A
B C D
E F G H
I J K L
M N O P
Q R S T
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A
Acceleration
Clause - A clause in a Deed of Trust or note that accelerates or hastens
the time when the debt becomes due. For example, most deeds of trust of
loans contain a provision that the note shall become due immediately upon
the sale or transfer of title of the loan, or upon failure to pay an installment
of principal or interest. This is also called a due on sale clause.
Adjustable
Rate Mortgage - A mortgage instrument with an interest rate that is
periodically adjusted to follow a preselected published index. The interest
rate is adjusted at certain intervals during the loan period.
Agency
- Any relationship in which one party (agent) acts for or represents another
(principal) under the authority of the principal. Agency involving real
property should be in writing, such as listing, trust, powers of attorney,
etc.
Amortization
- Payment of debt in regular, periodic installments of principal and interest,
as opposed to interest only payments.<
Appraisal
- An opinion of value based on factual analysis. Legally, an estimation
of value by two disinterested persons of suitable qualifications.
APR (Annual
Percentage Rate) - The yearly interest percentage of a loan, as expressed
by the actual rate of interest paid. The APR is disclosed as a requirement
of federal truth in lending statutes.
Assessed
Value - Value placed upon property for property, tax purposes by the
tax collector.
Assessment - A levy against property in addition to general taxes. Usually
for improvements such as streets, sewers, etc.
Assumption
of Mortgage - Agreement by a buyer to assume the liability under an
existing note secured by a mortgage or deed of trust. The lender usually
must approve the new debtor in order to release the existing debtor (usually
the seller) from liability.
B
Balloon
Note - A note calling for periodic payments which are insufficient
to fully amortize the face amount of the note prior to maturity, so that
a principal sum known as a "balloon" is due at maturity.
Beneficiary
- (1) One for whose benefit a trust is created. (2) In states in which
deeds of trust are commonly used instead of mortgages, the lender (mortgagee)
is called the beneficiary.
Borrower
- One who borrows funds, with the express or implied intention of repaying
the loan in full, or giving the equivalent.
Breach of Contract - Failure to perform a contract, in whole or in part,
without legal excuse.
Broker, Real Estate - One who is licensed by the state to carry on the
business of dealing in real estate. A broker may receive a commission
for his/her part in bringing together a buyer and seller, landlord and
tenant, or parties to an exchange.
Buy Down
- A fixed rate loan where the interest rate and payment are reduced for
a specific period of time by paying the interest up front to subsidize
the lower payment.
C
Cal-Vet
Loans - Real estate loans available to armed forces veterans from
California, at low interest rates.
Chain
of Title - The chronological order of conveyances of a parcel of land,
from the original owner to the present owner.
Clear Title - Real property against which there are no liens, especially
involuntary liens (mortgages).
Closing - In real estate sales, the final procedure in which documents
are executed and/or recorded, and the sale (or loan) is completed.
Closing
Costs - Expenses incidental to a sale of real estate, such as loan
fees, title fees, appraisal fees, etc.
Closing
Statement - The statement which lists the financial settlement between
buyer and seller, and the costs each must pay.
Cloud
on Title - An invalid encumbrance on real property, which, if valid,
would affect the rights of the owner. For example: A sells lot 1, tract
1, to B. The deed is mistakenly drawn to read lot 2, tract 1. A cloud
is created on lot 2 by the recording of the erroneous deed. The cloud
may be removed by quitclaim deed, or, if necessary, by court action.
Community
Homebuyers' Program - A fixed rate loan with a low 3 to 5% down payment,
no cash reserve requirement, and easier qualifying ratios. Subject to
borrower meeting income limits and attendance of a 4 hour training course
on home ownership.
Consideration
- Anything which is, legally, of value, and induces one to enter into
a contract.
Conventional Mortgage - A mortgage or deed of trust not obtained under
a government insured program such as FHA or VA.
Conveyance
- Transfer of title to land. Includes most instruments by which an
interest in real estate is created, mortgaged or assigned.
Covenants,
Conditions and Restrictions (CC&R's) - A term used in some areas
to describe the restrictive limitations which may be placed on property.
D
Deed
- Actually, any one of many conveyancing or financing instruments, but
generally a conveyancing instrument, given to pass fee title to property
upon sale.
Deed of
Trust - An instrument used in many states in place of a mortgage.
Property is transferred to a trustee by the borrower (trustor), in favor
of the lender ( beneficiary), and reconveyed upon payment in full.
Deposit
- Money given by the buyer with an offer to purchase. Shows good faith.
Also called earnest money.
Discount
Points - A negotiable fee paid to the lender to secure financing for
the buyer. Discount points are up front interest charges to reduce the
interest rate on the loan over the life, or a portion, of the loan's term.
One discount point equals one percent of the loan amount.
Disposable
Income - Income, usually monthly income, left over after fixed obligations
and living expenses for that period of income are paid.
Documentary
Transfer Tax - A state tax on the sale of real property, based on
the sale price.
Down Payment
- Cash portion paid by a buyer from his/her own funds, as opposed to that
portion of the purchase price which is being borrowed.
E
Encumbrance
- A claim, lien, charge, or liability attached to and binding real property.
Any right to, or interest in, land which may exist in one other than the
owner, but which will not prevent the transfer of fee title.
Equity
- The market value of real property, less the amount of existing liens.
Execute - To complete, to finish, in real estate deeds, to sign, seal,
and deliver.
F
Fair Credit
Reporting Act - A federal law giving one the right to see his/her
credit report so that errors may be corrected. A lender refusing credit
based on a credit report must inform the buyer which company issued the
report. The buyer may see the report without charge if refused credit.
Federal
Home Loan Banks - A system of I I regional banks established by the
Home Loan Bank act of 1932 in order to keep a permanent supply of money
available for home financing.
Fee Simple
- An estate under which the owner is entitled to unrestricted powers to
dispose of the property, and which can be left by will or inherited. Commonly,
a synonym for ownership.
F.H.A.
(Federal Housing Administration) - A federal agency which insures
first mortgages, enabling lenders to loan a very high percentage of the
sale price.
FHLMC
(Freddie Mac) - Federal Home Loan Mortgage Corporation. A federal
agency purchasing first mortgages, both conventional and federal insured,
from members of the Federal Reserve System and the Federal Home Loan Bank
System.
First
Mortgage - A mortgage having priority over all other voluntary liens
against certain property.
Fixed Rate Mortgage - A mortgage having a rate of interest which remains
the same for the life of the mortgage.
Flood
Insurance - Insurance indemnifying banks against loss by flood damage.
Required by lenders (usually banks) in areas designated (federally) as
potential flood areas. The insurance is private but federally subsidized.
FNMA (Fannie
Mae) - Federal National Mortgage Association. A private corporation
dealing in the purchase of first mortgages, at discounts.
G
GNNM (Ginnie
Mae) - Government National Mortgage Association. A federal association,
working with F.H.A., which offers special assistance in obtaining mortgages,
and purchases mortgages in a secondary capacity.
Good Faith
- Something done with good intentions, without knowledge of fraudulent
circumstances, or reason to inquire further.
Grant
Deed - One of the many types of deeds used to transfer real property.
Grantee - one to whom a grant is made, generally the buyer. Grantor -
one who grants property or property rights.
H
Hazard
Insurance - Real estate insurance protecting against loss caused by
fire, some natural causes, vandalism, etc., depending upon the terms of
the policy.
Homeowners'
Association - (1) An association of people who own homes in a given
area, formed for the purpose of improving or maintaining the quality of
the area. (2) An association formed by the builder of condominiums or
planned developments, and required by statute in some states. The builder's
participation as well as the duties of the association are controlled
by statute.
Homeowners'
Insurance - Includes the coverage of Hazard Insurance plus added coverage
such as personal liability, theft away from the home (items stolen from
the insured's car), and other such coverage.
Housing
Starts - Number of houses on which construction has begun. The figures
are used to determine the availability of housing, need for real estate
loans, need for labor and materials, etc.
I
Impound
Account - Account held by a lender for payment of taxes, insurance,
or other periodic debts against real property. The borrower pays a portion
of, for example, the yearly taxes, with each monthly payment. The lender
pays the tax bill from the accumulated funds.
Index
- An index used to adjust the interest rate of an adjustable rate mortgage
loan. For example: the change in U.S. Treasury securities (T-bills) with
a I year maturity. The weekly average yield on said securities, adjusted
to a constant maturity of one year, which is the result of weekly sales,
may be obtained weekly. This change in interest rates is the "index"
for the change in the specific adjustable rate mortgage.
Instrument
- Any writing having legal form and significance, such as a deed, mortgage,
will, lease, etc.
Interest
Rate - The percentage of an amount of money which is paid for its
use for a specified time, usually expressed as an annual percentage.
Interest
Rate Cap - The maximum interest rate increase of an adjustable rate
loan. For example: a 6% loan with a 5% interest rate cap would have a
maximum interest for the life of the loan which would not exceed I 1%.
J
Joint
Tenancy - An undivided interest in property, taken by two or more
joint tenants. The interests must be equal, occurring under the same conveyance,
and beginning at the same time. Upon the death of a joint tenant, the
interest passes to the surviving joint tenants, rather than to the heirs
of the deceased.
L
Late Charge
- A charge to the borrower for failure to pay an installment payment on
time.
Lease
- An agreement by which an owner of real property gives the right of possession
to another for a specified period of time and for a specified consideration
(rent). Title does not pass.
Legal
Description - A method of geographically identifying a parcel of land,
which is acceptable in a court of law. A description of a parcel of land
sufficient to identify the property such as a lot and tract number.
Lien
- An encumbrance against property for money, either voluntary or involuntary.
All liens are encumbrances but all encumbrances are not liens.
Lis Pendens
- A legal notice recorded to show pending litigation relating to real
property, and giving notice that anyone acquiring an interest in said
property subsequent to the date of the notice may be bound by the outcome
of the litigation.
Loan Origination
Fee - A one time set up fee charged by a lender.
Loan Package
- The file of all items necessary for the lender to decide to give or
not give a loan. These items would include the information on the prospective
borrower (loan application, credit report, financial statement, employment
letters, etc.) and information on the property (appraisal, survey, etc.).
M
Maintenance
Reserve - Money reserved to cover anticipated maintenance costs.
Maker - One who executes (signs) as the maker (borrower) of a note.
Marketability - Saleability. The probability of selling property at a
specific time, price and terms.
Marketable
Title - Title which can be readily marketed (sold) to a reasonably
prudent purchaser aware of the facts and their legal meaning concerning
liens and encumbrances.
Market
Price - The price a property brings in a given market. Commonly used
interchangeably with market value, although not truly the same.
Material
Fact - A fact upon which an agreement is based, and without which,
said agreement would not be made.
Maturity
- (1) Termination period of a note. For example: A 30 year mortgage
has a maturity of 30 years. (2) In sales law, the date a note becomes
due.
Mechanics
Lien - A lien created by statute for the purpose of securing priority
of payment for the price or value of work performed and materials furnished
in construction or repair of improvements to land, and which attaches
to the land as well as the improvements.
Moisture
Barrier - Insulating materials used to prevent the build up of moisture
(condensation) in walls and other parts of a building.
Mortgagee
- The party lending the money and receiving the mortgage. Some states
treat the mortgagee as the "legal" owner, entitled to rents
from the property. Other states treat the mortgagee as a secured creditor,
the mortgagor being the owner. The latter is the more modem and accepted
view.
Mortgage
Credit Certificate (MCC) Program - A first time homebuyer program
subject to purchase price and income limits and limited to Alameda, Contra
Costa, San Mateo and Santa Clara counties. The MCC program is actually
a special tax credit and assists buyers in qualifying on almost any loan
program.
Mortgage
Insurance - Insurance written by an independent mortgage insurance
company protecting the mortgage lender against loss incurred by a mortgage
default, thus enabling the lender to lend a higher percentage of the sale
price. The Federal government writes this form of insurance through the
FHA and VA.
Mortgagor
- The party who borrows the money and gives the mortgage.
Multiple
Listing - An exclusive listing, submitted to all members of an association,
so that each may have an opportunity to sell the property.
N
Note
- A unilateral agreement containing an express and absolute promise of
the signer to pay to a named person, or order, or bearer, a definite sum
of money at a specified date or on demand. Usually provides for interest
and, concerning real property, is secured by a mortgage or trust deed.
Notice
of Action - A recorded notice that real property may be subject to
a lien, or even that the title is defective, due to pending litigation.
Notice of a pending suit, also called "Lis Pendens".
Notice
of Cessation - A notice stating that work has stopped on a construction
project. Done to accelerate the period of filing a mechanic's lien.
Notice
of Completion - A notice, recorded to show that a construction job
is finished. The length of time in which mechanic's liens may be filed
depends upon when and if a notice of completion is recorded.
Notice
of Default - A notice filed to show that the borrower under a mortgage
or deed of trust is in default (behind on the payments).
O
Offer
- A presentation or proposal for acceptance, in order to form a contract.
To be legally binding, an offer must be definite as to price and terms.
Offer
and Acceptance - Necessary elements of a contract to sell real estate.
Origination
Fee - A fee made by a lender for making a real estate loan. Usually
a percentage of the amount loaned, such as one percent.
Owner
Occupied - Property physically occupied by the owner.
Ownership
- Rights to the use, enjoyment, and alienation of property, to the exclusion
of others. Concerning real property, absolute rights are rare, being restricted
by zoning laws, restrictions, liens, etc.
P
Payment
Cap - A maximum amount for a payment under an Adjustable Mortgage
Loan, regardless of the increase in the interest rate. If the payment
is less than the interest alone, negative amortization is created.
Payoff
- The payment in full of an existing loan or other lien.
Personal
Property - Any property which is not designated by law as real property.
Piggyback
Loan - A loan made jointly by two or more lenders on the same property
under one mortgage or trust deed. One 90% loan, for example, may have
one lender loaning 80% and another (subordinate) lender loaning the top
IO% (high risk portion).
PITI (Principal,
Interest, Taxes and Insurance) - Used to indicate what is included
in a monthly payment on real property. Principal, interest, taxes (property)
and insurance (hazard) are the four ma or portions of a usual monthly
payment.
Power
of Attorney - An authority by which one person (principal) enables
another (attomey-in-fact) to act for him. (1) General power - authorizes
sale, mortgaging, etc., of all property of the principal. Invalid in some
jurisdictions. (2) Special power specifies property, buyers, price and
terms. How specific it must be varies in each state.
Preliminary
Title Report - A report showing the condition of title before a sale
or loan transaction. After completion of the transaction, a title insurance
policy is issued.
Prepaid
Items - Those expenses of property which are paid in advance and will
usually be prorated upon sale, such as taxes, insurance, rent, etc.
Prepayment
Penalty - A penalty under a note, mortgage, or deed of trust, imposed
when the loan is paid before it is due.
Principal
- (1) The person who gives authority to an agent or attorney. (2)
Amount of debt, not including interest. The face value of a note, mortgage,
etc.
Private
Mortgage Insurance - Insurance against a loss by a lender in the event
of default by a borrower (mortgagor). The insurance is similar to insurance
by a government agency such as FHA , except that it is issued by a private
insurance company. The premium is paid by the borrower and is included
in the mortgage payment.
Promisee
- One to whom a promise has been made, such as the lender under a promissory
note.
Promisor
- One who makes a promise. The borrower under a promissory note.
Promissory
Note - A promise in writing, and executed by the maker, to pay a specified
amount during a limited time, or on demand, or at sight, to a named person,
or on order, or to bearer.
Proration
- To divide (prorate) property taxes, insurance premiums, rental income,
etc., between buyer and seller proportionately to time of use, or the
date of closing.
Public
Records - Usually at a county level, the records of all documents
which are necessary to give notice. The records are available to the public.
All transactions for real estate should be recorded.
Purchase
Agreement - An agreement between a buyer and seller of real property,
setting forth the price and terms of the sale.
Q
Quitclaim
Deed - A deed operating as a release: intended to pass any title,
interest, or claim which the grantor may have in the property, but not
containing any warranty of a valid interest or title in the grantor.
R
Real Estate
- (1) Land and anything permanently affixed to the land, such as buildings,
fences, and those things attached to the buildings, such as light fixtures,
plumbing and heating fixtures, or other such items which would be personal
property if not attached. The term is generally synonymous with real property,
although in some states a fine distinction may be made. (2) May refer
to rights in real property as well as the property itself.
Reconveyance
- An instrument used to transfer title from a trustee to the equitable
owner of real estate, when title is held as collateral security for a
debt. Most commonly used upon payment in full of a trust deed. Also called
a deed of reconveyance or release.
Recording
- Filing documents affecting real property as a matter of public record,
giving notice to future purchasers, creditors, or their interested parties.
Recording is controlled by statute and usually requires the witnessing
and notarizing of an instrument to be recorded.
Recording
Fee - The amount paid to the recorder's office in order to make a
document a matter of public record.
RESPA
- Real Estate Settlement Procedures Act. A federal statute effective June
20, 1975, requiring disclosure of certain costs in the sale of residential
(one to four family) improved property which is to be financed by a federally
insured lender.
Retaining
Wall - A wall used to contain or hold back dirt, water, or other materials
of a similar nature.
Right
of Survivorship - The right of a survivor of a deceased person to
the property of said deceased. A distinguishing characteristic of a joint
tenancy relationship.
S
Sales
Contract - Another name for a sales agreement, purchase agreement,
etc.
Second
Mortgage - A mortgage which ranks after a first mortgage in priority.
Properties may have two, three, or more mortgages, deeds of trust, or
land contracts, as liens at the same time. Legal priority would determine
whether they are called a first, second, third, etc. lien.
Septic
System - A sewage system, whereby waste is drained through pipes and
a tile field (a system of clay tiles and gravel) into a septic tank. Found
in areas where city or county sewers have not yet been installed.
Septic
Tank - An underground tank into which a sanitary sewer drains from
a building. The sewage is held until bacterial action changes the solids
into liquids or gasses, which are then released into the ground.
Signed,
Sealed and Delivered - A phrase indicating that everything necessary
to convey has been done by the grantor. Modernly, signed, and delivered
are still necessary, but the only seals commonly used are by governments,
corporations, and notaries.
Simple
Interest - Interest computed on principal alone, as opposed to compound
interest.
Special
Assessment - Lien assessed against real property by a public authority
to pay costs of public improvements (sidewalks, sewers, street lights,
etc.) which directly benefits the assessed property.
Specific
Performance - An action to compel the performance of a contract, when
money damages for breach would not be satisfactory.
Statement
of Identity - Also called Statement of Information, a confidential
form filled out by buyer and seller to help a title company determine
if any liens are recorded against either. Very helpful when people with
common names are involved.
Statute
- A law which comes from a legislative body. A written law, rather than
law established by court cases.
Subordinate
- To make subject or junior to.
Succession
- The passing or real property by will or inheritance, rather than by
grant of a deed or any other form or purchase.
Survey
- The measurement of the boundaries of a parcel of land, its area and
sometimes its topography.
T
Take Out
Loan - The "permanent '(long term) financing of real estate after
completion of construction.
Tax Base
- The assessed valuation of real property, which is multiplied by the
tax rate to determine the amount of tax due.
Tax Lien
- (1) A lien for nonpayment of property taxes. Attaches only to the property
upon which the taxes are unpaid. (2) A federal income tax lien. May attach
to all property of the one owing taxes.
Tenancy
by the Entirety - A form of ownership by husband and wife whereby
each owns the entire property. In the event of the death of one, the survivor
owns the property without probate.
Tenancy
in Common - An undivided ownership in real estate by two or more persons.
The interests need not be equal, and, in the event of the death of one
of the owners, no right of survivorship in the other owners exists.
Tenant
- (1) A holder of property under a lease or other rental agreement. (2)
Originally, one who had the right to possession, irrespective of the title
interest.
Terms
- The considerations, other than price, in a sale, lease, mortgage, etc.
For example: the way the money will be paid, time to take possession,
conditions, etc.
"Time
Is Of The Essence" - Clause used in contracts to bind one party
to performance at or by a specified time in order to bind the other party
to performance.
Title
- The evidence one has of right to possession of land.
Topography - The contour of land surface, such as flat, rolling, mountainous,
etc.
Transfer - The act by which the title to property is conveyed from one
person to another.
Transfer Tax - State tax on the transfer of real property. Based on purchase
price or money changing hands. Also called documentary transfer tax.
Trust
- A fiduciary relationship under which one holds property (real or personal)
for the benefit of another. The party creating the trust is called the
settlor, the party holding the property is the trustee, and the party
for whose benefit the property is held is called the beneficiary.
Trustee
- (1) One who is appointed, or required by law, to execute a trust. (2)
One who holds title to real property under the terms of a deed of trust.
Trustor
- The borrower under a deed of trust. One who deeds his property to
a trustee as security for the repayment of a loan.
V
Veterans
Administration (VA) - An agency of the Federal government which, among
other things, insures and guarantees loans for veterans,
W
Warrant
- To legally assure that title conveyed is good and possession will be
undisturbed.
Wrap-Around
Mortgage - A second or junior mortgage with a face value of both the
amount it secures and the balance due under the first mortgage. The mortgage
under the wrap-around collects a payment based on its face value then
pays the first mortgagee. It is most effective when the first has a lower
interest rate than the second, since the mortgagee under the wraparound
gains the difference between the interest rates, or the mortgagor under
the wrap-around may obtain a lower rate than if refinancing.
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Information on the page are believed to
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