Topic Highlight - NAR Settlement c.a.r.RPA & buyer representation & broker compensation agreement
The CAR Residential Purchase Agreement ...is the most commonly used contract by REALTOR members.
In the following videos (and blogs), we will cover briefly the forms and sections that comprise the , Buyers Representation with Broker's Compensation Advisory, and how to fill out the forms. Most importantly, we will also cover the latest NAR Settlement Revised Residential Listing and Purchase Agreements implemented on August 17, 2024.
These newly revised forms in 2024 includes, but are not limited to the following:
SELLER revised forms include: Residential Listing Agreement, Seller Payment Concession for Buyer's Broker, Open House Visitor Non-Agency Sign-In Form, Property Visit and Open House Advisory.
BUYER Revised forms include: Residential Purchase Agreement, Buyer Representation and Broker Compensation form, Modification of Terms-Buyer Representation Agreement. (BUT if seller will pay buyer agent's compensation use Seller Payment Concession for Buyer's Broker form)
For any questions please email me at callme@marybethrojas.com
In the following videos (and blogs), we will cover briefly the forms and sections that comprise the , Buyers Representation with Broker's Compensation Advisory, and how to fill out the forms. Most importantly, we will also cover the latest NAR Settlement Revised Residential Listing and Purchase Agreements implemented on August 17, 2024.
These newly revised forms in 2024 includes, but are not limited to the following:
SELLER revised forms include: Residential Listing Agreement, Seller Payment Concession for Buyer's Broker, Open House Visitor Non-Agency Sign-In Form, Property Visit and Open House Advisory.
BUYER Revised forms include: Residential Purchase Agreement, Buyer Representation and Broker Compensation form, Modification of Terms-Buyer Representation Agreement. (BUT if seller will pay buyer agent's compensation use Seller Payment Concession for Buyer's Broker form)
For any questions please email me at callme@marybethrojas.com
below are samples of the n.a.r. settlement advisories & agreements
and training videos:
sample listing agent form: 2024 residential listing agreement
listing agent form: 2024 new open house non-agency sign-in
training video: 2024 residential listing agreement
buyer agent property showing form: property visit & open house advisory
NOTE: Always have the buyers sign this form prior to showing a property. For you and your buyer(s) protection, be sure to have the buyer(s) sign the Buyer Representation & Broker Compensation Agreement first!
buyer agent form: buyer representation and broker compensation agreement
training video - new buyer representation & broker compensation agreement
buyer agent form: 2024 residential purchase agreement
NOTE: Use this form when buyer wants to make an offer.
training video: 2024 residential purchase agreement
need to get paid?
NOTE: The Buyer(s) Agent can request compensation from the Buyer(s) and the Seller, if applicable. A Buyer's Agent can be compensated by a Seller through a written request using the **Seller Payment (Concession) For Buyer's Broker Compensation form. The Buyer Agent can use this form. However, if the Buyer / Client can only compensate their Agent less than the original agreed amount, then use the ***Modification of Terms - Buyer Representation Agreement form
(please see sample forms).
(please see sample forms).
buyer agent form: **seller payment concession for buyer's broker compensation
buyer agent form: ***Modification of terms - buyer representation agreement
Understanding the New N.A.R. Buyer Representation and Broker Compensation Agreement
The real estate industry has undergone significant changes, and one of the most notable is the introduction of the Buyer Representation and Broker Compensation Agreement by the National Association of Realtors® (N.A.R.). This new agreement redefines the relationship between buyers and their real estate agents and brings clarity to how agents are compensated for their services. Here’s a closer look at the agreement and why it’s in a buyer's best interest to hire and compensate a buyer’s real estate agent.
What is the N.A.R. Buyer Representation and Broker Compensation Agreement?
The Buyer Representation and Broker Compensation Agreement is a legally binding contract between a buyer an a real estate agent (also referred to as a buyer's agent). Its purpose is to formalize the relationship, outlining the duties and responsibilities of both parties and specifying how the agent will be compensated for the services they provide.
Traditionally, a real estate agent's commission was paid out of the seller’s proceeds at closing. This commission was typically split between the seller's agent (also known as the listing agent) and the buyer's agent. However, as the real estate market evolves, this traditional compensation structure is changing. The new N.A.R. agreement focuses on transparency and flexibility, allowing buyers and agents to negotiate compensation that reflects the value of the services provided.
Key Aspects of the Agreement
- Buyer-Agent Relationship: The agreement clearly outlines the agent's fiduciary duties, ensuring that the agent acts in the buyer's best interest. It formalizes the agent's commitment to finding properties, negotiating terms, and guiding the buyer through the purchasing process.
- Compensation Clarity: The agreement specifies how the agent will be compensated. This could be a percentage of the purchase price, a flat fee, or another arrangement that both the buyer and agent agree upon. Importantly, it gives the buyer the ability to negotiate compensation rather than assuming it will be covered by the seller.
- Transparency: Buyers now have a clearer understanding of the costs involved in purchasing a property. Rather than the commission being "hidden" as part of the transaction, it’s openly discussed, and buyers can see the value they’re getting for their money.
1. High-Quality RepresentationReal estate transactions are complex, involving legal, financial, and logistical challenges. By compensating their agent directly, buyers can ensure they are getting high-quality, unbiased representation. An agent compensated by the buyer is solely dedicated to their interests, free from potential conflicts of interest that may arise from relying on seller-paid commissions.
2. Agent’s Expertise and EffortReal estate agents provide expertise in the following areas:
- Market Knowledge: A buyer's agent can provide valuable insight into local markets, including trends, pricing, and neighborhoods.
- Negotiation Skills: Agents are skilled negotiators who can help buyers secure the best possible price and terms.
- Due Diligence: Agents help with important steps such as reviewing property disclosures, coordinating inspections, and ensuring contract terms are met.
3. More Options for CompensationThe new agreement offers flexibility in how agents are paid, which can be beneficial to buyers. Instead of a fixed percentage commission tied to the purchase price, buyers and agents can agree on other compensation structures, such as:
- A flat fee, which may work better for buyers purchasing lower-cost properties.
- A reduced percentage or tiered commission based on the complexity of the deal or services provided. This flexibility allows for cost control and makes the compensation more tailored to the buyer's needs.
5. Incentivizing the Best OutcomeWhen a buyer compensates their agent, the agent is more likely to focus on finding properties that suit the buyer's specific needs, rather than steering them toward listings where the seller is offering higher commissions. This leads to a more objective and balanced property search and often a better outcome for the buyer.
The new N.A.R. Buyer Representation and Broker Compensation Agreement is designed to provide transparency, flexibility, and fairness in how buyer's agents are compensated. By compensating their agent, buyers can ensure they receive dedicated and high-quality service throughout the home-buying process. The agreement not only formalizes the buyer-agent relationship but also gives buyers more control and clarity, ultimately enhancing their real estate experience.
In this evolving market, understanding the value of a buyer's agent—and compensating them appropriately—can make all the difference in securing a great property and a smooth transaction.
sample script to use in a buyer agent presentation - regarding compensation
Buyer’s Agent Presentation Script 1
Here is a persuasive script designed to convince a buyer of the value you bring as their real estate agent and why they need to hire an experienced professional. You can follow this script as a guideline. You can interpret it with your own words, but stay as close as possible if you can. Also note: Make the buyer aware of the crucial stages of the buying process, such as the pre-escrow stage, the escrow transaction per se, and post-escrow support or aftermarket assistance after closing the escrow transaction.
(Introduction):
"Thank you for taking the time to meet with me today. I understand that buying a home is one of the most significant decisions you'll ever make, and I’m here to ensure that you navigate this process smoothly and successfully. Before we begin, I want to discuss why compensating a professional agent, like myself, is not just an expense but a valuable investment in your home-buying journey."
(1. Expert Market Knowledge):
"As a dedicated real estate professional, I live and breathe the housing market. I am constantly analyzing trends, studying neighborhoods, and staying up to date with local real estate laws and regulations. This expertise helps you make informed decisions and ensures that you get the best value for your investment. Without the guidance of an experienced agent, it's easy to overpay for a property or miss out on the right opportunity."
(2. Access to Exclusive Listings and Resources):
"One of the most significant advantages of working with me is my access to exclusive listings, off-market properties or pocket listings, and inside information. I can show you homes that may not be available to the general public like Zillow, giving you a competitive edge. In today’s fast-moving market, having access to the right property at the right time can save you thousands."
(3. Negotiation Expertise):
"When it comes to negotiating a purchase, I serve as your representative. Negotiating involves more than just getting the seller to lower the price. I focus on securing favorable terms, such as repairs, contingencies, and closing costs. I ensure that you get the best possible deal and that your investment is protected. Without professional negotiation skills, you risk leaving money on the table or entering into a less-than-ideal agreement."
(4. Time-Saving Convenience):
"Buying a home is time-consuming and, at times, nerve-wracking. From searching for properties and attending open houses to managing paperwork and coordinating inspections, the process can be overwhelming. My job is to streamline this process for you. I filter through listings, schedule showings, and handle the logistics, so you can focus on what matters most to you. My services ultimately save you time and energy, while ensuring that no crucial detail is overlooked."
(5. Protection and Guidance Through the Transaction):
"The home-buying process involves many legal and financial considerations. Contracts, contingencies, local mandatory regulations and title issues. These are just some of the necessary phases of a transaction. As your agent, I provide expert guidance, ensuring all documents are prepared correctly and protecting you from costly mistakes. I handle the intricacies of the contract, so you’re not left in a vulnerable position."
(6. Long-Term Value):
"My role doesn’t end once the deal is closed. I’m here for you in the long term, whether you need advice on home improvements, market updates, or assistance with selling down the road. My goal is to build a relationship based on trust and continued service, so you know you’re always supported, even after the purchase."
"Ultimately, my services and compensation reflect the value I bring to the table: expert knowledge, negotiation prowess, exclusive access, stress-free escrow, and peace of mind. By working together, you’ll have a trusted advisor in your corner, ensuring a smooth process and protecting your financial interests. Let’s make this exciting experience as stress-free and successful as possible.
So, What's your timeline for getting this done?"
Here is a persuasive script designed to convince a buyer of the value you bring as their real estate agent and why they need to hire an experienced professional. You can follow this script as a guideline. You can interpret it with your own words, but stay as close as possible if you can. Also note: Make the buyer aware of the crucial stages of the buying process, such as the pre-escrow stage, the escrow transaction per se, and post-escrow support or aftermarket assistance after closing the escrow transaction.
(Introduction):
"Thank you for taking the time to meet with me today. I understand that buying a home is one of the most significant decisions you'll ever make, and I’m here to ensure that you navigate this process smoothly and successfully. Before we begin, I want to discuss why compensating a professional agent, like myself, is not just an expense but a valuable investment in your home-buying journey."
(1. Expert Market Knowledge):
"As a dedicated real estate professional, I live and breathe the housing market. I am constantly analyzing trends, studying neighborhoods, and staying up to date with local real estate laws and regulations. This expertise helps you make informed decisions and ensures that you get the best value for your investment. Without the guidance of an experienced agent, it's easy to overpay for a property or miss out on the right opportunity."
(2. Access to Exclusive Listings and Resources):
"One of the most significant advantages of working with me is my access to exclusive listings, off-market properties or pocket listings, and inside information. I can show you homes that may not be available to the general public like Zillow, giving you a competitive edge. In today’s fast-moving market, having access to the right property at the right time can save you thousands."
(3. Negotiation Expertise):
"When it comes to negotiating a purchase, I serve as your representative. Negotiating involves more than just getting the seller to lower the price. I focus on securing favorable terms, such as repairs, contingencies, and closing costs. I ensure that you get the best possible deal and that your investment is protected. Without professional negotiation skills, you risk leaving money on the table or entering into a less-than-ideal agreement."
(4. Time-Saving Convenience):
"Buying a home is time-consuming and, at times, nerve-wracking. From searching for properties and attending open houses to managing paperwork and coordinating inspections, the process can be overwhelming. My job is to streamline this process for you. I filter through listings, schedule showings, and handle the logistics, so you can focus on what matters most to you. My services ultimately save you time and energy, while ensuring that no crucial detail is overlooked."
(5. Protection and Guidance Through the Transaction):
"The home-buying process involves many legal and financial considerations. Contracts, contingencies, local mandatory regulations and title issues. These are just some of the necessary phases of a transaction. As your agent, I provide expert guidance, ensuring all documents are prepared correctly and protecting you from costly mistakes. I handle the intricacies of the contract, so you’re not left in a vulnerable position."
(6. Long-Term Value):
"My role doesn’t end once the deal is closed. I’m here for you in the long term, whether you need advice on home improvements, market updates, or assistance with selling down the road. My goal is to build a relationship based on trust and continued service, so you know you’re always supported, even after the purchase."
"Ultimately, my services and compensation reflect the value I bring to the table: expert knowledge, negotiation prowess, exclusive access, stress-free escrow, and peace of mind. By working together, you’ll have a trusted advisor in your corner, ensuring a smooth process and protecting your financial interests. Let’s make this exciting experience as stress-free and successful as possible.
So, What's your timeline for getting this done?"
Ten Tips To Improve Your Negotiation skills
The Mandatory real estate disclosures
The Importance of Disclosures and Reports in a Real Estate Transaction in CaliforniaReal estate transactions are complex, involving significant financial commitments and legal obligations. In California, buyers and sellers are guided by a robust legal framework that ensures transparency and protects all parties involved. One of the most critical components of this framework is the disclosure and reporting process. Disclosures and reports serve as the backbone of trust in real estate transactions and ensure that buyers and sellers are aware of pertinent information before closing escrow.
1. Understanding Disclosures in California Real EstateIn California, sellers are legally required to provide certain disclosures to potential buyers. These disclosures are mandated by California Civil Code Section 1102 and help buyers make informed decisions about the property’s condition, history, and possible future liabilities. Common disclosures in California include:
For the buyer, full and accurate disclosures are essential to understanding the property’s true condition and avoiding unforeseen expenses. It allows the buyer to make informed decisions on whether to proceed with the purchase, renegotiate the price, or request specific repairs before closing.
3. Home Inspections and ReportsIn addition to seller disclosures, buyers typically order professional home inspections and specialized reports during the escrow process. These reports further inform buyers about the property’s condition and any potential issues that may not have been apparent in the initial walkthrough or seller’s disclosures. Key reports include:
During escrow, buyers are given the opportunity to review all disclosures and inspection reports. If new issues arise, buyers can negotiate repairs, request credits, or even back out of the deal if contingencies are not met. California law allows buyers to cancel the transaction within certain timelines if significant problems are found that were not disclosed or if repairs are not completed.
5. Legal Protections for Buyers and SellersThe California Association of Realtors (C.A.R.) provides standardized forms to ensure the disclosure process is thorough and consistent. These forms are designed to minimize misunderstandings and ensure that both buyers and sellers are on the same page throughout the transaction.
For sellers, making complete and honest disclosures is essential for avoiding legal claims. The disclosure process offers sellers protection against future disputes as long as they are transparent about known issues.
For buyers, the law provides significant protection, allowing them to pursue remedies if material information is intentionally or negligently withheld.
In California, disclosures and reports are fundamental to ensuring a smooth and transparent real estate transaction. They help buyers make informed decisions and offer sellers protection from potential legal disputes. By requiring disclosures, the state creates an environment where trust and accountability are prioritized, ultimately contributing to the integrity of the real estate market.
For both buyers and sellers, understanding and adhering to disclosure requirements is key to a successful real estate transaction. Buyers should take the time to thoroughly review all reports and disclosures, while sellers must be diligent in providing accurate information. In the end, these practices safeguard the interests of both parties and help avoid costly legal battles.
NOTE: Disclosure documents and advisories are available on the California Association of Realtors (C.A.R.) website. If you are a member of C.A.R. you can access these standardized forms in the Forms Library or in the Transaction portal.
1. Understanding Disclosures in California Real EstateIn California, sellers are legally required to provide certain disclosures to potential buyers. These disclosures are mandated by California Civil Code Section 1102 and help buyers make informed decisions about the property’s condition, history, and possible future liabilities. Common disclosures in California include:
- Transfer Disclosure Statement (TDS): This is one of the most critical documents in any California real estate transaction. It requires the seller to provide a detailed account of the property’s condition, noting any known defects, such as structural issues, plumbing or electrical malfunctions, and environmental hazards. The TDS is a comprehensive report that gives the buyer insights into potential risks associated with the property.
- Natural Hazard Disclosure (NHD): California’s diverse geography includes areas prone to natural disasters such as earthquakes, floods, and wildfires. Sellers are required to inform buyers if the property is located in any special hazard zones (e.g., earthquake fault zones, flood zones, fire hazard areas). The NHD report ensures that buyers are aware of these risks and can take necessary precautions.
- Lead-Based Paint Disclosure: For properties built before 1978, federal law requires sellers to disclose the presence of lead-based paint. California law aligns with this requirement, ensuring that buyers are aware of any potential lead paint risks, especially when young children are involved.
- Mello-Roos Disclosure: If a property is located in a community financed through the Mello-Roos Community Facilities District, the seller must disclose the special taxes associated with the property. Buyers must know these additional costs as they may significantly affect the total cost of homeownership.
For the buyer, full and accurate disclosures are essential to understanding the property’s true condition and avoiding unforeseen expenses. It allows the buyer to make informed decisions on whether to proceed with the purchase, renegotiate the price, or request specific repairs before closing.
3. Home Inspections and ReportsIn addition to seller disclosures, buyers typically order professional home inspections and specialized reports during the escrow process. These reports further inform buyers about the property’s condition and any potential issues that may not have been apparent in the initial walkthrough or seller’s disclosures. Key reports include:
- General Home Inspection Report: A licensed home inspector evaluates the overall condition of the property, including its foundation, roof, electrical systems, plumbing, and HVAC systems. This inspection often uncovers issues that may not have been disclosed by the seller.
- Pest Inspection Report: This report examines the property for evidence of termites, dry rot, or other wood-destroying pests. If pest damage is detected, the buyer may request treatment or repairs before completing the purchase.
- Specialized Inspections: Depending on the property’s location and age, additional inspections may be necessary, such as roof, sewer, or pool inspections. These specialized reports can identify specific problems that require attention before closing the deal.
During escrow, buyers are given the opportunity to review all disclosures and inspection reports. If new issues arise, buyers can negotiate repairs, request credits, or even back out of the deal if contingencies are not met. California law allows buyers to cancel the transaction within certain timelines if significant problems are found that were not disclosed or if repairs are not completed.
5. Legal Protections for Buyers and SellersThe California Association of Realtors (C.A.R.) provides standardized forms to ensure the disclosure process is thorough and consistent. These forms are designed to minimize misunderstandings and ensure that both buyers and sellers are on the same page throughout the transaction.
For sellers, making complete and honest disclosures is essential for avoiding legal claims. The disclosure process offers sellers protection against future disputes as long as they are transparent about known issues.
For buyers, the law provides significant protection, allowing them to pursue remedies if material information is intentionally or negligently withheld.
In California, disclosures and reports are fundamental to ensuring a smooth and transparent real estate transaction. They help buyers make informed decisions and offer sellers protection from potential legal disputes. By requiring disclosures, the state creates an environment where trust and accountability are prioritized, ultimately contributing to the integrity of the real estate market.
For both buyers and sellers, understanding and adhering to disclosure requirements is key to a successful real estate transaction. Buyers should take the time to thoroughly review all reports and disclosures, while sellers must be diligent in providing accurate information. In the end, these practices safeguard the interests of both parties and help avoid costly legal battles.
NOTE: Disclosure documents and advisories are available on the California Association of Realtors (C.A.R.) website. If you are a member of C.A.R. you can access these standardized forms in the Forms Library or in the Transaction portal.
REAL ESTATE TERMS
- A -
Abstract of Title - A condensed history or summary of all transactions affecting a particular tract of land.
Access - The right to enter and leave a tract of land from a public way. Can include the right to enter and leave over the lands of another.
Accretion - The slow build-up of lands by natural forces such as wind or water.
Acknowledgment - The act by which a party executing a legal document goes before an authorized officer or notary public and declares the same to be his or her voluntary act and deed.
Acre - A tract of land 208.71 feet square and containing 43,560 square feet of land.
Administrator - A person appointed by a probate court to settle the affairs of an individual dying without a will. The term is "administratrix" if such a person is a woman.
Adverse Possession - A claim made against the lands of another by virtue of open and notorious possession of said lands by the claimant.
Affidavit - A sworn statement in writing.
Agent - A person or company that has the power to act on behalf of another or to transact business for another, e.g., a title agent under contract with Old Republic Title to issue policies of title insurance.
Air Rights - The right to ownership of everything above the physical surface of the land.
ALTA - American Land Title Association, a national association of title insurance companies, abstractors and attorneys specializing in real property law. Its headquarters are in Washington, D.C.
Appurtenance - Anything so annexed to land or used with it that it will pass with the conveyance of the land.
ARM - Adjustable Rate Mortgage. See "Variable Rate Mortgage."
Assessment - The imposition of a tax, charge or levy, usually according to established rates.
Assessor - A public official who evaluates property for the purpose of taxation.
Assignee - One to whom a transfer of interest is made. For example, the assignee of a mortgage or contract.
Assignor - One who makes an assignment. For example, the assignor of a mortgage or contract.
Assumable Mortgage - A mortgage which, by its terms, allows a new owner to take over its obligations.
Attachment -Legal seizure of property to force payment of a debt.
Attorney in Fact - One who holds a power of attorney from another allowing him or her to execute legal documents such as deeds, mortgages, etc., on behalf of the grantor of the power.
- B -
Balloon Mortgage - A mortgage that is amortized over a specific period of years, but requires a lump sum payment in full at an earlier date.
Bankruptcy - A federal court proceeding in which debtors are relieved of liability for their debts after surrender of their assets to a court appointed trustee .
Bureau of Land Management - The branch of government in charge of surveying and managing public lands.
- C -
C & R ' s - Covenants, Conditions and Restrictions.
See "Conditions and Restrictions ."
Chain - A term of land measurement that is 66 feet in length.
Chain of Title - A term applied to the past series of transactions and documents affecting the title to a particular parcel of land.
Clear Title - One which is not encumbered or burdened with defects.
Closing - Also known as "escrow" or "settlement." The process of executing legally binding documents, such as deeds and mortgages most commonly associated with the purchase of real estate and the borrowing of money to assist in the purchase .
Clouded Title - An encumbered title.
Commitment to Insure - A report issued by a title insurance company, or its agent, committing the title insurance company to issue the form of policy designated in the commitment upon compliance with and satisfaction of requirements set forth in the commitment.
Common Interest Community (CIC) - Ownership characterized by mutual ownership of common areas, either jointly or through membership in an association, e.g., condominiums, planned unit developments, and townhomes.
Company Loan - Loan by employer to facilitate relocation of employee. Usually short term .
Condemnation - Taking private property for public use through court proceedings .
Condition or Conditions - A proviso in a deed or will that, upon the happening or failure to happen of a certain event, limits, enlarges, changes or terminates the title of the purchaser or devisee.
Conditions and Restrictions - A common term used to designate conditions and restrictions on the use of land. Includes penalties for failure to comply. Commonly used by land subdividers on newly platted areas.
Condominium - A system of individual fee ownership of units in a multi-unit structure, combined with joint ownership of common areas of the structure and land.
Conservator - See "Guardian . "
Contract for Deed - An agreement to sell and purchase under which title is held as security by the seller until such time as the required payments to the seller have been completed.
Convey - The act of deeding or transferring title to another.
Conveyance - An instrument by which title is transferred; a deed. Also, the act of transferring title.
Cooperative - A residential multi-unit building owned by a corporation in which each unit is occupied by a member of the corporation pursuant to a lease or occupancy agreement .
Covenant - An agreement written into deeds and other instruments promising performance or non-performance of certain acts, or stipulating certain uses or non-uses of the property.
Cul-de-Sac - The terminus of a street or alley. Usually laid out by modern engineers to provide a circular turn around for vehicles.
- D -
Deed - A written document by which the ownership of land is transferred from one person to another.
Deed of Trust - See " Mortgage."
Delivery - The final and absolute transfer of a deed from seller to buyer in such a manner that it cannot be recalled by the seller. A necessary requisite to the transfer of title.
Devise - The disposition of real property by will.
Due on Sale Clause - Provision in a mortgage or deed of trust which requires loan to be paid in full if property is sold or transferred.
- E -
Earnest Money - Advance payment of part of the purchase price to bind a contract for property. (also know as buyer's deposit)
Easement - An interest in land owned by another that entitles its holder to a specific limited use, such as laying a sewer, putting up electric power lines, or crossing the property.
Egress - The right to leave a tract of land. Often used interchangeably with "access."
Eminent Domain - The power of the state to take private property for public use upon payment of just compensation.
Encroachment - A trespass or intrusion onto another's property, usually by a structure, wall or fence.
Encumber - To burden a parcel of land with a lien or charge, e.g., a mortgage.
Encumbrance - A lien, liability or charge upon a parcel of land.
Escheat - A reversion of property to the state in those cases where an individual dies without heirs or devisees, and, in some states, without a will.
Escrow - A pro c e d u re whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer, and delivers them upon performance by the parties.
Estate - A person's possessions. The extent of a person's interest in real property.
Examination of Title - The investigation and interpretation of the record title to real property based on the title search or abstract.
Exception - In legal descriptions, that portion of land to be deleted or excluded. The term often is used in a different sense to mean an objection to title or encumbrance on title.
Executor - A person appointed by the probate court to carry out the terms of a will. The term is "executrix" if that person is a woman.
Extended Mortgage - One in which the due date of a mortgage is extended for a longer period, often at a higher interest rate than the original mortgage.
- F -
Fannie Mae - Federal National Mortgage Association (also FNMA) is a private corporation, federally chart e re d to provide financial products and services that increase the availability and affordability of housing by purchasing mortgage loans.
Fee Simple Estate - The greatest interest in a parcel of land that it is possible to own. Sometimes designated simply as "Fee."
Federal Housing Administration (FHA) Guarantee - An insurance contract in which HUD through FHA insures that the named lender will recover a specific percentage of the loan amount from the insurer (FHA) in the event that the loan goes bad.
Financing Statement - A document filed with the Register of Deeds or Secretary of State securing the title to personal property.
Fixtures - Any item of property so attached to real property that it becomes a part of the real property.
Flood Certification - A common term for a Federal Emergency Management Agency (FEMA) Standard Flood Hazard Determination Form (SFHDF). This determines whether land or a building is located within a Special Flood Hazard Area for purposes of flood insurance requirements under the National Flood Insurance Pro g r a m .
Forfeiture of Title - Provision in a deed creating a condition which will cause title to be passed to another should certain circumstances occur.
Foreclosure - is a legal process when a homeowner (or borrower) is in default and had stopped making payments on the loan, and the lender attempts to recover the balance of the loan on the property through a forced sale as in an auction or trustee sale (in California). refer to www.distressedhomesoutreach.com
Freddie Mac - Federal Home Loan Mortgage Corporation (also FHLMC) is a stockholder owned corporation chartered by Congress that purchases mortgage loans.
- G -
Ginnie Mae - Government National Mortgage Association (also GNMA) is a wholly-owned United States corporation that guarantees privately issued securities backed by pools of mortgages insured by FHA (Federal Housing Administration), FMHA (Farm e r s Home Administration) or VA (Veterans Administration).
Graduated Payment Mortgage - A loan in which monthly payments are relatively small in the beginning and gradually increase in dollar amount over the life of the mortgage.
Grantee - A person who acquires an interest in land by deed, grant, or other written instrument.
Grantor - A person, who, by a written instrument , transfers to another an interest in land.
Guardian - One appointed by the court to administer the affairs of an individual not capable of administering his or her own affairs.
- H -
Harbor Line - An arbitrary line set by authorities on navigable rivers, beyond which wharves and other structures may not be built. Also designated as line of navigation.
Heir - One who might inherit or succeed to an interest in land of an individual who dies without leaving a will (intestate).
Hiatus - A gap or space unintentionally left, when attempting to describe adjoining parcels of land.
Home Equity Conversion Mortgage - A reverse or reverse annuity mortgage in which HUD through FHA guarantees that the borrower will receive monthly payments from the insurer (FHA) in the event the lender is unable to make payments to the borrower.
Home Repair Loan - Used for repairs and additions to existing structures without affecting existing mortgage. Typically 10 years or less in length.
HUD 1 - A form settlement (closing) statement required by the U.S. Department of Housing and Urban Development (HUD) where federally related mortgages are being made on residential properties. It is a balance sheet showing the source of funds and the distribution of funds in connection with the purchase and/or mortgaging of residential property.
- I -
Improvements - Those additions to raw lands tending to
Inchoate Dower - The imperfect interest which the law gives a wife in the lands of her husband. This is an interest which upon the death of the husband may ripen into possession and use. Most states have abolished dower rights.
Inchoate Curtesy - The imperfect interest which the law gives a husband in the lands of his wife. This is an interest which upon the death of the wife my ripen into possession and use. Most states have abolished curtsey rights.
Indemnify - To make payment for a loss.
Ingress - The right to enter a tract of land. Often used interchangeably with "access."
Insurance - A contract of indemnity against specified perils.
Insurance Loan - When cash value of a life insurance policy is borrowed by the insured.
Interim Financing - Temporary or short term loans. Often used with new construction. Usually replaced with a permanent long-term mortgage.
Intestate - Designates the estate or condition of failing to leave a will at death. "To die intestate."
- J -
Joint Tenancy - An estate where two or more persons hold real estate jointly for life, where each owns an undivided interest in the property, and commonly includes a right of survivorship whereby following the death of one or more joint title owners, title vests in any surviving joint tenants.
Judgment - A decree of a court. In practice this is the lien or charge upon the lands of a debtor resulting from the Court 's award of money to a creditor.
See "Judgment Lien."
Judgment Docket - The record book of a County Clerk where a judgment is entered in order that it may become a lien upon the property of the debtor.
Judgment Lien - The charge upon the lands of a debtor resulting from the decree of a court properly entered into the judgment docket.
- K -
There are no items in this category.
- L -
Land Contract - See "Contract for Deed ."
Landmark - Any conspicuous object that helps establish land boundaries.
Lease - A grant of the use of lands for a term of years in consideration of the payment of a monthly or annual rental.
Lender's Policy - A form of title insurance policy which insures the validity, enforceability and priority of a lender's lien. This form does not provide protection for the owner.
Lessee - One who takes lands upon a lease.
Lessor - One who grants lands under a lease.
Lien - A hold, claim, or charge allowed a creditor upon the lands of a debtor. Some examples are mortgage liens, judgment liens, mechanics' liens.
Life Estate - A grant or reservation of the right of use, occupancy and ownership for the life of an individual.
Link - A term of land measurement being 1/100th of a chain or 66/100ths of a foot.
Lis Pendens - A notice recorded in the official records of a county to indicate that a suit is pending affecting the lands where the notice is recorded.
Loan Policy - See " Lender's Policy ."
Loss Payable Clause - Provision added to a Fire and Casualty Policy which says any loss will be paid to two or more parties as their interest may appear. Usually the owner and the mortgage lender.
Lot - A part of a subdivision or block having fixed boundaries ascertainable by reference to a plat or survey.
- M -
Majority - The age at which a person is entitled to handle his or her own affairs.
Marketable Title - A good title about which there is no fair or reasonable doubt.
Mechanic's Lien - A lien allowed by statute to contractors, laborers and material suppliers on buildings or other structures upon which work has been performed or materials supplied.
Metes and Bounds - A description of land by courses and distances.
Minor - One who because of insufficient age or status is legally incapable of making contracts.
Monument of Survey - Visible marks or indications left on natural or other objects indicating the lines and boundaries of a survey. May be posts, pillars, stones, cairns, and other such objects. May also be fixed natural objects, blazed trees, roads and even a water course.
Mortgage -An instrument used to encumber land as security for a debt.
Mortgage-Backed Security - A security evidencing either the ownership of an interest in a mortgage loan or pools of mortgage loans, or a separate obligation secured by a mortgage loan or pool of mortgage loans.
Mortgage Banker - A specialized lending institution that lends money solely with respect to real estate and secures its loans with mortgages on the real estate.
Mortgage Broker - A person or company that buys and sells mortgages for another on commission or who arranges for and negotiates mortgage contracts.
Mortgage Revenue Bonds - Issued by communities as a means of providing lower cost mortgage funds to certain qualified borrowers.
Mortgagee - The mortgage lender.
Mortgagee's Policy - See "Lender's Policy ."
Mortgagor - The mortgage borrower.
- N -
Negative Amortization - An actual increase in the principal amount of real estate loan because of the addition of matured but unpaid interest to the loan balance. Usually the result of monthly payments which a re temporarily set at a lower than needed level.
Notary - One authorized to take acknowledgments.
See "Acknowledgment."
Note - The instrument evidencing the indebtedness secured by a security instrument such as a mortgage or deed of trust.
- O -
Owner's Policy - A policy of title insurance which insures an owner’s interest and possession in real property. This form does not provide protection for a lender.
Ownership - The right to possess and use property to the exclusion of others.
- P -
Patent - A document or grant by which the federal or state government originally transferred title to public lands to an individual. The first in the series of transfers by which title comes down to present owners.
Personal Representative - A person appointed by the probate court to administer a decedent's estate.
See also "Executor" or "Administrator."
Plat or Plot - A map representing a piece of land subdivided into lots with streets shown there on.
P.M.I. - Private Mortgage Insurance. An insurance contract which insures that the named lender will re cover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.
Points - A one-time special fee or extra charge paid to a lender in order to secure a loan. Expressed as a percentage of face amount of mortgage.
Policy - A written contract of title insurance.
Policyowner - The insured on a title insurance policy.
Power of Attorney - An instrument authorizing another to act on one's behalf as his or her agent or attorney.
Power of Sale - A clause in a will, mortgage, deed of trust or trust agreement authorizing the sale or transfer of land in accordance with the terms of the clause.
Prorate - To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, a proration of real property taxes or fire insurance premiums.
- Q -
Quiet Title - An action in a proper Court to remove record defects or possible claims of other parties named in the action.
- R -
Range - A part of the government survey, being a strip of land six miles in width, and numbered east or west of the principal meridian.
Real Property - Land, together with fixtures, improvements and appurtenances.
Realtor® -A federally registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors® a n d subscribes to its strict Code of Ethics.
Realty - A brief term for real property.
Redeem - Literally "to buy back." The act of buying back lands after a mortgage foreclosure, tax foreclosure, or other execution sale.
Registered Land - See " Torrens Title ."
Reinsurance - To insure again by transferring to another insurance company all or part of an assumed liability, thus spreading the loss risk any one company has to carry.
REIT - Real Estate Investment Trust. A product of federal tax legislation formed as a business trust, under a special state REIT statute or as a corporation for the purpose of investing in real estate or mortgages on real estate.
REMIC - Real Estate Mortgage Investment Conduit. A product of 1986 federal tax legislation in which a business entity such as a corporation, partnership, or trust in which substantially all of the assets consist of qualified mortgages and permitted investments, elects to be treated as a REMIC. Qualification avoids treatment as a corporation for tax purposes.
Reverse or Reverse Annuity Mortgage - A mortgage for which the borrower pledges home equity in return for regular (monthly) payments, rather than a lump sum distribution of loan proceeds. Repayment is usually not required until the home is sold or the borrower's estate is settled, provided the borrower continues to live in the home and keeps current all taxes and insurance.
See also "Home Equity Conversion Mortgage."
Right - of - Way - The right which one has to pass across the lands of another. An easement.
Riparian - Rights to use of water and waterways in adjoining lakes or rivers.
- S -
Second Mortgage - A second loan on real estate that a l ready has a mortgage. It is subordinate to the first mortgage. Usually of shorter term and often at a higher interest rate.
Section or Section of Land - A parcel of land comprising one square mile or 640 acres.
Set Back Lines - Those lines which delineate the required distances for the location of structures in relation to the perimeter of the property.
Short Sale - terminology used to describe a distressed home sale where the price of the sale is less than the actual mortgage balance owed to the lender by the borrower (or home owner).
*Go to www.distressedhomesoutreach.com for reference.
Sub-surface Right - The right of ownership to things lying beneath the physical surface of the property.
Survey - The process of measuring land to determine its size, location and physical description and the resulting drawing or map.
- T -
Tenancy by the Entirety - Ownership by married persons where each owns the entire estate, with the survivor taking the whole upon the other's death.
Tenancy in Common - An estate or interest in land held by two or more persons, each having equal rights of possession and enjoyment, but without any right of succession by survivorship between the owners.
Tenant - Any person occupying real property with the owner's permission.
Testament - Another term for a will. Commonly referred to as "last will and testament."
Testate - The estate or condition of leaving a will at death. "To die testate."
Testator - A man who makes or has made a testament or will.
Testatrix - A woman who makes or has made a testament or will.
Title - The evidence of right which a person has to the ownership and possession of land. Commonly considered as a history of rights.
Title Defect - Any legal right held by others to claim property or to make demands upon the owner.
Title Insurance - Insurance against loss or damage resulting from defects or failure of title to a particular parcel of real property.
Title Plant - The total facilities - records, equipment, fixtures, and personnel - required to function as a title insurance operation. Technically, the organization of official records affecting real property into a system which allows quick and efficient recovery of title information.
Title Search - An examination of public records, laws, and court decisions to disclose the current facts regarding ownership of real estate.
Torrens Title - A system whereby, after court proceedings, a certificate is issued setting forth the extent of the applicant's estate in land subject to the exceptions shown. Most popular in the early 1900's, the system was adopted in 19 states. It is presently used only in parts of six states.
Township - A division of territory six miles square, containing 36 sections or 36 square miles.
Tract - A particular parcel of land.
Trust - A property right held by one as a fiduciary for the benefit of another.
Trustee - A person holding property in trust as a fiduciary for the benefit of another.
- U -
There are no items in this category.
- V -
VA Guarantee - An insurance contract in which the Veterans Administration (VA) insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad.
Variable Rate Mortgage - A loan in which the interest rate fluctuates with the cost of funds or some other index.
Vendee - A purchaser of real property under land contract.
Vendor - A seller of real property under land contract.
Vest - To pass to a person an immediate right or interest. Title may be said to vest in John Smith.
Vestee - A nonlegal term used by title insurers to indicate the owner of real property in a policy or report.
- W -
Warranty - A promise by the grantor of real property that he or she is the owner and will be responsible to the buyer if title is other than as represented.
Will -A written document providing for the distribution of property owned by a person after his or her death.
- X -
There are no items in this category.
- Y -
There are no items in this category.
- Z -
Zoning - The right of a municipality to regulate and determine the compatible character and use of property.
- Note -
The terms contained here are defined in their most commonly used form. Should more precise interpretations of these terms be necessary, we advise you to seek the counsel of an attorney.
- A -
Abstract of Title - A condensed history or summary of all transactions affecting a particular tract of land.
Access - The right to enter and leave a tract of land from a public way. Can include the right to enter and leave over the lands of another.
Accretion - The slow build-up of lands by natural forces such as wind or water.
Acknowledgment - The act by which a party executing a legal document goes before an authorized officer or notary public and declares the same to be his or her voluntary act and deed.
Acre - A tract of land 208.71 feet square and containing 43,560 square feet of land.
Administrator - A person appointed by a probate court to settle the affairs of an individual dying without a will. The term is "administratrix" if such a person is a woman.
Adverse Possession - A claim made against the lands of another by virtue of open and notorious possession of said lands by the claimant.
Affidavit - A sworn statement in writing.
Agent - A person or company that has the power to act on behalf of another or to transact business for another, e.g., a title agent under contract with Old Republic Title to issue policies of title insurance.
Air Rights - The right to ownership of everything above the physical surface of the land.
ALTA - American Land Title Association, a national association of title insurance companies, abstractors and attorneys specializing in real property law. Its headquarters are in Washington, D.C.
Appurtenance - Anything so annexed to land or used with it that it will pass with the conveyance of the land.
ARM - Adjustable Rate Mortgage. See "Variable Rate Mortgage."
Assessment - The imposition of a tax, charge or levy, usually according to established rates.
Assessor - A public official who evaluates property for the purpose of taxation.
Assignee - One to whom a transfer of interest is made. For example, the assignee of a mortgage or contract.
Assignor - One who makes an assignment. For example, the assignor of a mortgage or contract.
Assumable Mortgage - A mortgage which, by its terms, allows a new owner to take over its obligations.
Attachment -Legal seizure of property to force payment of a debt.
Attorney in Fact - One who holds a power of attorney from another allowing him or her to execute legal documents such as deeds, mortgages, etc., on behalf of the grantor of the power.
- B -
Balloon Mortgage - A mortgage that is amortized over a specific period of years, but requires a lump sum payment in full at an earlier date.
Bankruptcy - A federal court proceeding in which debtors are relieved of liability for their debts after surrender of their assets to a court appointed trustee .
Bureau of Land Management - The branch of government in charge of surveying and managing public lands.
- C -
C & R ' s - Covenants, Conditions and Restrictions.
See "Conditions and Restrictions ."
Chain - A term of land measurement that is 66 feet in length.
Chain of Title - A term applied to the past series of transactions and documents affecting the title to a particular parcel of land.
Clear Title - One which is not encumbered or burdened with defects.
Closing - Also known as "escrow" or "settlement." The process of executing legally binding documents, such as deeds and mortgages most commonly associated with the purchase of real estate and the borrowing of money to assist in the purchase .
Clouded Title - An encumbered title.
Commitment to Insure - A report issued by a title insurance company, or its agent, committing the title insurance company to issue the form of policy designated in the commitment upon compliance with and satisfaction of requirements set forth in the commitment.
Common Interest Community (CIC) - Ownership characterized by mutual ownership of common areas, either jointly or through membership in an association, e.g., condominiums, planned unit developments, and townhomes.
Company Loan - Loan by employer to facilitate relocation of employee. Usually short term .
Condemnation - Taking private property for public use through court proceedings .
Condition or Conditions - A proviso in a deed or will that, upon the happening or failure to happen of a certain event, limits, enlarges, changes or terminates the title of the purchaser or devisee.
Conditions and Restrictions - A common term used to designate conditions and restrictions on the use of land. Includes penalties for failure to comply. Commonly used by land subdividers on newly platted areas.
Condominium - A system of individual fee ownership of units in a multi-unit structure, combined with joint ownership of common areas of the structure and land.
Conservator - See "Guardian . "
Contract for Deed - An agreement to sell and purchase under which title is held as security by the seller until such time as the required payments to the seller have been completed.
Convey - The act of deeding or transferring title to another.
Conveyance - An instrument by which title is transferred; a deed. Also, the act of transferring title.
Cooperative - A residential multi-unit building owned by a corporation in which each unit is occupied by a member of the corporation pursuant to a lease or occupancy agreement .
Covenant - An agreement written into deeds and other instruments promising performance or non-performance of certain acts, or stipulating certain uses or non-uses of the property.
Cul-de-Sac - The terminus of a street or alley. Usually laid out by modern engineers to provide a circular turn around for vehicles.
- D -
Deed - A written document by which the ownership of land is transferred from one person to another.
Deed of Trust - See " Mortgage."
Delivery - The final and absolute transfer of a deed from seller to buyer in such a manner that it cannot be recalled by the seller. A necessary requisite to the transfer of title.
Devise - The disposition of real property by will.
Due on Sale Clause - Provision in a mortgage or deed of trust which requires loan to be paid in full if property is sold or transferred.
- E -
Earnest Money - Advance payment of part of the purchase price to bind a contract for property. (also know as buyer's deposit)
Easement - An interest in land owned by another that entitles its holder to a specific limited use, such as laying a sewer, putting up electric power lines, or crossing the property.
Egress - The right to leave a tract of land. Often used interchangeably with "access."
Eminent Domain - The power of the state to take private property for public use upon payment of just compensation.
Encroachment - A trespass or intrusion onto another's property, usually by a structure, wall or fence.
Encumber - To burden a parcel of land with a lien or charge, e.g., a mortgage.
Encumbrance - A lien, liability or charge upon a parcel of land.
Escheat - A reversion of property to the state in those cases where an individual dies without heirs or devisees, and, in some states, without a will.
Escrow - A pro c e d u re whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer, and delivers them upon performance by the parties.
Estate - A person's possessions. The extent of a person's interest in real property.
Examination of Title - The investigation and interpretation of the record title to real property based on the title search or abstract.
Exception - In legal descriptions, that portion of land to be deleted or excluded. The term often is used in a different sense to mean an objection to title or encumbrance on title.
Executor - A person appointed by the probate court to carry out the terms of a will. The term is "executrix" if that person is a woman.
Extended Mortgage - One in which the due date of a mortgage is extended for a longer period, often at a higher interest rate than the original mortgage.
- F -
Fannie Mae - Federal National Mortgage Association (also FNMA) is a private corporation, federally chart e re d to provide financial products and services that increase the availability and affordability of housing by purchasing mortgage loans.
Fee Simple Estate - The greatest interest in a parcel of land that it is possible to own. Sometimes designated simply as "Fee."
Federal Housing Administration (FHA) Guarantee - An insurance contract in which HUD through FHA insures that the named lender will recover a specific percentage of the loan amount from the insurer (FHA) in the event that the loan goes bad.
Financing Statement - A document filed with the Register of Deeds or Secretary of State securing the title to personal property.
Fixtures - Any item of property so attached to real property that it becomes a part of the real property.
Flood Certification - A common term for a Federal Emergency Management Agency (FEMA) Standard Flood Hazard Determination Form (SFHDF). This determines whether land or a building is located within a Special Flood Hazard Area for purposes of flood insurance requirements under the National Flood Insurance Pro g r a m .
Forfeiture of Title - Provision in a deed creating a condition which will cause title to be passed to another should certain circumstances occur.
Foreclosure - is a legal process when a homeowner (or borrower) is in default and had stopped making payments on the loan, and the lender attempts to recover the balance of the loan on the property through a forced sale as in an auction or trustee sale (in California). refer to www.distressedhomesoutreach.com
Freddie Mac - Federal Home Loan Mortgage Corporation (also FHLMC) is a stockholder owned corporation chartered by Congress that purchases mortgage loans.
- G -
Ginnie Mae - Government National Mortgage Association (also GNMA) is a wholly-owned United States corporation that guarantees privately issued securities backed by pools of mortgages insured by FHA (Federal Housing Administration), FMHA (Farm e r s Home Administration) or VA (Veterans Administration).
Graduated Payment Mortgage - A loan in which monthly payments are relatively small in the beginning and gradually increase in dollar amount over the life of the mortgage.
Grantee - A person who acquires an interest in land by deed, grant, or other written instrument.
Grantor - A person, who, by a written instrument , transfers to another an interest in land.
Guardian - One appointed by the court to administer the affairs of an individual not capable of administering his or her own affairs.
- H -
Harbor Line - An arbitrary line set by authorities on navigable rivers, beyond which wharves and other structures may not be built. Also designated as line of navigation.
Heir - One who might inherit or succeed to an interest in land of an individual who dies without leaving a will (intestate).
Hiatus - A gap or space unintentionally left, when attempting to describe adjoining parcels of land.
Home Equity Conversion Mortgage - A reverse or reverse annuity mortgage in which HUD through FHA guarantees that the borrower will receive monthly payments from the insurer (FHA) in the event the lender is unable to make payments to the borrower.
Home Repair Loan - Used for repairs and additions to existing structures without affecting existing mortgage. Typically 10 years or less in length.
HUD 1 - A form settlement (closing) statement required by the U.S. Department of Housing and Urban Development (HUD) where federally related mortgages are being made on residential properties. It is a balance sheet showing the source of funds and the distribution of funds in connection with the purchase and/or mortgaging of residential property.
- I -
Improvements - Those additions to raw lands tending to
Inchoate Dower - The imperfect interest which the law gives a wife in the lands of her husband. This is an interest which upon the death of the husband may ripen into possession and use. Most states have abolished dower rights.
Inchoate Curtesy - The imperfect interest which the law gives a husband in the lands of his wife. This is an interest which upon the death of the wife my ripen into possession and use. Most states have abolished curtsey rights.
Indemnify - To make payment for a loss.
Ingress - The right to enter a tract of land. Often used interchangeably with "access."
Insurance - A contract of indemnity against specified perils.
Insurance Loan - When cash value of a life insurance policy is borrowed by the insured.
Interim Financing - Temporary or short term loans. Often used with new construction. Usually replaced with a permanent long-term mortgage.
Intestate - Designates the estate or condition of failing to leave a will at death. "To die intestate."
- J -
Joint Tenancy - An estate where two or more persons hold real estate jointly for life, where each owns an undivided interest in the property, and commonly includes a right of survivorship whereby following the death of one or more joint title owners, title vests in any surviving joint tenants.
Judgment - A decree of a court. In practice this is the lien or charge upon the lands of a debtor resulting from the Court 's award of money to a creditor.
See "Judgment Lien."
Judgment Docket - The record book of a County Clerk where a judgment is entered in order that it may become a lien upon the property of the debtor.
Judgment Lien - The charge upon the lands of a debtor resulting from the decree of a court properly entered into the judgment docket.
- K -
There are no items in this category.
- L -
Land Contract - See "Contract for Deed ."
Landmark - Any conspicuous object that helps establish land boundaries.
Lease - A grant of the use of lands for a term of years in consideration of the payment of a monthly or annual rental.
Lender's Policy - A form of title insurance policy which insures the validity, enforceability and priority of a lender's lien. This form does not provide protection for the owner.
Lessee - One who takes lands upon a lease.
Lessor - One who grants lands under a lease.
Lien - A hold, claim, or charge allowed a creditor upon the lands of a debtor. Some examples are mortgage liens, judgment liens, mechanics' liens.
Life Estate - A grant or reservation of the right of use, occupancy and ownership for the life of an individual.
Link - A term of land measurement being 1/100th of a chain or 66/100ths of a foot.
Lis Pendens - A notice recorded in the official records of a county to indicate that a suit is pending affecting the lands where the notice is recorded.
Loan Policy - See " Lender's Policy ."
Loss Payable Clause - Provision added to a Fire and Casualty Policy which says any loss will be paid to two or more parties as their interest may appear. Usually the owner and the mortgage lender.
Lot - A part of a subdivision or block having fixed boundaries ascertainable by reference to a plat or survey.
- M -
Majority - The age at which a person is entitled to handle his or her own affairs.
Marketable Title - A good title about which there is no fair or reasonable doubt.
Mechanic's Lien - A lien allowed by statute to contractors, laborers and material suppliers on buildings or other structures upon which work has been performed or materials supplied.
Metes and Bounds - A description of land by courses and distances.
Minor - One who because of insufficient age or status is legally incapable of making contracts.
Monument of Survey - Visible marks or indications left on natural or other objects indicating the lines and boundaries of a survey. May be posts, pillars, stones, cairns, and other such objects. May also be fixed natural objects, blazed trees, roads and even a water course.
Mortgage -An instrument used to encumber land as security for a debt.
Mortgage-Backed Security - A security evidencing either the ownership of an interest in a mortgage loan or pools of mortgage loans, or a separate obligation secured by a mortgage loan or pool of mortgage loans.
Mortgage Banker - A specialized lending institution that lends money solely with respect to real estate and secures its loans with mortgages on the real estate.
Mortgage Broker - A person or company that buys and sells mortgages for another on commission or who arranges for and negotiates mortgage contracts.
Mortgage Revenue Bonds - Issued by communities as a means of providing lower cost mortgage funds to certain qualified borrowers.
Mortgagee - The mortgage lender.
Mortgagee's Policy - See "Lender's Policy ."
Mortgagor - The mortgage borrower.
- N -
Negative Amortization - An actual increase in the principal amount of real estate loan because of the addition of matured but unpaid interest to the loan balance. Usually the result of monthly payments which a re temporarily set at a lower than needed level.
Notary - One authorized to take acknowledgments.
See "Acknowledgment."
Note - The instrument evidencing the indebtedness secured by a security instrument such as a mortgage or deed of trust.
- O -
Owner's Policy - A policy of title insurance which insures an owner’s interest and possession in real property. This form does not provide protection for a lender.
Ownership - The right to possess and use property to the exclusion of others.
- P -
Patent - A document or grant by which the federal or state government originally transferred title to public lands to an individual. The first in the series of transfers by which title comes down to present owners.
Personal Representative - A person appointed by the probate court to administer a decedent's estate.
See also "Executor" or "Administrator."
Plat or Plot - A map representing a piece of land subdivided into lots with streets shown there on.
P.M.I. - Private Mortgage Insurance. An insurance contract which insures that the named lender will re cover a specific percentage of the loan amount from the insurer in the event the loan goes bad. Many lenders require this on higher percentage loans.
Points - A one-time special fee or extra charge paid to a lender in order to secure a loan. Expressed as a percentage of face amount of mortgage.
Policy - A written contract of title insurance.
Policyowner - The insured on a title insurance policy.
Power of Attorney - An instrument authorizing another to act on one's behalf as his or her agent or attorney.
Power of Sale - A clause in a will, mortgage, deed of trust or trust agreement authorizing the sale or transfer of land in accordance with the terms of the clause.
Prorate - To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, a proration of real property taxes or fire insurance premiums.
- Q -
Quiet Title - An action in a proper Court to remove record defects or possible claims of other parties named in the action.
- R -
Range - A part of the government survey, being a strip of land six miles in width, and numbered east or west of the principal meridian.
Real Property - Land, together with fixtures, improvements and appurtenances.
Realtor® -A federally registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors® a n d subscribes to its strict Code of Ethics.
Realty - A brief term for real property.
Redeem - Literally "to buy back." The act of buying back lands after a mortgage foreclosure, tax foreclosure, or other execution sale.
Registered Land - See " Torrens Title ."
Reinsurance - To insure again by transferring to another insurance company all or part of an assumed liability, thus spreading the loss risk any one company has to carry.
REIT - Real Estate Investment Trust. A product of federal tax legislation formed as a business trust, under a special state REIT statute or as a corporation for the purpose of investing in real estate or mortgages on real estate.
REMIC - Real Estate Mortgage Investment Conduit. A product of 1986 federal tax legislation in which a business entity such as a corporation, partnership, or trust in which substantially all of the assets consist of qualified mortgages and permitted investments, elects to be treated as a REMIC. Qualification avoids treatment as a corporation for tax purposes.
Reverse or Reverse Annuity Mortgage - A mortgage for which the borrower pledges home equity in return for regular (monthly) payments, rather than a lump sum distribution of loan proceeds. Repayment is usually not required until the home is sold or the borrower's estate is settled, provided the borrower continues to live in the home and keeps current all taxes and insurance.
See also "Home Equity Conversion Mortgage."
Right - of - Way - The right which one has to pass across the lands of another. An easement.
Riparian - Rights to use of water and waterways in adjoining lakes or rivers.
- S -
Second Mortgage - A second loan on real estate that a l ready has a mortgage. It is subordinate to the first mortgage. Usually of shorter term and often at a higher interest rate.
Section or Section of Land - A parcel of land comprising one square mile or 640 acres.
Set Back Lines - Those lines which delineate the required distances for the location of structures in relation to the perimeter of the property.
Short Sale - terminology used to describe a distressed home sale where the price of the sale is less than the actual mortgage balance owed to the lender by the borrower (or home owner).
*Go to www.distressedhomesoutreach.com for reference.
Sub-surface Right - The right of ownership to things lying beneath the physical surface of the property.
Survey - The process of measuring land to determine its size, location and physical description and the resulting drawing or map.
- T -
Tenancy by the Entirety - Ownership by married persons where each owns the entire estate, with the survivor taking the whole upon the other's death.
Tenancy in Common - An estate or interest in land held by two or more persons, each having equal rights of possession and enjoyment, but without any right of succession by survivorship between the owners.
Tenant - Any person occupying real property with the owner's permission.
Testament - Another term for a will. Commonly referred to as "last will and testament."
Testate - The estate or condition of leaving a will at death. "To die testate."
Testator - A man who makes or has made a testament or will.
Testatrix - A woman who makes or has made a testament or will.
Title - The evidence of right which a person has to the ownership and possession of land. Commonly considered as a history of rights.
Title Defect - Any legal right held by others to claim property or to make demands upon the owner.
Title Insurance - Insurance against loss or damage resulting from defects or failure of title to a particular parcel of real property.
Title Plant - The total facilities - records, equipment, fixtures, and personnel - required to function as a title insurance operation. Technically, the organization of official records affecting real property into a system which allows quick and efficient recovery of title information.
Title Search - An examination of public records, laws, and court decisions to disclose the current facts regarding ownership of real estate.
Torrens Title - A system whereby, after court proceedings, a certificate is issued setting forth the extent of the applicant's estate in land subject to the exceptions shown. Most popular in the early 1900's, the system was adopted in 19 states. It is presently used only in parts of six states.
Township - A division of territory six miles square, containing 36 sections or 36 square miles.
Tract - A particular parcel of land.
Trust - A property right held by one as a fiduciary for the benefit of another.
Trustee - A person holding property in trust as a fiduciary for the benefit of another.
- U -
There are no items in this category.
- V -
VA Guarantee - An insurance contract in which the Veterans Administration (VA) insures that the named lender will recover a specific percentage of the loan amount from the insurer in the event the loan goes bad.
Variable Rate Mortgage - A loan in which the interest rate fluctuates with the cost of funds or some other index.
Vendee - A purchaser of real property under land contract.
Vendor - A seller of real property under land contract.
Vest - To pass to a person an immediate right or interest. Title may be said to vest in John Smith.
Vestee - A nonlegal term used by title insurers to indicate the owner of real property in a policy or report.
- W -
Warranty - A promise by the grantor of real property that he or she is the owner and will be responsible to the buyer if title is other than as represented.
Will -A written document providing for the distribution of property owned by a person after his or her death.
- X -
There are no items in this category.
- Y -
There are no items in this category.
- Z -
Zoning - The right of a municipality to regulate and determine the compatible character and use of property.
- Note -
The terms contained here are defined in their most commonly used form. Should more precise interpretations of these terms be necessary, we advise you to seek the counsel of an attorney.
