The Internet Real Estate Glossary

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Abandonment - A process under bankruptcy law where the court releases a property from its control when it is deemed to no longer have any value to the estate.  The situation whereby a homeowner leaves a house with no intention to return. 

Abstract - A succinct summary; (e.g. an abstract of title; an abstract of judgment, etc.)

Abstract of Title - A historical summary from public records of all recorded transactions that affect title to a property. An attorney or a title company will review an ‘abstract of title’ to determine if there are any title defects or problems affecting the title to the property. All such problems must be cleared before a clear and insurable title can be conveyed and issued to the buyer.

Abstract of Judgment - The summary of a court judgment that creates a lien against a property when filed with the county recorder.  An abstract is a summary; an abstract of judgment is a summary of a judgment; a judgment is the end result of a lawsuit. A judgment may run many pages. An abstract of judgment typically runs one or two pages. It just shows who won the lawsuit, who lost, how much is owed, what court made the decisions, the date of the judgment and the attorney for the winner of the lawsuit. Once the abstract of judgment is recorded (filed with the county clerk or county recorder), it creates a general lien on the judgment debtor^’s property, including the real estate. An abstract of judgment will be discovered by a title company whenever a landowner tries to sell the land. Most title companies will demand that it be paid off as a condition of insuring the resale.

Accelerated Cost Recovery System - A tax calculation that provides greater depreciation in the early years of ownership of real estate or personal property.

Acceleration (clause) - A loan provision or clause in a mortgage, note, bond, deed of trust, or other credit agreement, giving the lender the right to declare the entire amount due and payable, prior to the natural maturity date of the loan and that requires the mortgagor, maker, or other obligor to pay part or all of the balance sooner than the date or dates specified for payment. This typically occurs upon a default such as nonpayment of principal, interest, or failure to pay insurance premiums; or the sale of the property.

Acceptance - a buyers or sellers agreement to enter into a contract and be bound by the terms of the offer.

Accommodation Recording - The recordation of title documents as a courtesy by a title company , sans the assumption of responsibility for their correctness or validity.

Accession - The idea that the owner of land is entitled to all that the soil produces or all that is added to the land either intentionally or by mistake. Trade fixtures not removed are "assessed" by the owner of the property.

Accommodator - A party who temporarily holds the sale proceeds of a property, on behalf of the seller, who is involved in an 1031 exchange.

Accretion - Refers to land which is accumulated by the gradual washing or motion of water.

Accrued Interest - Interest that has been earned but not paid.

Accrued Items of Expense - Those incurred expenses that are not yet payable. The seller¹s accrued expenses are credited to the purchaser in the closing statement.

Accumulated Depreciation - in accounting, the amount of depreciation expense that has been claimed to date.

Accretion - The addition to land through natural forces such as wind or water (the opposite of erosion).

Acknowledgment - Formal declaration before a public official (typically a notary public) that one has signed a document. Required before recording real estate legal documents, such as a deeds of trust. A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own. An acknowledgment is necessary to entitle an instrument (with certain specific exceptions) to be recorded, to impart constructive notice of its contents, and to entitle the instrument to be used as evidence without further proof. The certificate of acknowledgment is attached to the instrument or incorporated therein.

Acre - a two dimensional measure of land equaling 4,840 square yards or 43,560 square feet.

Action to quiet title - A court action to establish ownership to real property. Although technically not an action to remove a cloud on a title, the two actions are usually referred to as “quiet title” actions.

Acquiesence - Implied acceptance by an informed party. Witnessed by conduct that recognizes the existence of a transaction and permits it to be carried into effect; implied acceptance.

Acquisition - An act or process, such as foreclosure, by which one procures ownership of property.

Acquisition cost - In a HUD-FHA transaction, the sum of the price paid for the property and any costs of closing, repairs, or financing properly paid by the borrower.

Actual/Actual remittance method - Remittance method wherein the servicer remits, to the investor, only the actual principal and interest collected from the borrower.

Actual Notice - The actual knowledge that a person has about the existence of a particular fact.

Ad Litem - Lat. “guardian at law.” A guardian or attorney appointed by the court to prosecute or defend a suit on behalf of a party incapacitated by infancy (a child) or otherwise.

Ad Valorem  - A prefix meaning "based on value". Most local governments levy an ad valorem tax on property. Latin “according to” value. A tax imposed on the value of property levied as a percentage of that value.

Addendum - something added as an attachment to a contract.

Additional Principal Payment - Extra money included in the monthly payment to help reduce the principal and shorten the term of the loan.

Adjoining - contiguous, attached, sharing a common border

Adjudication - A judicial determination.

Adequate protection - Assurance or ‘protection’ given to a lender, whether in the form of collateral or otherwise, that the lender’s position will not deteriorate by reason of the continued use of the property in which the lender has an interest.

Adjustable rate mortgage (ARM) - A mortgage for which the interest rate is not fixed but changes during the life of the loan in line with movements in an index rate. You also may see ARMs referred to as variable-rate mortgages (VRM). A loan with an interest rate that fluctuates based on a specified financial index, such as Treasury securities. LIBOR, etc.

Adjusted Cost Basis - The cost of any improvements the seller makes to the property. Deducting the cost from the original sales price provides the profit or loss of a home when it is sold.

Adjusted Tax Basis - the original cost or other basis of the property, reduced by depreciation deductions and increased by capital expenditures.

Adjusted market price - The value of a property after adjustments have been made for differences between it and comparable property that has been appraised.

Adjustment cap - The ‘cap’ or maximum that the interest rate can increase or decrease on a loan or mortgage per adjustment. Usually associated with ARM loans. A 1% adjustment cap means the interest rate will not increase or decrease more than 1% at the next adjustment.

Adjustment period - The length of time for which the interest rate is fixed on an ARM. If the adjustment period is one year, then the interest rate will remain fixed for one year, after which time it will adjust, according to some index rate such as Prime Rate, LIBOR or some other variable rate. One year is the most common adjustment period.

Administrator - a person appointed by a court to administer the estate of a deceased person who left no will.

Administrator's Deed - A legal document that an administrator of an estate uses to transfer property.

Advances - Monies paid from the servicer’s funds for real estate taxes, property insurance premiums, and other expenses necessary to protect the mortgagee’s interests under the mortgage.  Moneys paid, on behalf of an owner, by a junior interest holder. Done to temporarily cure a delinquency on a senior encumbrance that threatens to extinguish the junior's position. Thereafter the junior lien holder can start their own foreclosure

Adversary proceeding - A disputed, litigated matter in bankruptcy court that is begun by the filing of a complaint, as in a lawsuit.

Adverse possession - A means of acquiring title where an occupant has been in actual, open, notorious and continuous occupancy of a property under a claim of right for the required statutory period. A method of acquiring title to real property by physical possession of the property for a statutorily set time period, under certain conditions, by a person other than the owner of record

Affidavit - A written statement or declaration of fact confirmed under oath or affirmation of the party making it. A form of testimony.

Affidavit of amount due - An affidavit executed by the lender establishing the amount of the debt for the purposes of obtaining a judgment in foreclosure. The affidavit eliminates the need for the lender to appear at the actual hearing.

Agency - An agency relationship is one in which one person is empowered to act on behalf of another, subject to the control and consent of the person being represented. Realtors literally are real-estate “agents” working to help buy or a sell a home.

Agent - The person who is acting on behalf of the principal or client; one who is trusted to act on behalf of another. (See “buyer’s agent” and “listing agent.”)

Agreement for Deed - see Contract for Deed.

Agreement of sale - A written, signed agreement between the seller and the purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to the terms of the agreement. (See “contract of purchase, purchase agreement, offer and acceptance, land contract, earnest-money contract or sales agreement.”) Also known as an agreement to convey. A signed, written contract entered into between the seller (vendor) and buyer (vendee) for sale of real property (land) under certain specific terms and conditions.

Air Loans - A swindler invents borrowers and buildings to obtain loans. The perpetrator may set up phones and pose as borrower, employer, appraiser and credit agency when the lender calls to verify.

Air Rights - The right to use, control and occupy the space above a particular parcel of land.

Alienation - A transferring of property to another.

Alienation clause - Calls for a debt under a mortgage or deed of trust to be due in its entirety upon transfer of ownership of the secured property. (See also “acceleration clause” and “due on sale clause.”)

All Inclusive Trust Deed - This applies to states that use trust deeds instead of mortgages. It is the same as a wraparound mortgage. A junior trust deed that includes in its balance the amounts of the senior included trust deeds. Interest is charged on the over-all total of the AITD, invariably at a higher rate than that charged on the included trust deeds. The interest rate differential accrues to the benefit of the beneficiary of the AITD, boosting the effective yield on their equity in the all-inclusive. Also known as a "wrap-around", mortgage or deed of trust.

Allodial - The free and full ownership of rights in land by individuals, which is the basis of real property in the United States.

ALTA - Refers to title insurance adopted by the American Land Title Insurance Association and is used nationwide. It usually refers to a loan policy, but can also insure an owner.

Amortize or amortization - A gradual paying off of a debt by periodic installments that include principal and interest payments. The interest due is recalculated with each month’s principal payment. The gradual repayment of a debt in a series of equal periodic amounts until the total debt, including interest, is paid in full. Senior loans are typically amortized over 30 years, whereas junior loans are generally amortized over a much shorter time period.

Amortized Loan - loan that is repaid in a series of installments each of which contains a portion that is applied to reduce the principal amount of the loan and a portion that is applied to pay interest with each successive payment allocates a larger portion to principal reduction and a smaller portion to interest payment until the outstanding balance is ultimately reduced to zero.

Annual Cap - maximum amount the interest rate on an adjustable rate mortgage can be raised or lowered in the course of one twelve month period.

Annual percentage rate (APR) - A measure of the cost of credit, expressed as a yearly rate. The effective rate of interest may be higher than the note rate because the APR takes into account closing costs. The APR concept makes it easier to compare loan programs offered by different lenders, which may include different charges and loan costs.

Anti-deficiency law - state statute providing for the borrower, or mortgagor not to be liable to the lender, or mortgagee for the deficiency between the proceeds received at the foreclosure sale and the balance due on the mortgage. California has an anti-deficiency law. Most other states do not.

Anticipatory Breach - A communication that informs a party that the obligations of the original contract will not be fulfilled.

Appearance - Coming into court as a party to a suit, either in person or by a representing attorney; The formal proceeding by which a defendant submits himself to the jurisdiction of the court. An appearance may be general or specific; general appearance is a simple unqualified or unrestricted submission to the jurisdiction of the court while a specific appearance restricts the purpose of the appearance.

Apportionment - The adjustment of the income, expenses, or carrying charges of real estate that are usually computed to the date of closing of title so that the seller pays all expenses to that date. The buyer assumes all expenses from the data on which the deed is conveyed to the buyer.

Appraisal - An valuation, opinion or estimate, usually in writing, of the value of a property at a given date. conducted by a disinterested person with suitable qualifications. Generally, value for single family properties is based upon a review of recent market activity using sales of comparable properties as a basis and then making value adjustments based upon the comparison of the comparable property to the subject property.

Appraised value - An option of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings. (Compare with “market value.”)

Appraiser - A qualified person who is hired to make estimates on the market value of property.

Appreciation - The increase in market value of real estate.

Appurtenance - Something which is outside the property itself but belongs to the land and adds to its greater enjoyment, such as a right-of-way or a barn or a dwelling.

ARM - (see “Adjustable Rate Mortgage”)

Arm’s-length transaction - A transaction among parties who each acts in his or her own best interest. A transaction between two brothers would not be an arm’s-length transaction.

Arrears - Payment made after it’s due is in arrears. Mortgage interest is paid in arrears, meaning that it is paid for the previous month rather than in advance.

As-Is - without guarantees as to condition.  When a property is sold as is, the seller does not warrant or guarantee that the property is free of defects. The buyer accepts the property in its present condition, without modification.

Asking price - The price at which the property has been placed on the market for sale.

Assemblage - Bringing two or more lots together under one ownership.

Assessor - A municipal or county official who determines the value of properties for the purpose of taxation. (Compare with “appraiser.”)

Assessed Value - the value established for property tax purposes

Assessment - A valuation or a determination as to value of property. It is often used in connection with assessing property taxes or levying of property taxes. A bonded tax imposed to pay for public improvements (e.g. street/alley paving, curbs, sidewalks, etc.) beneficial to a limited area . Paid semi-annually over a 10 year period to the Bond Division of the city or county treasurer's office where the property is located.

Asset - property owned by a person that has real value.

Assessor - An official who has the responsibility of determining assessed valuation.

Assessors Parcel Number - A number assigned by the county tax assessor to identify a parcel of real property.

Assign - To transfer, make over, or set over to another.

Assignee - - the person to whom an agreement or contract is sold or transferred.

Assignment - The transfer of the ownership of the mortgage or security interest from one party to another. The term “assignment” generally does not refer to the transfer of ownership of real property. (see Conveyance). Written document by which property, other than real property, is transferred from one person to another. Assignment of mortgage, assignment of deed of trust, assignment of lease, assignment of rentals, etc. are common assignments. The "assignee" receives the property assigned.

Assignment or OTC Liens - These are liens that went through the sale process and were not purchased at the sale. They can be purchased directly from the taxing jurisdiction and usually earn the maximum interest rate available. Usually they can be purchased by mail. The downside is they are the parcels that nobody wanted to buy at the sale.

Assignment of bid - The assignment of the successful bid at the foreclosure sale to another party.

Assignment of rent - A written agreement executed by the borrower, granting the mortgagee the right to collect rents and otherwise manage the property, and apply the net income toward the payment of arrearages. An additional clause in a deed of trust wherein the trustor agrees to let the beneficiary collect the rents generated by the secured property in the event of a foreclosure action. Actually accomplished by getting a court appointed receiver installed.

Assignor - A person or entity that transfers ownership to another.

Assume - To take on, become bound as another is bound, or put one’s self in place of another as to an obligation or liability.

Assumable mortgage - When a home is sold, sellers may transfer their mortgage to a new buyer. This means the mortgage is “assumable.” Lenders generally require a credit review of the new borrower and may charge a fee for the assumption. Some mortgages contain a due-on-sale clause, which means the mortgage may not be transferable to the new buyer. Instead, the lender may make the seller pay the entire balance that is due when the home is sold. Sellers should obtain a written release from the lender stating clearly that they are no longer responsible for mortgage payments. Advertising a home with an assumable mortgage can attract buyers who may have difficulty qualifying for a traditional mortgage.

Assumes and Agrees to Pay - A clause in a deed or related document under which a buyer who takes over payments on the seller's old loan also agrees to pay the old loan. The buyer will normally receive title and make the payments. The assumes and agrees to pay language is often found in the consideration section of the deed that transfers title from the seller to the buyer in such an assumption. The seller may or may not be released from liability, but in either case, the buyer is responsible legally to make payments on the loan.

Assumption - The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money, since this is an existing mortgage debt, unlike a new mortgage where closing costs and new, probably higher, market-rate interest charges will apply. A formal agreement with a lender in which a new property owner agrees to be personally liable for the repayment of a pre-existing lien. Generally entails paying the lender an assumption fee and sometimes a higher interest rate. Doesn't release the original borrower from further liability unless the agreement specifically provides for it.

Assumption clause - In mortgages, a provision that the mortgage may not be assumed without written content of mortgagee.

Attachment - The seizing (by a Sheriff or other authorized officer) of property belonging to the defendant as security for any judgment the plaintiff may get in a court action.

Attest - To witness.

Attornment - A tenant\'s formal agreement to be a tenant of a new landlord.

Attorney-in-fact - One who is authorized to act for another under a power of attorney, with powers limited by the signed agreement. n agent authorized to act for another. Commonly evidenced by a recorded Power of Attorney. Holder of the power can exercise it only as long as it has not been revoked and the grantor remains alive and competent enough to act on their own behalf if need be.

Attorney's Opinion of Title - A statement issued by an attorney after analyzing an abstract as to quality of title.

Auction - The process by which property is sold at public sale to the highest bidder or to the lender who receives a credit offset against the amount due on the mortgage. (See “sheriff’s sale; trustee’s sale”).

Automatic stay - Immediately upon the filing of a bankruptcy petition in the bankruptcy court, a federal injunction automatically stops (stays) all debt collection activities, against the debtor, including foreclosure and eviction.

Avulsion –

Occurs in cases where there is a sudden loss of land through nature.

This real estate glossary is courtesy of the Internet Real Estate Center - Join the Online Real Estate Revolution.