Dictionary of Real Estate Terms….
This brochure provides you with most of the terms you will come across in a real estate transaction. Individual matters should be discussed with an attorney whenever there is a legal question.
ABSTRACT OF JUDGEMENT: A written summary of a judgment which states how much money the losing defendant owes to the person who won the lawsuit, in addition to interest, court costs, and any specific orders that the losing defendant must obey. The purpose is to create a public record so the debt can be collected.
ACCELERATION CLAUSE: This clause in a note and trust deed permits the payee or beneficiary to declare the entire unpaid balance immediately due and payable when a given condition occurs. Such a condition can be the sale of the land. This clause is sometimes called an “alienation clause”.
ACCOMMODATOR: (Qualified intermediary): A party to an IRC 1031 exchange transaction who, pursuant to an Exchange Agreement, holds money from the sale of the relinquished property, acquires replacement property, and then transfers the replacement property to the exchanger for the purpose of the taxpayer deferring capital gain tax.
AD VALOREM: Literally, “according to value.” This term is usually used in reference to real property taxes which are assessed according to value, i.e., ad valorem.
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 listings, trusts, power of attorney’s, etc.
AMORTIZATION: The process of paying off a debt together with interest, usually with equal payments at regular intervals over a period of time.
APPRAISAL: An opinion as to the fair market value of land and the improvements on it.
ASSESSED VALUE: The value placed on land and improvements as a basis for taxation. In California, this is usually accomplished by the County Assessor’s office, and the assessed value for real estate taxes are usually one quarter of market value.
ASSESSMENTS: Special and local levies upon property in the immediate vicinity of an improvement. Assessments can be imposed by such entities as flood control districts, street lighting districts and air pollution control districts with serve an area.
ASSIGNEE: One to whom a transfer of interest is made. For example, the assignee of a Deed of Trust or contract.
ASSIGNMENT: The transfer, in writing, of a person’s interest to another person or entity in an asset, such as an assignment of stock, a Deed of Trust and note or a lease.
ASSIGNOR: One who makes an assignment. For example, the assignor of a Trust or contract.
ASSUMPTION: An agreement by one party to pay an obligation previously owed by another. For example, the assumption of an existing Trust Deed by a new owner may occur when the property is sold.
ATTORNEY IN FACT: A person who is allowed to transact business and execute documents on behalf of another person because on holds power of attorney.
BENEFICIARY: In a Trust Deed, the lender is designated as the beneficiary. She/he obtains the benefit of the security.
BENEFICIARY’S STATEMENT: A report from the lender, usually in writing, settling forth the terms and conditions of a loan already of record, such as amounts still owed, interest rate, monthly payments, etc.
BILL OF SALE: A document that attests to the transfer of ownership of personal property.
BORROWER: One who obtains a loan and owes money to a lender.
BUYER: One who purchases or acquires property.
CAL-FIRPTA: Under the Foreign Investment of Real Property Act, every buyer must (can be done by escrow holder) unless an exemption applies, deduct and withhold 3.33% of the gross sales price from seller’s proceeds and send it to the Franchise Tax Board, if the seller is a “foreign person” under the stature.
CONDEMNATION: The exercise of the power of eminent domain by which property is taken for a public use upon payment or just compensation. Condemnation can also refer to the condemning of unsafe structures.
CONDOMINIUM: A multifamily or other structure in which units are individually owned and in which owners of individual units also own an undivided interest in common areas.
CONTINGENT: Dependent upon conditions or events specified but not yet accomplished. Property may be sold contingent upon the seller or buyer meeting a predetermined condition.
CONVEYANCE: A written document that transfers title to an asset from one person to another. A deed and an assignment are both conveyances, as is a bill sale.
COUNTY ASSESSOR: One who sets value of property for taxation purposes.
DEED: A written and notarized document which conveys ownership of land from one person to another.
DEED OF TRUST: A document executed by the owner of land by which the land is given as security for the payment of a note or other performance of an obligation. In California and some other states the Deed of Trust is usually used in a place of mortgage.
DEFAULT: Failure to perform a duty or to pay an obligation.
DEFICIENCY JUDGMENT: A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
DEMAND/BENEFICIARY’S DEMAND: A statement from a lender showing the amount due on a loan.
DISCLOSSDURE: In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease. A builder must give to a potential buyer the factors of his new development (school facilities nearby, airport, etc.)
EARNEST MONEY: An amount of money given as part of the purchase price to bind the agreement between buyer and seller.
EASEMENT: A right of way giving persons other than the owner access to or over a property for a specific purpose such as mains, water pipes, drains, cable, etc.
EMINET DOMAIN: A right or power of a governmental body to take property for a public purpose upon payment of just compensation.
ENCUMBRANCE: A lien affecting the land and improvements, such as a mortgage or Trust Deed.
EQUITY: The difference between the market value of a property and the claims (debts) held against it.
ESCROW: The holding of funds, documents, securities, or other property by an impartial third party escrow for the other two participants in a business transaction. When the transaction is completed, the escrow agent releases the entrusted property and release funds.
EXCEPTION: An interest in real property which is excluded from the conveyance and remains in the grantor or which had been excluded in a prior conveyance.
EXCHANGE: A transaction under United States law which specifies that if an asset (usually real estate) is sold and the proceeds are then reinvested in a like kind asset, then no gain or loss is recognized, allowing the deferment of capital gains taxes. This law is defined by Section 1031 of the Internal Revenue Code.
FIRE INSURANCE: Insurance against loss or damage by fire, to a specific property.
FORECLOSURE: A legal process instituted by a lend to have the proceeds from the sale of a property applied to the payment of a default debt.
GRANTEE: The buyer of the deed of real property.
GRANTOR: The seller of the deed of real property.
IMPOUND ACCOUNT: An account held in trust by the lender in which the borrower is required to place monthly deposits for taxes and insurance which will be paid by the lender.
LEASE OPTION (LEASE WITH OPTION TO PURCHASE): A lease containing an option giving the lessee the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the leases or only for a portion of the lease period.
LENDER: One who lends money to borrowers.
LESSEE: Tenant under a lease.
LESSOR: The landlord under a lease.
LEGAL DISCRIPTION: Description of real property, as used in legal documents in contrast to a street address by which the property is commonly known. Legal descriptions usually refer to recorder maps, surveys, or other public documents.
LIEN: A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold.
LIS PENDENS: A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or federal court.
MARKET VALUE: The price that real property would reasonable is expected to bring were it to be offered for sale with a reasonable sales effort over a reasonable period of time.
METES AND BOUNDS: A term used in describing the boundary lines of land setting forth all the boundary lines together with their terminal points and angles.
MORTGAGE: A written document executed by the owner of land by which the land is given as security for the payment of a debt or performance of an obligation (rarely used in California).
NOTE: Written evidence of a debt by a borrower that includes a promise of payment in accordance with specified terms. A valuable document which must not be lost even when paid in full. In real property transactions, a note is usually secured by a Deed of Trust.
NOTICE TO COMPLETION: A notice which should be recorded to indicate completion of a work improvement to real property. A valid notice of completion limits the time for filing valid mechanic’s liens.
NOTICE OF DEFAULT: A step in the foreclosure process in which the lender formally informs the court that the borrower is late in payments.
OPEN END DEED OF TRUST: A Deed of Trust which secures in which the notes for funds that a lender may advance to a trustor, subsequent to the execution of the original loan.
OWNER CARRY BACK: A term used to indicate that the seller is willing to take back a purchase money Deed of Trust.
PAYEE: One who receives payments of a Note.
PAYER: One who makes payments of a Note.
PERSONAL PROPERTY: All the property which is not land or improvements permanently affixed to land. Examples: stocks, bonds, furniture, automobiles, clothing, promissory notes, etc. Items of tangible personal property are often referred to as chattels.
PMI (PRIVATE MORTGAGE INSURANCE): Insurance against a loss by a lender in the event of default by a borer (mortgagor). The insurance is similar to insurance by a governmental 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.
POINTS: A charge made by a lender. One point equals one percent of the loan amount.
POWER OF ATTORNEY: A written authorization to an individual to perform specified acts on behalf of his principal. This may be granted as either a general or a limited power.
PRELIMINARY TITLE REPORT: A report from a title company of the present condition of title made prior to the issurance of a title policy.
PREPAYMENT PENALTY: An agreement between borrower and lender to pay a penalty for the payment in full of a note before it actually becomes due.
PRORATION: The allocation of property taxes, interest, insurance premiums, rental income, etc. between buyer and seller proportionate to time of use.
QUITCLAIM DEED: A deed which conveys whatever right, title or interest the grantor may have in property at the time of conveyance. There is no guarantee implied in a Quitclaim Deed.
REAL PROPERTY: Land or improvements permanently affixed to land.
RECONVEYANCE: A document, executed when obligations in a deed of trust have been met, that removes the lien on title to property created by a deed of trust.
RECORDATION: Filing of documents for public record in the office of the County Recorder, a very necessary process in dealing with real property.
REQUEST FOR NOTICE OF DEFAULT: A recorded request for notification, of a recorded notice of default on a Deed of Trust.
RESERVATION: Right reserved by the grantor in conveying property, or a right which had previously been reserved.
RESTRICTIONS: This is often referred to a convenants, conditions and restrictions (CC&R) in regard to a piece of property, setting limitations on its use.
RIGHT OF WAY: The right of another to cross over, under or through a parcel of land.
SELLER: One who sells property to another.
SHORT PAY (SHORT SALE): A short sale is the sale of real property where the fair market sales price is less than the loan balance owed.
SUBJECT TO: Usually refers to the condition of title that exists at the time of acquisitions by the buyer, such as “subject to” a Deed of Trust of record.
SUBORDINATION AGREEMENT: An agreement by which a prior lien is made inferior to an otherwise junior lien.
TAX COLLECTOR: One who collects the taxes on the property.
TITLE: Evidence of person’s to or the extent of his interest in property.
TITLE INSURANCE: Insurance against loss or damage resulting from defects in title to a particular parcel of real property.
TRUST DEED: A Deed of Trust (See Deed of Trust)
TRUSTEE (IN DEED OF TRUST): The entity to which property is conveyed in trust, not to be confused with the beneficiary.
TRUSTOR (IN DEED OF TRUST): The borrower under a Deed of Trust.
VENDEE: One who is purchasing property under a land sale contract.
VENDOR: One who is selling property under a land sale contract.
VESTING: The manner in which the owner of real property holds title. For example, John Jones, a single man.
ZONNING: Local government regulations relating to the use of property.
This brochure provides you with most of the terms you will come across in a real estate transaction. Individual matters should be discussed with an attorney whenever there is a legal question.
ABSTRACT OF JUDGEMENT: A written summary of a judgment which states how much money the losing defendant owes to the person who won the lawsuit, in addition to interest, court costs, and any specific orders that the losing defendant must obey. The purpose is to create a public record so the debt can be collected.
ACCELERATION CLAUSE: This clause in a note and trust deed permits the payee or beneficiary to declare the entire unpaid balance immediately due and payable when a given condition occurs. Such a condition can be the sale of the land. This clause is sometimes called an “alienation clause”.
ACCOMMODATOR: (Qualified intermediary): A party to an IRC 1031 exchange transaction who, pursuant to an Exchange Agreement, holds money from the sale of the relinquished property, acquires replacement property, and then transfers the replacement property to the exchanger for the purpose of the taxpayer deferring capital gain tax.
AD VALOREM: Literally, “according to value.” This term is usually used in reference to real property taxes which are assessed according to value, i.e., ad valorem.
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 listings, trusts, power of attorney’s, etc.
AMORTIZATION: The process of paying off a debt together with interest, usually with equal payments at regular intervals over a period of time.
APPRAISAL: An opinion as to the fair market value of land and the improvements on it.
ASSESSED VALUE: The value placed on land and improvements as a basis for taxation. In California, this is usually accomplished by the County Assessor’s office, and the assessed value for real estate taxes are usually one quarter of market value.
ASSESSMENTS: Special and local levies upon property in the immediate vicinity of an improvement. Assessments can be imposed by such entities as flood control districts, street lighting districts and air pollution control districts with serve an area.
ASSIGNEE: One to whom a transfer of interest is made. For example, the assignee of a Deed of Trust or contract.
ASSIGNMENT: The transfer, in writing, of a person’s interest to another person or entity in an asset, such as an assignment of stock, a Deed of Trust and note or a lease.
ASSIGNOR: One who makes an assignment. For example, the assignor of a Trust or contract.
ASSUMPTION: An agreement by one party to pay an obligation previously owed by another. For example, the assumption of an existing Trust Deed by a new owner may occur when the property is sold.
ATTORNEY IN FACT: A person who is allowed to transact business and execute documents on behalf of another person because on holds power of attorney.
BENEFICIARY: In a Trust Deed, the lender is designated as the beneficiary. She/he obtains the benefit of the security.
BENEFICIARY’S STATEMENT: A report from the lender, usually in writing, settling forth the terms and conditions of a loan already of record, such as amounts still owed, interest rate, monthly payments, etc.
BILL OF SALE: A document that attests to the transfer of ownership of personal property.
BORROWER: One who obtains a loan and owes money to a lender.
BUYER: One who purchases or acquires property.
CAL-FIRPTA: Under the Foreign Investment of Real Property Act, every buyer must (can be done by escrow holder) unless an exemption applies, deduct and withhold 3.33% of the gross sales price from seller’s proceeds and send it to the Franchise Tax Board, if the seller is a “foreign person” under the stature.
CONDEMNATION: The exercise of the power of eminent domain by which property is taken for a public use upon payment or just compensation. Condemnation can also refer to the condemning of unsafe structures.
CONDOMINIUM: A multifamily or other structure in which units are individually owned and in which owners of individual units also own an undivided interest in common areas.
CONTINGENT: Dependent upon conditions or events specified but not yet accomplished. Property may be sold contingent upon the seller or buyer meeting a predetermined condition.
CONVEYANCE: A written document that transfers title to an asset from one person to another. A deed and an assignment are both conveyances, as is a bill sale.
COUNTY ASSESSOR: One who sets value of property for taxation purposes.
DEED: A written and notarized document which conveys ownership of land from one person to another.
DEED OF TRUST: A document executed by the owner of land by which the land is given as security for the payment of a note or other performance of an obligation. In California and some other states the Deed of Trust is usually used in a place of mortgage.
DEFAULT: Failure to perform a duty or to pay an obligation.
DEFICIENCY JUDGMENT: A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
DEMAND/BENEFICIARY’S DEMAND: A statement from a lender showing the amount due on a loan.
DISCLOSSDURE: In real estate, revealing all the known facts which may affect the decision of a buyer or tenant. A broker must disclose known defects in the property for sale or lease. A builder must give to a potential buyer the factors of his new development (school facilities nearby, airport, etc.)
EARNEST MONEY: An amount of money given as part of the purchase price to bind the agreement between buyer and seller.
EASEMENT: A right of way giving persons other than the owner access to or over a property for a specific purpose such as mains, water pipes, drains, cable, etc.
EMINET DOMAIN: A right or power of a governmental body to take property for a public purpose upon payment of just compensation.
ENCUMBRANCE: A lien affecting the land and improvements, such as a mortgage or Trust Deed.
EQUITY: The difference between the market value of a property and the claims (debts) held against it.
ESCROW: The holding of funds, documents, securities, or other property by an impartial third party escrow for the other two participants in a business transaction. When the transaction is completed, the escrow agent releases the entrusted property and release funds.
EXCEPTION: An interest in real property which is excluded from the conveyance and remains in the grantor or which had been excluded in a prior conveyance.
EXCHANGE: A transaction under United States law which specifies that if an asset (usually real estate) is sold and the proceeds are then reinvested in a like kind asset, then no gain or loss is recognized, allowing the deferment of capital gains taxes. This law is defined by Section 1031 of the Internal Revenue Code.
FIRE INSURANCE: Insurance against loss or damage by fire, to a specific property.
FORECLOSURE: A legal process instituted by a lend to have the proceeds from the sale of a property applied to the payment of a default debt.
GRANTEE: The buyer of the deed of real property.
GRANTOR: The seller of the deed of real property.
IMPOUND ACCOUNT: An account held in trust by the lender in which the borrower is required to place monthly deposits for taxes and insurance which will be paid by the lender.
LEASE OPTION (LEASE WITH OPTION TO PURCHASE): A lease containing an option giving the lessee the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the leases or only for a portion of the lease period.
LENDER: One who lends money to borrowers.
LESSEE: Tenant under a lease.
LESSOR: The landlord under a lease.
LEGAL DISCRIPTION: Description of real property, as used in legal documents in contrast to a street address by which the property is commonly known. Legal descriptions usually refer to recorder maps, surveys, or other public documents.
LIEN: A legal claim against an asset which is used to secure a loan and which must be paid when the property is sold.
LIS PENDENS: A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or federal court.
MARKET VALUE: The price that real property would reasonable is expected to bring were it to be offered for sale with a reasonable sales effort over a reasonable period of time.
METES AND BOUNDS: A term used in describing the boundary lines of land setting forth all the boundary lines together with their terminal points and angles.
MORTGAGE: A written document executed by the owner of land by which the land is given as security for the payment of a debt or performance of an obligation (rarely used in California).
NOTE: Written evidence of a debt by a borrower that includes a promise of payment in accordance with specified terms. A valuable document which must not be lost even when paid in full. In real property transactions, a note is usually secured by a Deed of Trust.
NOTICE TO COMPLETION: A notice which should be recorded to indicate completion of a work improvement to real property. A valid notice of completion limits the time for filing valid mechanic’s liens.
NOTICE OF DEFAULT: A step in the foreclosure process in which the lender formally informs the court that the borrower is late in payments.
OPEN END DEED OF TRUST: A Deed of Trust which secures in which the notes for funds that a lender may advance to a trustor, subsequent to the execution of the original loan.
OWNER CARRY BACK: A term used to indicate that the seller is willing to take back a purchase money Deed of Trust.
PAYEE: One who receives payments of a Note.
PAYER: One who makes payments of a Note.
PERSONAL PROPERTY: All the property which is not land or improvements permanently affixed to land. Examples: stocks, bonds, furniture, automobiles, clothing, promissory notes, etc. Items of tangible personal property are often referred to as chattels.
PMI (PRIVATE MORTGAGE INSURANCE): Insurance against a loss by a lender in the event of default by a borer (mortgagor). The insurance is similar to insurance by a governmental 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.
POINTS: A charge made by a lender. One point equals one percent of the loan amount.
POWER OF ATTORNEY: A written authorization to an individual to perform specified acts on behalf of his principal. This may be granted as either a general or a limited power.
PRELIMINARY TITLE REPORT: A report from a title company of the present condition of title made prior to the issurance of a title policy.
PREPAYMENT PENALTY: An agreement between borrower and lender to pay a penalty for the payment in full of a note before it actually becomes due.
PRORATION: The allocation of property taxes, interest, insurance premiums, rental income, etc. between buyer and seller proportionate to time of use.
QUITCLAIM DEED: A deed which conveys whatever right, title or interest the grantor may have in property at the time of conveyance. There is no guarantee implied in a Quitclaim Deed.
REAL PROPERTY: Land or improvements permanently affixed to land.
RECONVEYANCE: A document, executed when obligations in a deed of trust have been met, that removes the lien on title to property created by a deed of trust.
RECORDATION: Filing of documents for public record in the office of the County Recorder, a very necessary process in dealing with real property.
REQUEST FOR NOTICE OF DEFAULT: A recorded request for notification, of a recorded notice of default on a Deed of Trust.
RESERVATION: Right reserved by the grantor in conveying property, or a right which had previously been reserved.
RESTRICTIONS: This is often referred to a convenants, conditions and restrictions (CC&R) in regard to a piece of property, setting limitations on its use.
RIGHT OF WAY: The right of another to cross over, under or through a parcel of land.
SELLER: One who sells property to another.
SHORT PAY (SHORT SALE): A short sale is the sale of real property where the fair market sales price is less than the loan balance owed.
SUBJECT TO: Usually refers to the condition of title that exists at the time of acquisitions by the buyer, such as “subject to” a Deed of Trust of record.
SUBORDINATION AGREEMENT: An agreement by which a prior lien is made inferior to an otherwise junior lien.
TAX COLLECTOR: One who collects the taxes on the property.
TITLE: Evidence of person’s to or the extent of his interest in property.
TITLE INSURANCE: Insurance against loss or damage resulting from defects in title to a particular parcel of real property.
TRUST DEED: A Deed of Trust (See Deed of Trust)
TRUSTEE (IN DEED OF TRUST): The entity to which property is conveyed in trust, not to be confused with the beneficiary.
TRUSTOR (IN DEED OF TRUST): The borrower under a Deed of Trust.
VENDEE: One who is purchasing property under a land sale contract.
VENDOR: One who is selling property under a land sale contract.
VESTING: The manner in which the owner of real property holds title. For example, John Jones, a single man.
ZONNING: Local government regulations relating to the use of property.
