Building Line or
Setback
- Distances from the ends
and/or sides of the lot beyond which construction may
not extend. The building line may be established by a
filed plat of subdivision, by restrictive covenants in
deeds or leases, by building codes, or by zoning
ordinances.
- Built-Ins
- Items that are not
movable, such a stoves, ovens, microwave ovens,
dishwashers.
- Buyers Market
- A market condition which
occurs in real estate where more homes are for sale than
there are interested buyers
- Buyer Services
- Check out the services
that J.J. can provide to you.
Click here for more information!
- Capital Gains
- A term used for income
tax purposes which represents the gain realized from the
sale of an asset less the purchase price and deductible
expense.
- Capitalization
- An appraising term used
in determining value by considering net operating income
and a percentage of reasonable return on investment.
- Cash Flow
- The owner's spendable
income after operating expenses and debt service is
deducted
- Certificate of
Title
- A certificate issued by
a title company or a written opinion rendered by an
attorney that the seller has good marketable and
insurable title to the property which he is offering for
sale. A certificate of title offers no protection
against any hidden defects in the title which an
examination of the records could not reveal. The issuer
of a certificate of title is liable only for damages due
to negligence. The protection offered a homeowner under
a certificate of title is not as great as that offered
in a title insurance policy.
- Chain Of Title
- A history of conveyances
and encumbrances affecting the title as far back as
records are available
- Client
- One who employs
another's services, as in an attorney, real estate
agent, insurance agent, etc.
- Closing
- In the sale of real
estate it is the final moment when all documents are
executed and recorded and the sale is complete. Also a
general selling term where a sales person is attempting
to sell something and the buyer agrees to purchase
- Closing Costs
- The numerous expenses
which buyers and sellers normally incur to complete a
transaction in the transfer of ownership of real estate.
These costs are in addition to price of the property and
are items prepaid at the closing day.
- Closing
Statement
- A list of the final
accounting of all Moines of both buyer and seller
prepared by an escrow agent which notes all costs each
must pay at the completion of a real estate transaction.
- Cloud (On Title)
- An outstanding claim or
encumbrance which adversely affects the marketability of
title.
- Commission
- Money paid to a real
estate agent or broker by the seller as compensation for
finding a buyer and completing the sale. Usually it is a
percentage of the sale price- - 6 to 7 percent on
houses, 10 percent on land.
- Common Area
- That area owned in
common by owners of condominiums and planned sight
development homes within a subdivision.
- Community
Property
- Both real and personal
property accumulated by a husband and wife after
marriage through joint efforts of both living together.
- Condemnation
- A declaration by
governing powers that a structure is unfit for use.
- Conditional
Sales Contract
- A contract for the sale
of property where the buyer has possession and use, but
the seller retains title until the conditions of the
contract have been fulfilled. Also known as a land
contract.
- Condominium
- Individual ownership of
a dwelling unit and an individual interest in the common
areas and facilities which serve the multi- unit
project.
- Consideration
- Anything of value given
to induce someone into entering into a contract.
- Construction
Loan
- The short-term financing
of improvements on real estate. Once the improvements
are completed a 'take out' loan for a longer term is
usually issued.
- Contingency
- A condition upon which a
valid contract is dependent. For example; the sale of a
house is contingent upon the buyer obtaining adequate
financing.
- Contract
- An agreement between tow
or more parties, written or oral, to do or not to do
certain things.
- Contractor
- In the construction
industry, a contractor is one who contracts to erect
buildings or portions of them. There are also
contractors for each phase of construction: heating,
electrical, plumbing, air conditioning, road building,
bridge and dam erection, and others.
- Conventional
Mortgage
- A mortgage loan not
insured by HUD or guaranteed by the Veterans'
Administration. It is subject to conditions established
by the lending institution and State statutes. The
mortgage rates may vary with different institutions and
between States. (States have various interest limits.)
- Conveyance
- The transfer of the
title to land from one to another.
- Counter Offer
- An offer in response to
an offer. 'A' offers to by 'B's' house for $20,000 which
is listed for $22,000. 'B' counter offers 'A's' offer by
stating that he will sell the house to 'A" for $21,000.
The $21,000 is the counter offer.
- Covenants
- Agreements written into
deeds and other instruments stating performance or
non-performance of certain acts or noting certain uses
or non-uses of property.
- Deed
- A formal written
instrument by which title to real property is
transferred from one owner to another. The deed should
contain an accurate description of the property being
conveyed, should be signed and witnessed according to
the laws of the State where the property is located, and
should be delivered to the purchaser at closing day.
There are two parties to a deed: the grantor and the
grantee. (See also deed of trust, general warranty deed,
quitclaim deed, and special warranty deed.)
- Default
- Failure to make mortgage
payments as agreed to in a commitment based on the terms
and at the designated time set forth in the mortgage or
deed of trust. It is the mortgagor's responsibility to
remember the due date and send the payment prior to the
due date, not after. Generally, thirty days after the
due date if payment is not received, the mortgage is in
default. In the event of default, the mortgage may give
the lender the right to accelerate payments, take
possession and receive rents, and start foreclosure.
Defaults may also come about by the failure to observe
other conditions in the mortgage or deed of trust.
- Depreciation
- Decline in value of a
house due to wear and tear, adverse changes in the
neighborhood, or any other reason.
- Documentary
Stamps
- A State tax, in the
forms of stamps, required on deeds and mortgages when
real estate title passes from one owner to another. The
amount of stamps required varies with each State.
- Down Payment
- The amount of money to
be paid by the purchaser to the seller upon the signing
of the agreement of sale.
- Earnest Money
- The deposit money given to the
seller or his agent by the potential buyer upon the
signing of the agreement of sale to show that he is
serious about buying the house. If the sale goes
through, the earnest money is applied against the
downpayment. If the sale does not go through, the
earnest money will be forfeited or lost unless the
binder or offer to purchase expressly provides that it
is refundable.
- Easement Rights
- A right- of- way granted to a
person or company authorizing access to or over the
owner's land. An electric company obtaining a right- of-
way across private property is a common example.
- Economic Obsolescence
- Loss of useful life and
desirability of a property through economic forces, such
as change in zoning, changes in traffic flow, etc.,
rather than deterioration.
- Encroachment
- An obstruction, building, or part
of a building that intrudes beyond a legal boundary onto
neighboring private or public land, or a building
extending beyond the building line.
- Encumbrance
- A legal right or interest in land
that affects a good or clear title, and diminishes the
land's value. It can take numerous forms, such as zoning
ordinances, easement rights, claims, mortgages, liens,
charges, a pending legal action, unpaid taxes, or
restrictive covenants. An encumbrance does not legally
prevent transfer of the property to another. A title
search is all that is usually done to reveal the
existence of such encumbrances, and it is up to the
buyer to determine whether he wants to purchase with the
encumbrance, or what can be done to remove it.
- Equity
- The value of a homeowner's
unencumbered interest in real estate. Equity is computed
by subtracting from the property's fair market value the
total of the unpaid mortgage balance and any outstanding
liens or other debts against the property. A homeowner's
equity increases as he pays off his mortgage or as the
property appreciates in value. When the mortgage and all
other debts against the property are paid in full the
homeowner has 100% equity in his property.
- Escalation Clause
- A clause in a lease providing for
an increased rent at a future time due to increased
costs to lessor, as in cost of living index, tax
increases, etc.
- Escheat
- The reverting of property to the
state in the absence of heirs.
- Escrow
- Funds paid by one party to
another (the escrow agent) to hold until the occurrence
of a specified event, after which the funds are released
to a designated individual. In FHA mortgage transactions
an escrow account usually refers to the funds a
mortgagor pays the lender at the time of the periodic
mortgage payments. The money is held in a trust fund,
provided by the lender for the buyer. Such funds should
be adequate to cover yearly anticipated expenditures for
mortgage insurance premiums, taxes, hazard insurance
premiums, and special assessments.
- Estate
- The ownership interest of a
person in real property. Is also used to refer to a
deceased person's property. And often used to describe a
large home with spacious grounds
- Fair Market
Value
- That price a property will bring
given that both buyer and seller are fully aware of
market conditions and comparable properties.
- Fee Simple
- Ownership of title to property
without any limitation, which can be sold, left at will,
or inherited.
- Fixtures
- Items affixed to buildings or
land usually in such a way that they cannot be moved
without damage to themselves or the property, such as
plumbing, electrical fixtures, trees, etc.
- Foreclosure
- A legal term applied to any of
the various methods of enforcing payment of the debt
secured by a mortgage, or deed of trust, by taking and
selling the mortgaged property, and depriving the
mortgagor of possession.
- Front Footage
- The linear measurement along the
front of a parcel. That portion of the parcel which
fronts the street or walkway.
- Functional Obsolescence
- Loss in value due to out-of-date
or poorly designed equipment while newer equipment and
structures have been invented since it's construction.
- General Warranty Deed
- A deed which conveys not only all
the grantor's interests in and title to the property to
the grantee, but also warrants that if the title is
defective or has a "cloud" on it (such as mortgage
claims, tax liens, title claims, judgments, or
mechanic's liens against it) the grantee may hold the
grantor liable.
- Grantee
- That party in the deed who is the
buyer or recipient.
- Grantor
- That party in the deed who is the
seller or giver.
- Ground Lease
- A lease of vacant land
- Hazard Insurance
- Protects against damages caused
to property by fire, windstorms, and other common
hazards.
- Home Owners Association
- An association of homeowners
within a community formed to improve and maintain the
quality of the community. An association formed by the
developer of condominiums or planned developments.
- HUD
- U.S. Department of Housing and
Urban Development. Office of Housing/Federal Housing
Administration within HUD insures home mortgage loans
made by lenders and sets minimum standards for such
homes.
- Interest
- A charge paid for borrowing
money. (See mortgage note)
- Involuntary Lien
- A lien which attaches to property
without the consent of the owner such as tax liens as
opposed to voluntary liens (mortgages).
- Joint Tenancy
- Joint ownership by two or more
persons with right of survivorship. Upon the death of a
joint tenant, his/her interest does not go to his/her
heirs, but to the remaining joint tenants.
- Lease
- A contract between the owner of
real property, called the lessor, and another person
referred to as the lessee, covering all conditions by
which the lessee may occupy and use the property.
- Lease With Option To
Purchase
- A lease where the lessee has the
option to purchase the leased property. The terms of the
purchase option must be set forth in the lease.
- Legal Description
- The geographical identification
of a parcel of land
- Lessee
- One who contracts to rent
property under a specified lease>
- Lessor
- An owner who contracts into a
lease with a tenant (lessee).
- Lien
- A claim by one person on the
property of another as security for money owed. Such
claims may include obligations not met or satisfied,
judgments, unpaid taxes, materials, or labor. (See also
special lien.)
- Life Estate
- A estate in real property for the
life of a person
- Listing
- A contract between owner and
broker to sell the owner's property
- Marketable Title
- A title that is free and clear of
objectionable liens, clouds, or other title defects. A
title which enables an owner to sell his property freely
to others and which others will accept without
objection.
- Mechanic's Lien
- A lien created by statute on a
specific property for labor or materials contributed to
an improvement on that property.
- Mortgage
- A lien or claim against real
property given by the buyer to the lender as security
for money borrowed. Under government- insured or loan-
guarantee provisions, the payments may include escrow
amounts covering taxes, hazard insurance, water charges,
and special assessments. Mortgages generally run from 10
to 30 years, during which the loan is to be paid off.
- Mortgage Commitment
- A written notice from the bank or
other lending institution saying it will advance
mortgage funds in a specified amount to enable a buyer
to purchase a house.
- Mortgage Insurance
Premium
- The payment made by a borrower to
the lender for transmittal to HUD to help defray the
cost of the FHA mortgage insurance program and to
provide a reserve fund to protect lenders against loss
in insured mortgage transactions. In FHA insured
mortgages this represents an annual rate of one- half of
one percent paid by the mortgagor on a monthly basis.
- Mortgage Note
- A written agreement to repay a
loan. The agreement is secured by a mortgage, serves as
proof of an indebtedness, and states the manner in which
it shall be paid. The note states the actual amount of
the debt that the mortgage secures and renders the
mortgagor personally responsible for repayment.
- Mortgage (Open- End)
- A mortgage with a provision that
permits borrowing additional money in the future without
refinancing the loan or paying additional financing
charges. Open- end provisions often limit such borrowing
to no more than would raise the balance to the original
loan figure.
- Mortgagee
- The lender in a mortgage
agreement.
- Mortgagor
- The borrower in a mortgage
agreement.
- Multiple Listing
- A listing taken by a member of an
organization of brokers, whereby all members have an
opportunity to find a buyer.
- Negative Amortization
- When monthly payments are not
enough to cover interests costs, they are added to the
principal balance, and you may end up owing more than
when you started. This is most likely to occur with
ARMs that have payment caps.
- Notary Public
- One who is authorized by federal
or local government to attest authentic signatures and
administer oaths.
- Note
- A written instrument
acknowledging a debt and promising payment
- Offer
- A presentation to form a contract
or agreement.
- Option
- A right given, for consideration,
to purchase or lease property upon stipulated terms
within a specific period of time
- Origination Fee
- Application fee(s) for processing
a proposed mortgage.
- Plat
- A map or chart of a lot,
subdivision or community drawn by a surveyor showing
boundary lines, buildings, improvements on the land, and
easements.
- P.M.I. (Private
Mortgage Insurance)
- Insurance which covers a portion
of the first mortgage allowing the lender to offer more
lenient terms to a borrower.
- Points
- Sometimes called "discount
points." A point is one percent of the amount of the
mortgage loan. For example, if a loan is for $25,000,
one point is $250. Points are charged by a lender to
raise the yield on his loan at a time when money is
tight, interest rates are high, and there is a legal
limit to the interest rate that can be charged on a
mortgage. Buyers are prohibited from paying points on
HUD or Veterans' Administration guaranteed loans
(sellers can pay, however). On a conventional mortgage,
points may be paid by either buyer or seller or split
between them.
- Prepayment
- Payment of mortgage loan, or part
of it, before due date. Mortgage agreements often
restrict the right of prepayment either by limiting the
amount that can be prepaid in any one year or charging a
penalty for prepayment. The Federal Housing
Administration does not permit such restrictions in FHA
insured mortgages.
- Prepayment Penalty
- A penalty within a note,
mortgage, or deed of trust imposing a penalty if the
debt is paid in full before the end of its terms.
- Principal
- The basic element of the loan as
distinguished from interest and mortgage insurance
premium. In other words, principal is the amount upon
which interest is paid.
- Purchase Agreement
- An agreement between buyer and
seller denoting price and terms of the sale.
- Real Estate Agent
- a licensed person who works under
the direction of a broker selling and renting real
estate.
- Real Estate Broker
- A middle man or agent who buys
and sells real estate for a company, firm, or individual
on a commission basis. The broker does not have title to
the property, but generally represents the owner.
- Realtor
- A real estate broker holding
membership with the National Association of Realtors.
- Refinancing
- The process of the same mortgagor
paying off one loan with the proceeds from another loan.
- Restrictive Covenants
- Private restrictions limiting the
use of real property. Restrictive covenants are created
by deed and may "run with the land," binding all
subsequent purchasers of the land, or may be "personal"
and binding only between the original seller and buyer.
The determination whether a covenant runs with the land
or is personal is governed by the language of the
covenant, the intent of the parties, and the law in the
State where the land is situated. Restrictive covenants
that run with the land are encumbrances and may affect
the value and marketability of title. Restrictive
covenants may limit the density of buildings per acre,
regulate size, style or price range of buildings to be
erected, or prevent particular businesses from operating
or minority groups from owning or occupying homes in a
given area. (This latter discriminatory covenant is
unconstitutional and has been declared unenforceable by
the U.S. Supreme Court.)
- Seller's Market
- More buyers than sellers.
- Seller Services
- Check out the services
that J.J. can provide to you.
Click here for more information!
- Special Assessments
- A special tax imposed on
property, individual lots or all property in the
immediate area, for road construction, sidewalks,
sewers, street lights, etc.
- Special Lien
- A lien that binds a specified
piece of property, unlike a general lien, which is
levied against all one's assets. It creates a right to
retain something of value belonging to another person as
compensation for labor, material, or money expended in
that person's behalf. In some localities it is called
"particular" lien or "specific" lien. (See lien.)
- Special Warranty Deed
- A deed in which the grantor
conveys title to the grantee and agrees to protect the
grantee against title defects or claims asserted by the
grantor and those persons whose right to assert a claim
against the title arose during the period the grantor
held title to the property. In a special warranty deed
the grantor guarantees to the grantee that he has done
nothing during the time he held title to the property
which has, or which might in the future, impair the
grantee's title.
- Survey
- A map or plat made by a licensed
surveyor showing the results of measuring the land with
its elevations, improvements, boundaries, and its
relationship to surrounding tracts of land. A survey is
often required by the lender to assure him that a
building is actually sited on the land according to its
legal description.
- Tax
- As applied to real estate, an
enforced charge imposed on persons, property or income,
to be used to support the State. The governing body in
turn utilizes the funds in the best interest of the
general public.
- Title
- As generally used, the rights of
ownership and possession of particular property. In real
estate usage, title may refer to the instruments or
documents by which a right of ownership is established
(title documents), or it may refer to the ownership
interest one has in the real estate.
- Title Insurance
- Protects lenders or homeowners
against loss of their interest in property due to legal
defects in title. Title insurance may be issued to a
"mortgagee's title policy." Insurance benefits will be
paid only to the "named insured" in the title policy, so
it is important that an owner purchase an "owner's title
policy", if he desires the protection of title
insurance.
- Title Search or
Examination
- A check of the title records,
generally at the local courthouse, to make sure the
buyer is purchasing a house from the legal owner and
there are no liens, overdue special assessments, or
other claims or outstanding restrictive covenants filed
in the record, which would adversely affect the
marketability or value of title.
- Trustee
- A party who is given legal
responsibility to hold property in the best interest of
or "for the benefit of" another. The trustee is one
placed in a position of responsibility for another, a
responsibility enforceable in a court of law. (See deed
of trust.)
- Variable Interest Rate
- A fluctuating interest rate which
can go up or down depending on the going market rate.
- Voluntary Lien
- A voluntary lien by the owner
such as a mortgage, as opposed to involuntary liens
(taxes).
- Waive
- To relinquish, or abandon. To
forego a right to enforce or require anything.
- Wrap-Around Mortgage
- A second mortgage which is
subordinate to but includes the face value of the first
mortgage.
- Zoning Ordinances
- The acts of an authorized local
government establishing building codes, and setting
forth regulations for property land usage.
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Re/Max Elite
5532 Eulala Drive
Nashville, TN 37211
Toll Free: (877) 821-0100
Office:
615-781-0100
Direct Line: 615-300-7788
Fax: 615-781-1060
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