Glossary of Terms - A
Abstract of Title:
A summary or digest of all transfers, conveyances, legal proceedings and any other facts relied on as evidence of title for property, showing continuity of ownership, together with any other elements of record which may impair the title to the property.
A condition in a real estate financing instrument (such as a mortgage) giving the lender the power to declare all sums owed to the lender immediately due and payable upon the happening of an event, such as the sale of the property, or a delinquency in the repayment of the note.
The act of agreeing or consenting to the terms of an offer thereby establishing the “meeting of the minds” that is an essential element of a contract.
A common measure of land equaling 160 square rods, or 4,480 square yards, or 43,560 square feet.
An additional document or form that is added to an agreement or contract.
Additional Principal Payment:
A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.
Adjustable Rate Mortgage (ARM):
A mortgage loan which bears interest at a rate subject to change during the term of the loan at a pre-determined or varying rate established by the market.
Advanced Listing Fee:
Any fee charged for services related to promoting the sale or lease of real estate and paid in advance of the rendering of such services, including any fees for listing, advertising or offering for sale or lease any real estate. These fees are unlawfully charged in connection with that illegal practice of obtaining a fee in advance for the advertising of property, with no intent to obtain a buyer, by persons representing themselves as real estate licensees or representatives of licensed real estate companies.
A method of acquiring title to real property through possession of the property for a statutory period under certain conditions by a person other than the actual owner of record of the property.
A statement or declaration reduced to writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
The relationship between principal and the principal’s agent which arises out of a contract, either express or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.
One who acts for and with authority from another individual called the principal.
An exchange of promises, a mutual understanding or an arrangement; a contract.
Agreement of Sale:
A written agreement or contract between seller and purchaser in which they reach a “meeting of the minds” on the terms and conditions of the sale.
A clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property.
ALTA Owner’s Policy:
An owner’s extended coverage policy that provides buyers and owners the same protection that the ALTA policy provides to lenders.
ALTA Title Policy:
A type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy to include unrecorded mechanic’s liens, unrecorded physical easements, facts a physical survey would show, water and mineral rights and rights of parties in possession, such as tenants and buyers under unrecorded instruments.
The gradual repayment of a loan by installment payments over a fixed amount of time.
A timetable for repayment of a loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.
A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity.
Annual Percentage Rate (APR):
The relative cost of credit, financing or a loan expressed as an annual rate as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act (TILA). The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.
An amount paid yearly or at other regular intervals, often at a guaranteed minimum amount. Also, a type of insurance policy in which the policy holder makes payments for a fixed period or until a stated age, and then receives annuity payments from the insurance company.
A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security. Lenders use the information on the loan application to evaluate whether or not they can give the loan, and if so, the amount of money they can lend.
An opinion of the value of property prepared by an individual licensed as an appraiser resulting from an analysis of facts about the property.
A licensed professional who conducts an analysis of the property, including examples of sales of similar properties in order to develop an estimate of the value of the property. The analysis is called an “appraisal.”
An increase in the market value of a home due to changing market conditions and/or home improvements.
Appropriation of Water:
The taking, impounding or diversion of water flowing on the public domain from its natural course and the application of the water to some beneficial use personal and exclusive to the appropriator.
A process where disputes are settled by referring them to a fair and neutral third party (an arbitrator). The disputing parties agree in advance to agree with the decision of the arbitrator. There is a hearing where both parties have an opportunity to be heard, after which the arbitrator makes a decision.
A contract or offer clause stating that the seller will not repair or correct any problems with the property. This term is also used in listings and marketing materials.
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
The valuation of property for the purpose of levying a tax or the amount of the tax levied. Also, payments made to a common interest community such as a homeowners’ association.
A transfer to another of any property in possession or in action, or of any estate or right therein. A transfer by a person of that person’s rights under a contract.
A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the seller’s existing mortgage; the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due-on-sale clause, the loan may not be assumed without the lender’s consent.
An undertaking or adoption of a debt or obligation primarily resting upon another person.
A lender’s charge for changing over and processing new records for a new owner who is assuming an existing loan.
Assumption of Mortgage:
The taking of a title to property by a grantee wherein grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.
An automated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.