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GLOSSARY OF REAL ESTATE TERMS
Real estate law covers a great number of topics, and includes a number of specialized terms. An experienced attorney can help explain these concepts to you.
Appraisal: An appraisal is a calculation of a property’s value. Appraisals are prepared by a disinterested third party and use the sale prices of similar properties in the same area within the recent past. Most mortgage lenders require an appraisal before making 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. 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 personal 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.
Deed: A document that transfers ownership of real estate. As discussed above, a warranty deedincludes a guarantee by the seller that his or her title to the land and improvements is good. A quit claim deed only transfers rights to the property that an owner has, and contains no guarantee that the seller has a clear title.
Foreclosure: The process by which a mortgage lender takes legal ownership of a property when a buyer fails to make mortgage payments. Foreclosure proceedings take place in the court system and are regulated to prevent abuse.
Joint Tenancy: A form of ownership in which spouses or other parties own equal shares in a property. This type of ownership usually includes the words “with full rights of survivorship, and not as tenant in common”. This means that upon the death of one of the joint tenants the property passes immediately to the surviving joint tenant.
Mortgage Loan: A loan where the collateral is the property being purchased with the loan money. 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.
Title Opinion: A title opinion is the legal document drafted by an attorney which shows the current owner of the real estate and any title objections.