For Sale By Owner Monthly
Glossary of Terms
Abutting owner - the owner of a property that adjoins a public right of way.
Acceleration clause - a loan provision that allows a lender to demand full payment of a loan when a certain act occurs, such as failure to make regular payment, or the transfer of property ownership without the lender's consent.
Acceptance - the legal counterpart to "offer;" the two comprise a legal contract.
Acknowledgment - a written statement affirming and thereby executing a document. These are typically notarized to assume full legal credence.
Action to quiet title - an action to rectify any confusion about the true ownership of a property.
Addendum - a provision added to a document or agreement outside the main body of the document.
Adjustable mortgage loans or Adjustable rate mortgages (ARM's) - mortgage loans that start out with an interest rate significantly below the prevailing market rates for mortgage loans. Their interest rates are designed to move up or down over time, in response to key economic indicators to which individual loans such as these are tied.
Agency listing or agreement - also know as a "non-exclusive listing," this is a real estate agent's listing of a property that enables agent retention of a commission if a property is sold by any real estate agent, but not if the sale is made by the seller.
Agreement - the term doesn't carry the legal weight of the term "contract," but is generally regarded as the precursor to a formal contract either verbal or written.
Amendment - an alternation of a contract that does not change its basic purpose or spirit.
Amortization - the arrangement by which debt payments are made over time, which takes into account the ratio of interest and principal that changes as the loan matures.
Amortize - the process of debt reduction by a series of payments that are applied to both interest and principal.
Annual percentage rate (APR) - the true amount of interest paid on a debt. The government requires that lenders disclose the APR to borrowers.
Appraisal - a determination of a property's value based on objective property and overall market analysis.
Appreciation - the increase of a property's market value.
Appurtenance - an element of a property, either structural such as an outbuilding or legal such as an easement, that is transferable to any new owner of the property.
"As Is" condition - a status of property that does not infer a representation of quality, good or bad, by the seller at the time of sale.
Assessed value - value determined for tax purposes by government evaluators. This value may be significantly below true market value in many jurisdictions.
Assessment - this term has two meanings; the determination of a property's value to be used for tax purposes and an obligation secured by the property typically for community-related improvements.
Backup offer - a second buyer who is in a position to replace a first buyer if a transaction fails to materialize.
Balloon payment - a payment or series of payments that are lump sums applied to the reduction of debt. Breach of covenant - the violation of one or more stipulations of an agreement.
Broker - this term is often improperly applied to all real estate sales professionals, when in fact the qualification status of brokers is technically superior to that of a real estate agents.
Cancellation clause- a provision that specifies the conditions under which a buyer and seller would mutually agree to terminate an agreement.
Cashier's check- a check drawn on the account of a bank , rather than the account of one individual (such as your buyer). This type of draft is therefore a more reliable form of payment than a personal check.
Certificate of redemption- proof that a property has been re-purchased by the original owner after having been lost through default. Each state provides for a certain period of time following default during which an owner may buy back , or redeem , a property that has been lost .
Certificate of sale- an instrument given to the buyer of a property at a judicial sale following a default , which may not make the sale official until the period of redemption has elapsed .
Closing- the final execution of a sale which is affirmed by the recording of documents pertinent to the sale.
Cloud on title- an encumbrance against a property , either financial or physical , such as related to property boundaries.
Comparables- properties similar to one being sold which are used to help determine a seller's market price.
Condominium- a structure sub-divided into individual units which are individually owned, with additional land and building property which is commonly owned by the individual owners.
Contingency- an element of an agreement which must be satisfied before the total agreement can be consummated.
Counter offer- a response to an earlier offer that includes a modification of an agreement's terms. Covenant- a legal term that refers to agreements or provisions of agreements.
Deed- a legal document used to convey title to a property , and a term relating also to documents of financing.
Deed of trust- a document whose purpose is similar to that of a mortgage, used in some states to secure a property for a lender until a loan is paid in full.
Equity- a property owner's net interest in a property; a property's value minus its encumbrances.
Escrow- a third party neutral to the interests of a buyer and seller who serves as an intermediary, who holds the property's deed, and executes the terms of a transaction based on instructions that are mutually agreed upon by buyer and seller.
Escrow instructions- directions issued to the neutral escrow agent that are agreed to by both buyer and seller.
Escrow agent or officer- a specialist in a given jurisdiction's escrow practices who serves as an objective intermediary between buyer and seller.
Fee simple- a term that basically is a synonym for ownership of property, that can be sold in any way and passed on to inheritors.
FHA (Federal Housing Administration)- a federal entity that acts as an insurer for loans made by private lenders, thus allowing loans to be made with terms more desirable to borrowers than other financing options.
General lien- an obligation secured by an entire property, as opposed to just a portion of the interest in a property-
Grantee- a person being granted something, such as a buyer of a property.
Grantor- a person granting something, such as the seller of a property.
Grantor- grantee index- the county documentation of all property ownership histories which is cross indexed to allow property ownership to be readily determined using such factors as individual names, property addresses, tax identification numbers, etc.
Holding escrow- an escrow that endures for an extended period of time in order for the escrow agent to assure the performance of one or all parties in a transaction, as opposed to a typical escrow period which is in effect only long enough to execute the closing of a sale.
Home owners association- a group of owners of homes in a given neighborhood or condominium development for the purpose of establishing and maintaining an agreed upon set of living standards applying to all affected property owners.
Joint tenancy- an equal right of ownership in a property that applies to two or more owners, and which calls for the rights of any deceased joint tenants to pass to the other tenants rather than heirs.
Lease- an agreement to rent space by a lessor ( owner ) to a lessee ( tenant ) in exchange for rent payment.
Legal title- technical ownership of a property, such as that by a lender holding the deed to an encumbered property, even though the property is owned and occupied by a private party.
Lien - an obligation against a property owner secured by the owner's property.
Market value approach- the determination of a property's value using a comparison of other similar properties in the area.
Mortgage broker- an intermediary who will research and arrange financing provided by a lender for a borrower seeking the most desirable loan terms.
Mortgage Insurance- assurance offered by an insuring entity that a lender's interests in a loan will be protected in the event a borrower defaults. Two of the largest providers of mortgage insurance are the Federal Housing Administration and Veterans Administration.
Plat map- a diagram specifying the location and dimensions of individual building lots and other real estate properties.
Plat book- a collection of plat maps for properties in an area.
Power of attorney- a legal device which allows one individual to represent another for the execution of legal acts. The power may be general, or all encompassing, or restricted to one particular act.
Preliminary title report- summary of all interests involved in a property's ownership, that is issued prior to the completion of a sale or loan transaction.
Private mortgage insurance- a policy that protects the lender from default by a borrower, the premium for which is paid by the borrower.
Promissory note- often used to serve as earnest money for a home sale, the note is a representation to pay the amount of the note under the terms the note specifies.
Quitclaim deed- an instrument with which an interest in a property may be documented as discontinued.
Real estate or real property- anything that is attached to land, and attached to buildings on the land, as opposed to personal property, which is physically unattached and may be moved. (mobile homes, for example, are considered personal, not real property, because they are transportable.)
Reconveyance- an indication of the termination of a borrower's obligation to repay a debt secured for a lender, usually in the form of a trust deed. When the debt is paid, the title to the property is reconveyed to the owner.
Recordation- the legal acknowledgment of a transaction through the filing, or recording, of the transaction's documentation.
Secondary mortgage market- a market in which consummated loans are sold to investors, usually at a discount, to generate additional funds for lenders to issue new loans.
Second mortgage- a loan that is subordinate to a property's first mortgage. A property may have several mortgages against it, each ranked in order of priority.
Security land contract - also called an installment land contract, this is a hybrid of a land contract and a deed of trust which excludes a lender's right to call a loan due on sale, but preserves a trust deed's aspects regarding foreclosure.
"Subject to" clause - a provision in a deed which makes the responsibility for any loan deficiency that of the original maker of the mortgage.
Tenancy in common - a mutual ownership of a property by two or more persons whose interests in the property, in the event of any tenant in common's death, passes to legal heirs rather than the other tenants in common.
Title insurance - insurance issued to protect against any losses resulting from title encumbrances.
Title search - the process by which a property's title history is reviewed to reveal all parties who have an interest in the property and the nature and degree of their interest.
Trust account - an account supervised by parties neutral to a transaction in which funds are held prior to closing.
Warranty deed - a deed that includes a warranty of a property's title that is assured by the issuer, or grantor, of the deed. This is a duplication of the protection provided by title insurance.
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