Glossary of Real Estate Topics
Real estate law covers a great number of topics, and includes a number of specialized terms and jargon. An experienced attorney can help explain these concepts to you.
Appraisal: An appraisal is an estimate of a property’s value. Appraisals are conducted by an uninvolved third party, and compare the sale price of a property to the values of similar properties in the same area within the past year, preferably within the last six months. Most mortgage lenders require an appraisal before offering a loan.
Assessment: A charge levied by the local government for infrastructure that benefits adjacent properties. This includes road work, sidewalks, or sewer/gas lines. Adjacent property owners pay proportional shares of the improvement’s cost.
Broker: A real estate broker works for one of the parties in a real estate purchase. They are licensed persons or organizations.
Closing: The final part of a real estate transaction, where both parties review the terms of sale and the actual sales documents. The seller transfers ownership at the closing, while the buyer generally pays closing costs and, when applicable, finalizes the mortgage.
Condominium: From the Latin for “co-ownership”, a condominium is a building split into individual apartments owned by the residents. The condominium association’s common areas are shared by the owners. The association pays taxes and deals with property maintenance and improvement. Condominium owners generally pay association fees as well as mortgage payments. Property insurance on condominiums or townhouses may or may not be included in homeowner association fees. If they are included in the homeowner’s fees, they do not cover personally owned property, such as furniture or electronics. A review of policies covered by homeowner associations before purchase is wise, as well as a review on the upkeep of the community property.
Contract for Deed: A contract for deed leaves legal ownership of a property with the seller until the buyer makes full payment of the purchase amount. The buyer is given use of the property.
Deed: A document that transfers ownership of real estate. As discussed above, a warranty deed includes a guarantee by the seller that his or her title to the land and improvements is uncontested. A quitclaim deed only transfers rights to the property that an owner has, and contains no guarantee that the seller has a clear title, or relieves them from debt in which the property is claimed as collateral.
Foreclosure: This is a process by which a mortgage lender takes legal ownership of a property when a buyer fails to make mortgage payments. In most states, foreclosure proceedings involve court appearances and are regulated to prevent abuse.
Joint Tenancy: A form of ownership in which spouses or other parties own equal shares in a property.
Mortgage Loan: Any loan where the collateral is the property being purchased with the loan money. Like foreclosure, mortgage regulations differ from state to state. Mortgage loans may have fixed or adjustable interest rates, and may have balloon payments that have a total balance due after a certain number of years. FHA and VA loans may be transferable, others may not.
RESPA: The Real Estate Settlement Procedures Act. RESPA protects buyers by requiring mortgage lenders to disclose all policies and relationships to a mortgage borrower. It also requires lenders to provide fair estimates of all service charges and transaction costs.
Survey: A mapping of boundaries, easements, and improvements on a property. Lenders often require surveys before a transaction, especially for commercial or new residential developments, in order to resolve any irregularities. Most states have time limits on the age of surveys.
Title Insurance and Title Opinion: Title insurance protects buyers against damages resulting from any undiscovered defects in a property’s title. A title opinion is a legal document drafted by an attorney which lays out the condition of a title. Both options can help to reassure a buyer before purchase of a property.
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