Real Estate Dictionary Continued...
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Real Estate Dictionary ... A - F
Real Estate Terms Dictionary - Canada

Real Estate Dictionary Terms:

General Warranty Deed - A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.

Graduated Payment Mortgage - Residential mortgage which has monthly mortgage payments that start at a low level and increase at a predetermined rate.

Grantee - That party in the deed who is the buyer or recipient.

Grantor - That party in the deed who is the seller or giver.

Holdback - That portion of a loan commitment not funded until some additional requirement such as rental or completion is attained. In construction it is a percentage of the contractor's draw held back to provide additional protection for the interim lender, often in an amount equal to the contractor's profit.

HUD - U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by lenders and sets minimum standards for such homes.

Interest - A charge paid for borrowing money. (See mortgage note)

Interest rate - The percentage of an amount of money which is paid for its use for a specified time. Usually expressed as an annual percentage.

Investor - An person or institution investing in mortgages.

Involuntary lien - A lien imposed against property without consent of an owner. Examples include taxes, special assessment, federal income tax liens, mechanics liens, and materials liens.

Job Site
Construction location.

Jogging
Another term for inching, which is the movement of a crane hook, bridge or trolley when they are moved in short, jerky increments, such as stop and start.

Joint
Used to indicate a common property ownership interest in real estate. Indicates a shared liability in terms of a contractual relationship.

Joint and Several Liability
Situation wherein each borrower, on the same note, is held fully liable for the entire amount of the debt, not just a portion. The creditor may demand full repayment from any individual.

Joint Clearance
Gap between surfaces to be joined by welding, where the gap will help ensure that the weld filler penetrates to the needed depth in the base metal.

Joint Liability

Two or more people sharing the responsibility of fulfilling the terms of a debt.

Joint Note
More than one maker on a note where if one or more of the makers default on the note, all of the makers are sued jointly, rather than just one or all, to make restitution.

Joint Ownership
Ownership of real estate with two or more individuals having equal ownership with, upon the death of one owner, the property is transferred to the survivor.

Joint Tenancy
Equal ownership, by two or more people, each of whom has an undivided interest, with the right of survivorship.

Joint Venture
An agreement between two or more parties to invest in a specific single business or property. Although not a continuing relationship, it is treated as a partnership for income tax purposes.

Judgment
Decision, by a court, that a party must repay a debt and a lien may be placed against property owned by that party.

Judgment Creditor
The party to whom the court awarded a financial judgment against a debtor.

Judgment Debtor
The party against whom the court has placed a financial judgment.

Judicial Foreclosure

Property of a defaulted borrower is sold under court order and the amount received is ratified by the Court.

Kick-out Clause
Sales contract clause, which allows a seller to accept a contingent offer and then back out to accept a second and better offer without penalty.

Kicker
Payment required by a mortgage in addition to normal principal and interest. Also called an equity kicker or participation loan, it allows the mortgagee to participate in income from the mortgagor.

Kiosk
An independent stand from which merchandise is sold, often placed in the common area of a shopping center.

Kit Home
Structure containing prefabricated parts, which is assembled by a contractor.

Kitchenette
Tiny kitchen area that is often built into the end of another room such as a room in an efficiency apartment.

Land contract - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer. This financing vehicle is often used when property is sold on a small down payment.

Lease - A written document containing the conditions under which the possession and use of real or personal property are given by the owner to another for a stated period and for a stated consideration.

Legal description - A property description recognized by law which is sufficient to locate and identify the property without oral testimony.

Lessee (tenant) - The person or persons holding rights of possession and use of property under terms of a lease.

Lessor (landlord) - The one leasing property to a lessee. Licensed Mortgage Broker - The licensed person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. A firm or individual bringing the borrower and lender together and receiving a commission. A mortgage broker does not retain servicing.

Lien - A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

Limited partnership - A partnership that consists of one or more general partners who are fully liable and one or more limited partners who are liable only for the amount of their investment.

Loan - A sum of money loaned at interest to be repaid.

Loan Processing - (1) A System by which a Buyer is evaluated for loan approval. The system compares the stated income, debt, savings and credit against documentation provided by the buyer (or alternative Federal documents). Calculations of Debt-To-Income, Loan-To-Value, Net Worth, Cash Reserves and Compensating Factors are used to develop and Underwriting Opinion.

(2) The system of structuring a Buyer's financial situation and documentation in such a way that an Underwriting Opinion can be reached.

Loan submission - A package of pertinent papers and documents regarding specific property or properties. It is delivered to a prospective lender for review and consideration for the purpose of making a mortgage loan.

Loan-to-value ratio - The relationship between the amount of the mortgage loan and the appraised value of the security expressed as a percentage of the appraised value.

Marketable Title - A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.

Metes and bounds - A description in a deed of the land location in which the boundaries are defined by directions and distances.

Mortgage - A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.

Mortgage Commitment - A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Mortgage Insurance Premium - The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of one-half of one percent paid by the mortgagor on a monthly basis.

Mortgage Life Insurance - A type of term life insurance often bought by mortgagors. The amount of coverage decreases as the mortgage balance declines. In the event that the borrower dies while the policy is in force, the debt is automatically satisfied by insurance proceeds.

Mortgage Note - A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.

Mortgage (Open-End) - A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure.

Mortgagee - The lender in a mortgage agreement.

Mortgagor - The borrower in a mortgage agreement.

Origination - The process of originating mortgages. Solicitation may be from individual borrowers, builders, or brokers.

Origination fee - A fee or charge for the work involved in the evaluation, preparation, and submission of a proposed mortgage loan.

Originator - A person who solicits builder, brokers, and others to obtain applications for mortgage loans. origination is the process by which the mortgage lender brings into being a mortgage secured by real property.

Plans and specifications - Architectural and engineering drawings and specifications for construction of a building or project, including a description of materials to be used and the manner in which they are to be applied.

Plot - A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

Points - Sometimes called "discount points." A point is one percent of the amount of the mortgage loan. For example, if a loan is for $25,000, one point is $250. Points are charged by a lender to raise the yield on his loan at a time when money is tight, interest rates are high, and there is a legal limit to the interest rate that can be charged on a mortgage. Buyers are prohibited from paying points on HUD or Veterans' Administration guaranteed loans (sellers can pay, however). On a conventional mortgage, points may be paid by either buyer or seller or split between them.

Portable Mortgage - A mortgage that can be moved from one home to another. Instead of repaying your mortgage when you move and taking out a new one on the new home, you transfer the old mortgage to the new property.

Preclosing - A transaction preceding the formal closing, often used to settle outstanding issues (survey, pest inspection, hazard insurance, flood insurance (if required), with the formal closing shortly thereafter.

Prepayment - Payment of mortgage loan, or part of it, before due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. The Federal Housing Administration does not permit such restrictions in FHA insured mortgages.

Principal - The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.

Principal balance - The outstanding balance of a loan.

Private mortgage insurance (PMI) - Insurance written by a private company protecting the mortgage lender against loss by a mortgage default. Purchase Agreement - (See agreement of sale).

Realtor - A real estate broker or an associate holding active membership in a local real estate board affiliated with the National Association of Realtors.

Reconveyance - The transfer of land from one person to the immediately preceding owner. It is used when the performance of debt is satisfied under the terms of a deed of trust.

Redemption Period - That period of time in those states where it is allowed in which a foreclosed mortgagor has to buy back his property by paying principal amount and interest and fees.

Refinancing - The process of the same mortgagor paying off one loan with the proceeds from another loan.

Release of lien - An instrument discharging secured property from a lien.

Restrictive Covenants - Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller and buyer. The determination whether a covenant runs with the land or is personal is governed by the language of the covenant, the intent of the parties, and the law in the State where the land is situated. Restrictive covenants that run with the land are encumbrances and may affect the value and marketability of title. Restrictive covenants may limit the density of buildings per acre, regulate size, style or price range of buildings to be erected, or prevent particular businesses from operating or minority groups from owning or occupying homes in a given area. (This latter discriminatory covenant is unconstitutional and has been declared unenforceable by the U.S. Supreme Court.)

Right of survivorship - In joint tenancy, the right of survivors to acquire the interest of a deceased joint tenant.

Right-of-way - A privilege operating as an easement upon land, whereby a land owner, by grant or agreement, gives another the right to pass over land. Also knows as easement.

Sales Agreement - See agreement of sale.

Sales Contract - Another name for a sales agreement, purchase agreement, etc. Not to be confused with a land contract, which is a conditional sales contract.

Satisfaction of mortgage - The record able instrument given by the lender to evidence payment in full of the mortgage debt. Sometimes knows as a release deed.

Secondary financing - Financing real estate with a loan, or loans, subordinate to a first mortgage or first trust deed.

Secondary mortgage market - The market where existing mortgages are bought and sold. It contrasts with the primary mortgage market, where mortgages are just originated, and packaged for delivery to the secondary market.

Servicing - The duties of the mortgage lender as a loan correspondent as specified in the servicing agreement for which a fee is received. Consists of operational procedures covering accounting, bookkeeping, insurance, tax records, loan payment follow-up, delinquency loan follow-up and loan analysis.

Special Assessments - A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

Special Lien - A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien.

Special Warranty Deed - A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has, or which might in the future, impair the grantee's title.

Survey - A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.

Takeout commitment - A promise to make a loan at a future specified time. It is commonly used to designate a higher cost, shorter term, backup commitment as a support for construction financing until a suitable permanent loan can be secured.

Tax -As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public. Tax Lien - A claim against property for the amount of its due and unpaid taxes.

Tenancy - A holding of real estate under any kind of right of title. Tenancy At Will - A holding of real estate that can be terminated at the will of either the lessor or the lessee, usually with notice.

Tenancy by entirety - The joint ownership of property by a husband and wife where both are viewed as one person under common law that provides for the right of survivorship.

Tenancy in common - In law, the type of tenancy or estate created when real or personal property is granted, devised or bequeathed to two or more persons, in the absence of expressed words creating a joint tenancy. There is no right of survivorship.

Term - The period of time between the commencement date an termination date of a note, mortgage, legal document, or the contract.

Title - As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.

Title Insurance - Protects lenders or homeowners against loss of their interest in property due to legal defects in title. Title insurance may be issued to a "mortgagee's title policy." Insurance benefits will be paid only to the "named insured" in the title policy, so it is important that an owner purchase an "owner's title policy", if he desires the protection of title insurance.

Title Search or Examination - A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive covenants filed in the record, which would adversely affect the marketability or value of title.

Trustee - A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law. (See deed of trust.)

Real Estate Dictionary Terms:

Warehousing - The holding of a mortgage on a short term basis pending either a sale to an investor or other long term financing.

Warranty deed - A deed in which the grantor or seller warrants or guarantees that good title is being conveyed, as opposed to a quitclaim deed that contains no representation or warrant as to the quality of title being conveyed.




Real Estate Dictionary Terms:

Zoning Ordinances - The acts of an authorized local government establishing building codes, and setting forth regulations for property land usage.