Do You Know Real Estate Terms?
Real Estate Terms to Know and Understand
AMENDMENTS: A change — either to alter, add to, or correct — part of an agreement without changing the principle idea or essence.
APPRAISAL: An estimate of value of property resulting from analysis of facts about the property; an opinion of value.
ASSUMPTION: Taking over another person’s financial obligation; taking title to a parcel of real property with the Buyer assuming liability for paying an existing note secured by a deed of trust against the real proper-ty.
BENEFICIARY: The recipient of benefits, often from a deed of trust; usually the lender.
CLOSE OF ESCROW: Generally, the date the documents are recorded and title passes from Seller to Buyer. On this date, the Buyer be-comes the legal owner, and title insurance becomes effective.
COMPARABLE SALES: Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”
DEED OF TRUST: An instrument used in many states in place of a mortgage.
DEED RESTRICTIONS: Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of real property.
EARNEST MONEY DEPOSIT: Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.
EASEMENT: A right, privilege or interest limited to a specific purpose that one party has in the land of another.
HAZARD INSURANCE: Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.
IMPOUNDS: A trust type account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.
LEGAL DESCRIPTION: A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.
LIEN: A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.
PITI: A payment that combines Principal, Interest, Taxes, and Insurance.
POWER OF ATTORNEY: A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is some-times called an “Attorney-in-Fact.”
PURCHASE AGREEMENT: The purchase contract between the Buyer and Seller. It is usually completed by the real estate agent and signed by the Buyer and Seller.
QUITCLAIM DEED: A deed operating as a release, intending to pass any title, interest, or claim which the grantor may have in the proper-ty, but not containing any warranty of a valid interest or title by the grantor.
RECORDING: Filing documents affecting real property with the County Recorder as a matter of public record.