Glossary

A

abatement

A decrease or reprieve from a debt, tax or other payment obligation.

above ground

The portion of a building that is built above ground level.

abrasion resistance

Resistance of lead-based paint to wear by rubbing or friction; related to both toughness and gloss.

abrasive

An abrasive is a material, often a mineral that is used to shape or finish a work piece through rubbing which leads to part of the work piece being worn away.

absolute humidity

Air moisture content expressed in grains (or pounds) of water vapor per pound of dry air.

absorption area

The soil surface area of a drain field (trench, bed, subsurface injector area, etc.) that treats and absorbs wastewater. Usually the trench bottom.

abstraction method

A way of estimating the value of property using similar properties available in the same market.
This method systematically examines demand factors needed to support any increase in the supply of real estate space in any given area.

abutment

The part of a structure that supports the weight of an arch or a solid part of a wall or a pier that supports a strut or a vault.

access

The right to enter or leave a piece of property from a public right of way, sometimes by passing through property that belongs to someone else.

access panel

An opening in the wall or ceiling near the fixture that allows access for servicing the plumbing/electrical system.

accessible surface

Any protruding interior or exterior surface, such as an interior window sill, that a young child can mouth or chew.

accommodation recording

Filing documents with the county recorder without verifying them, for the convenience of your customer.

accrue

To increase or accumulate, such as interest on a loan.

acknowledgment

A formal declaration before an authorized official such as a notary, by a person who has signed a document, that the document is his or her act. The person acknowledging the document must personally appear before the notary.

acre

A parcel of land that measures 43,560 square feet.

act of god

An accident or event that is unpreventable and is the result of natural causes such as lightning or floods.

active earth pressure

The horizontal stress caused by a mass of soil against a retaining wall as the wall moves away from the soil.

actual cash value

The value of an item less the amount of value that has been lost for ordinary wear and tear over time (depreciation).

add-on assignment

Adding another appliance or built-in system to a policy that is not currently covered in the provider’s plan.

addendum

An attached supplement to a purchase agreement or to escrow instructions that lists any additional changes to the original document.

additional living expense (ALE)

Increases in your living expenses caused by the accident for which you are making an insurance claim in order to maintain a normal standard of living.

additive

Any solid or liquid material or biological agent marketed primarily for cleaning, treating, degreasing, unclogging, disinfecting, deodorizing or otherwise affecting the performance of any component of an on-site system.

adhesives

An adhesive or glue is a material, usually in a liquid or semi-liquid state, that adheres or bonds items together.

adjustable-rate mortgage (ARM)

A mortgage that begins at a rate that’s lower than the current fixed rate and rises or falls each year over the life of the loan after a set period of time. (The changing rates are linked to economic indexes.)

adjustment date

The date the interest rate increases or decreases on an adjustable-rate mortgage.

ad valorem

A Latin phrase that means according to the value.

adverse possession

Acquiring title to a property by taking possession of it for a period of time, without the owner’s consent.

adverse use

Using property without the owner’s consent.

affidavit

A written sworn statement.

affix

To secure (an object or document) to another; to attach; add to.

aftershocks

Smaller earthquakes that follow the largest quake in a sequence. The larger the initial earthquake, the more numerous the aftershocks, which can continue over a period of weeks or months.

agency closing

Takes place when a lender uses a title company (or other firm) as an agent to complete a loan.

agent

A person or company that has the authority to conduct business for another.

air barrier

Any part of a building shell that offers resistance to air leakage. The air barrier is effective if it stops air from leaking.

air change

The amount of air required to completely replace the air in a room or building; not to be confused with re-circulated air.

air erosion

The passage of air over friable ACBM which may result in the release of asbestos fibers.

air handler/coil blower

The indoor part of an air conditioner or heat pump that moves cooled or heated air throughout the ductwork of your home. An air handler is usually a furnace or a blower coil.

air leakage

Unintentional air leaking into or out of a building through cracks and small openings.

airflow

The distribution or movement of air through a heating/cooling/ventilating system.

algae

Microscopic plant-like organisms that contain chlorophyll, which may grow on the surface of your pool water.

algaecide

Treatment that kills algae and airborne spores as they blow into your pool.

alkaline

Having a pH greater than 7; the alkalinity of water is a measure of its capacity to neutralize acids.

alkalinity

A measurement of the presence of alkali in water. Alkali is a compound that neutralizes acid to produce a pH level of more than 7 in your pool water.

allergen

a substance (such as a mold spore) that can cause hay fever, rashes, sinusitis, or asthma symptoms.

all-inclusive rate

When used with title insurance, a rate that may include a portion of the cost of the title examination and/or other closing services.

ALTA

The American Land Title Association, a national association of title insurance companies and attorneys specializing in real estate law. ALTA headquarters is in Washington D.C. For more information visit http://www.alta.org/

American Land Title Association (ALTA) Policy

A comprehensive title insurance policy that includes an inspection of the property and guarantees boundaries. An ALTA policy protects a mortgage lender‘s interest in a property.

amendment

A change made to an agreement.

amenity

A feature, attribute or addition to a property that increases its appeal (or value) in a particular neighborhood, such as an ocean view, solar heating, a swimming pool, wine cellar, home theater, etc.

amortization (loan)

The process of paying off a mortgage loan over a period of years. Part of each monthly payment pays interest on the loan and the other is applied to the principal, until the loan is paid off.

amortization schedule

A table or schedule indicating how much of each monthly loan payment will be applied toward the principal and how much toward interest over the life of a loan.

amortized loan

A loan paid off in installments, usually over a period of years.

annual percentage rate (APR)

The real, annual rate of interest on a loan. (It is slightly higher than the rate on your mortgage because of the way it is calculated, based on a government formula, but it gives you a truer sense of what you are actually paying.)

application

The form used to apply for a mortgage loan, which asks for information about a borrower’s income, savings, assets, debts, etc.

application fee

The fee that a lender charges to process a loan application.

appraisal

An estimate of the fair market value of a particular property written by an independent, state-licensed real estate appraiser and based on several factors, including comparable sales of similar homes in a neighborhood.

appraisal report

A standard form with supporting documents and details that summarizes a professional appraiser’s estimate of a property’s current market value.

appraised value

A qualified estimate of a property’s fair market value, based on an appraiser‘s training, experience and analysis of the property.

appraiser

An individual who is trained and qualified to estimate the value of real and personal property.

appreciation

The increase in the value of a property brought about by changes in market conditions, inflation, improvements or other causes.

appurtenance

A land improvement that is considered part of the property.

aquifer

An underground formation in rocks and soils that contain enough ground water to supply wells and springs.

architectural exhibit

A written document describing the architectural details of the project, which is submitted to the lender as part of the 203k loan process.

ARM

See adjustable-rate mortgage.

asbestos abatement

The process of removing or containing asbestos.

asbestos containing material (ACM)

Products that are made with asbestos.

asbestos debris

Pieces of ACBM that can be identified by color, texture, or composition, or means dust, if the dust is determined by an accredited inspector to be ACM.

assessed value

The value placed on property by a county tax assessor and used to compute property taxes.

assessment

Placing a value on a property for tax purposes. Also, an additional charge for a municipal improvement, or improvements on a condominium.

assessor

A public official who determines the value of a property for tax purposes.

asset

Items of value that you own. Assets that can be quickly converted into cash are considered liquid assets.

assignment

An assignment takes place when the ownership of a mortgage, promissory note or deed of trust is transferred from one company or individual to another.

assignee

The person or entity that receives a title, claim, property, interest, or right from another person.

assignor

The person or entity that transfers a title, claim, property, interest, or right to another person or entity.

assumption

The term applied when a buyer of real property assumes the mortgage of the seller. The buyer agrees to adopt the mortgage debt, becoming personally liable for its full repayment.

attachment

Taking of a property (legally) to force payment of a debt.

attorney’s opinion

A lawyer’s written statement that sets forth what he or she believes to be the condition of a property’s title.

auger

A tool for drilling/boring into unconsolidated earth materials (soil) consisting of a spiral blade wound around a central stem or shaft that is commonly hollow (hollow-stem auger).

AWQS

Aquifer Water Quality Standards

B

backflow

Unwanted flow of water in the reverse direction.

balanced water

A condition in which pH, achieved when total alkalinity, calcium hardness and temperature are properly balanced.

ballast

An anchoring material (such as rock, gravel, pavers) used to resist wind on top of the roof membrane.

balloon mortgage

A mortgage loan that begins at a lower-than-fixed interest rate, but requires the remaining balance to be paid at a specific date in a lump sum.

balloon payment

A large amount that pays off a loan.

basic rate

When used with title insurance, the rate charged when you don’t qualify for a reduced rate, such as a reissue rate.

battens

Wood strips installed on a roof to support tiles and ensure that they do not slip.

beam

A structural member that supports a load (weight). Sometimes called a “girder”.

bearing capacity

The ability of the underlying soil to support the weight of a foundation.

bearing point

A point where a bearing or structural weight is concentrated and transferred to the foundation.

bearing wall

A wall that supports any vertical load in addition to its own weight.

bedrock

Strong rock that lies under surface deposits of soil and weathered rock.

benzene

A cancer-causing chemical associated with fuels, such as gasoline. Benzene evaporates quickly and dissolves easily in water.

bilateral escrow instructions

One set of escrow instructions signed by both buyer and seller, usually signed when escrow opens. This is common in Southern California.

bill of sale

A signed document that transfers ownership of personal property from a seller to a buyer.

binder

A written confirmation of insurance coverage before the policy is actually issued. Also, a good-faith deposit.

binding contract

An agreement between two or more parties that is legally binding.

bio-Aerosol

Airborne particles, for example, mold spores or fragments of a mold growth that are suspended in the air.

biweekly mortgage

A mortgage in which you make payments every two weeks instead of once a month. (Additional fees may apply in this situation.)

blind spikes

Detectors exposed to known radon or decay product concentrations and submitted for analysis without being labeled as such. Used to evaluate the accuracy of the measurement.

blower-door test

Test used to determine a home’s “air-tightness” using a powerful fan mounted in an exterior door opening to pressurize or depressurize the house.

border survey

A survey that identifies the borderlines around a property from corner to corner.

borehole

The well shaft, which is lined with a solid pipe that seals out contaminants and stabilizes the hole that reaches down to the water.

boundary

A borderline around a piece of property.

breach

Failure to perform a specific duty or fulfill a specific obligation.

breakout

Visible movement of septic effluent on the surface of a property when a system fails or is overloaded.

broker

An individual who acts as an agent, bringing parties together (such as a borrower and a lender) and earns a fee for brokering a deal. A good broker has a broad knowledge of the industry and can suggest alternatives that may benefit the borrower.

broker’s commission

An amount paid to a real estate broker for handling a property transaction, usually based on the sale price of the property.

building code

The minimum local or state regulations that govern how a home may be designed, constructed or modified. The code is designed to protect the health and safety of the structure’s occupants.

building envelope

All external building materials, windows, and walls, which enclose the internal space.

building permit

A written authorization from the city or county that grants permission to construct or renovate a building as described in the application.

buyer’s agent

A real estate agent who represents the buyer (not the seller).

C

CAE

The Combined Annual Efficiency is a measure of the amount of heat produced for every dollar of fuel consumed for both home and water heating.

calcium carbonate

Crystals formed on swimming pool surfaces when the calcium hardness, pH or total alkalinity levels are too high. Also known as scale.

cap

The ceiling on interest rate increases on an adjustable rate mortgage.

capital gain

The profit you make when you sell a property. A portion of the profit is not taxed. Up to $250,000 for single taxpayers is excluded and up to $500,000 is excluded for taxpayers who are married filing jointly.

carbon footprint

The amount of carbon dioxide emitted by something (as a person’s activities) during a given period.

carbon monoxide

Carbon monoxide (CO) is a deadly, colorless, odorless, poisonous gas. It is produced by the incomplete burning of various fuels, including coal, wood, charcoal, oil, kerosene, propane, and natural gas.

cash-out refinance

When a borrower refinances his mortgage at a higher amount than the current loan balance with the intention of taking part of the money for personal use.

catch basin

A large underground container with a grate for the collection of storm water run-off. It catches or collects dirt and other debris and prevents them from polluting streams and lakes.

caulking

A flexible material used to seal exterior cracks and openings commonly found around windows or foundations.

caveat emptor

A Latin phrase for let the buyer beware meaning that the buyer alone is responsible for determining the quality of a purchase before paying. You should always know your rights and be vigilant to avoid scams.

CC&Rs

Covenants, conditions and restrictions determine how land or a property cannot be used.

cement

A powdered substance made of lime and clay that is mixed with water and sand to make mortar (an adhesive) or with water, sand and gravel to make concrete.

central air conditioning system

System in which air is treated at a central location and distributed to and from rooms by one or more fans and a series of ducts.

centralized septic system

An onsite wastewater disposal system which collects waste from multiple buildings or facilities for treatment and disposal at a single site or facility.

certificate of eligibility

A document issued by the Veteran’s Administration that certifies a veteran’s eligibility for a VA loan.

certificate of reasonable value (CRV)

A document issued by the Veteran’s Administration, when an appraisal has been made on a property being purchased with a VA loan.

certificate of title

An attorney’s written opinion that verifies ownership of a property as stated on the certificate.

cesspool

A lined excavation in the ground which receives the discharges of a drainage system or part thereof, so designed as to retain the organic matter and solids discharging therein, but permitting the liquids to seep through the bottom and sides.

chain of title

The history of the ownership of a piece of property going back to the original owner. The document that transfers ownership from one to another is called a deed.

change order

A formal request to change the scope of work for the existing project set forth in the original plan. A change order generally affects the cost of the project.

check source

A radioactive source, not necessarily calibrated, which is used to confirm the continuing satisfactory operation of an instrument.

chimney cap

A box that sits on top of your chimney that prevents sparks and burning debris from getting out of your chimney, and keeps rain, animals, leaves and branches out of the chimney.

chimney shell

Outer part of a chimney. The outer shell can be made of brick, stone or metal.

chimney sweep

A worker who clears ash and soot from chimneys.

chlorine

Chlorine is a naturally-occurring chemical element, one of the basic building blocks of matter. Chlorine is an essential nutrient for plants and animals. It is added to water to disinfect it.

circuit breaker

A protective devise that automatically opens a circuit when it is overloaded.

cistern

A rainwater storage tank, often underground.

claim

To assert or demand a right to something, such as money or property.

Cleanup

The utilization of HEPA-vacuuming or wet cleaning or both to control and eliminate accumulations of asbestos material and asbestos waste material.

clear title

A title that is free of liens or legal questions about ownership of the property.

close of escrow (COE)

The date when the buyer becomes the legal owner of a property and title insurance goes into effect.

closing

The final step in a real estate sales transaction when a deed is transferred from seller to buyer.

closing agent

An individual who represents a buyer and handles the closing and the legal transfer of title and ownership from the seller to the buyer. Also called settlement agent.

closing costs

Amounts paid for various services during a real estate closing, such as document preparation, notary services and title insurance. Closing costs are separate from the purchase price of the property and they can range from 3% to 7% of a home’s closing price.

closing statement

A document listing all cash received, all charges and credits made and all cash paid out to complete a real estate transaction.

cloud on title

The term used when a title search uncovers any problem, such as a lien, that adversely affects a property’s title. Usually clouds on title can only be removed by a release or court action.

CLTA

California Land Title Association, an association of title agencies in the state of California. For more information, visit http://www.clta.org/

CMA

Comparative Market Analysis (CMA) is an evaluation of similar, recently sold homes (called comparables) that are near a home intended to be bought or sold. It is used to establish a price range, or fair market value of a home based on current market activity.

co-borrower

An additional individual who signs (and is also responsible for repaying) a loan and whose name is on the property’s title.

co-signed account

An account signed by someone in addition to the primary borrower, making both people responsible for the amount borrowed.

collateral

Something that is pledged to secure a loan. In a home loan, the property is the collateral. The borrower risks losing the property if the loan is not repaid according to the terms of the mortgage or deed of trust.

colony

A uniform mass of cells growing on a solid surface. A colony is usually the smallest unit of mold that can be observed with the naked eye.

commission

An amount paid to a real estate agent for handling a property transaction, usually based on the sale price of the property.

commitment letter

A formal promise of a loan from a lender to a buyer. The letter spells out the terms of the loan.

commitment of title

A promise that a title company will issue title insurance.

common areas

Areas in a planned unit development or condominium that are shared by the owners, such as lobbies, walkways, garages, mail and laundry rooms.

common area assessments

Fees paid by the owners of individual units in a condominium or planned development to maintain the public areas they share in common, such as parking garage, lobby, etc.

community property

In some states, especially the southwest, when a married couple acquires property during their marriage, they are considered joint owners, except under special circumstances.

community rating system (CRS)

A CRS is a way of measuring how well a community prepares for the possibility of flooding. Residents of areas that have a high level of preparedness may be eligible for discounts on their flood insurance premiums.

comparable sales

A list of recent sale prices of homes in a neighborhood that are similar (comparable) in size. Comps are used to determine the current market value of a property. You can get a list of comparables from your real agent or appraiser.

competitive market analysis

Calculating a property’s value based on sales of similar properties in the same neighborhood.

compressor

The part of the outdoor air conditioner or heat pump that compresses and pumps refrigerant to meet household cooling requirements.

concrete

Concrete is a composite construction material composed primarily of aggregate, cement and water.

concurrent escrow

Instances in which the closing of one escrow is dependent on the closing of another; for example, a buyer is dependent on the first closing to earn the money he needs for the second closing.

condensation

The process in which a gas or vapor turns into a liquid, like dew forming on grass.

condenser coil

The outdoor portion of an air conditioner or heat pump that either releases or collects heat, depending on the time of the year.

conditions

Specific terms in a contract that must be met before a transaction can close.

condominium

A form of property ownership in which you own your individual unit and share the rest of the space in the development (e.g., common areas, such as the lobby, mail room, parking garage, etc.)

condominium conversion

Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

conduction

The transfer of heat energy through a substance or from one substance to another by direct contact of atoms or molecules.

conforming loan

Any loan that follows Fannie Mae guidelines and stays within the limits it sets each year.

containment

The negative-pressurized enclosure where the asbestos abatement is actually taking place.

contaminant

Anything found in water (including microorganisms, minerals, chemicals, radionuclides, etc.) which may be harmful to human health.

contingency

A condition that must be met before a contract is legally binding. A buyer, for example, may add a contingency clause to a purchase agreement stating that the sale will not go through if the seller does not provide proof that the property has been inspected for termites. All contingencies must be met or waived before the deal can close.

contingency fund

An amount kept in reserve to guard against possible losses.

contract

An oral or written agreement to perform a certain act, such as providing a loan at a specific rate of interest.

contract broker

An agent who brings a buyer and seller to the point of an executed contract, but who does not represent either party.

convection

Transport of heat by the movement of a gas or liquid.

conventional loan

A loan that requires no insurance or guarantee.

conventional mortgage

Home loans from commercial lenders that are not government loans (VA and FHA).

convertible ARM

An adjustable-rate mortgage that allows the borrower to change to a fixed-rate mortgage within a period of time.

convey

To transfer a property title from one person to another.

co-operative (co-op)

A type of ownership in which the residents of a multi-unit housing complex own shares in the corporation that owns the property. Each resident has the right to occupy a specific apartment or unit in the complex.

co-ownership

Title ownership held by two or more individuals or entities.

coping (roof)

The point where the slant of a roof meets the exterior side of a structure. When inspecting a home it’s important to be sure that the coping is not broken or missing.

copper

A natural element sometimes used in swimming pools as an algaecide. High levels of copper may stain hair, fingernails or pool surfaces and can also result in green, brown or blue water.

counteroffer

A new offer that introduces new terms or conditions made in response to an offer that has been received. It rejects the original offer, which can only be revived by the party that made the prior offer.

courier fee

An amount charged for delivering closing documents.

crawlspace

A shallow and uninhabitable area, usually between the soil and the first floor of the home, which provides access to the electrical, plumbing and heating, ventilation and air conditioning (HVAC) systems located below the first floor.

credit bureau

An organization that collects credit information and issues individual reports.

credit history

A record of an individual’s debt payments over the years. Lenders review credit histories as part of the process for deciding to grant a mortgage.

credit report

A report of an individual’s debt and payment history, prepared by a credit bureau and used by a lender to determine a loan applicant’s creditworthiness.

creditor

A person to whom money is owed.

creosote

The byproduct of wood-burning fires.

cross connection

Any actual or potential connection between a drinking (potable) water supply and a source of contamination.

cross-contamination

The spread of contaminates from the affected area to formerly unaffected areas.

CSIA

The Chimney Safety Institute of America (CSIA) is a non-profit, educational organization dedicated to chimney and venting system safety.

D

damper

A chimney damper is a vent that opens and closes to allow air in and out of the chimney. Some dampers open wider or smaller to allow adjustments to the air flow into the chimney.

debt

An amount you owe.

deed

The legal document of ownership that verifies title to a property. It is passed from seller to buyer in a closing transaction.

deed of trust

Another term for a mortgage. Some states, like California, do not record mortgages. Instead, they record a deed of trust which transfers a property to a third party (trustee) to hold until a loan is paid.

default

Failure to make a mortgage payment within a specified period of time, usually within 30 days of the due date.

defect

A deficiency, irregularity, blemish on a title, which usually needs to be resolved before a transaction can close.

deformation

A change in the shape of an object or material.

delinquency

Failure to make mortgage payments when they are due, usually on the first day of the month, although there is usually a grace period of a few days before a late payment fee is charged.

delivery

The final, irrevocable transfer of a deed from a seller to a buyer.

deposit

A down payment in advance of a larger sum due.

depreciation

A reduction in the value of a property due to ordinary wear and tear over time.

detection limit

The minimum amount of a substance that can be reliably measured by a particular method.

disbursement

Released money that has been held in an escrow account.

disclosure

A list of a property’s features and defects that the seller gives to the buyer. A disclosure is required in many states.

displacement

A change in position.

disposal field trenches

Trenches excavated in a predetermined and approved septic area that comprise the disposal field.

distressed property

A mortgaged property that is in foreclosure.

dormer

A vertical window set in a small gable projecting from a sloping roof.

down payment

The part of the purchase price of a property that the buyer pays upfront in cash. (This amount is separate from the loan amount and the closing costs.)

downdraft

When the natural flow of air is inverted and travels down the chimney, causing smoke to accumulate inside the building.

draft

Movement or flow of combustion air and flue gas up through the chimney and out the top.

draw request

A formal request for funds held in a rehabilitation escrow account.

dredging

Removing soils from a sea, river or lake bed in order to deepen the waterway for water travel.

drive-by appraisal

Unlike a full, interior appraisal of a property, a drive-by appraisal is based on a professional appraiser’s evaluation of the exterior of the home and neighborhood.

dry rot

A fungal disease that causes wood to become brittle and crumble into powder.

dry wood termite

A type of termite that feeds on dry wood, which, over a long period of time can destroy wooden structures.

dual agent

A real estate agent who represents both the buyer and the seller in a transaction.

duct work

A system in the home that circulates heated or cooled air throughout the structure.

due on sale clause

A clause written into a mortgage that allows the lender to demand full payment of the loan balance when you sell your property.

DWV

Abbreviation for Drain, Waste and Vent.

E

earnest money

A deposit made by a potential buyer to show that he or she is committed to the transaction.

earthquake fault

A fracture in a rock mass where some movement has taken place.

earthquake hazard

Any physical occurrence that is the result of an earthquake that may produce adverse effects on human activities.

earthquake strap

A metal strap used to secure a water heater to the house frame or foundation.

easement

A right given to allow someone else access to your property for a specific purpose. A common example would be: allowing a utility company onto your property to install and maintain power lines.

eave

The overhang at the lower end of a roof.

effective age

An appraiser’s estimate of the physical condition of a building. The actual age of a building may be different from its effective age.

effective date

The day that home warranty coverage begins.

egress

The right to exit or leave a property without trespassing on someone else’s property.

elevated building

A building that has no basement and has its lowest elevated floor raised above the ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

elevation certificate

An elevation certificate is a detailed survey of a structure’s elevation to see if it is above or below the base flood elevation. An elevation certificate can be used to reduce the cost of flood insurance or even remove a particular structure from the 1% (100-year) floodplain.

embankment

A man-made earth structure constructed for the purpose of impounding water.

embosser

A pliers-like device, that creates raised areas and indentations on paper when pressed. An embosser is not an official notary seal, but may be used in addition to the seal.

eminent domain

The right of a government to take private property for public use by paying its fair market value.

enclosure

An airtight, impermeable, permanent barrier around ACBM to prevent the release of asbestos fibers into the air.

encroach

To intrude illegally on someone else’s land. Also, to trespass.

encroachment

An improvement that intrudes illegally on someone else’s property, such as a garage or deck that is built across a property boundary line onto a neighbor’s land.

encumbrance

Anything that restricts or impedes the title to a property, such as a mortgage, debt, lien or court judgment.

energy auditor

A home inspector who evaluates your home to identify areas where energy efficiency improvements can save you money.

energy star

A system sponsored by the Environmental Protection Agency and the U.S. Department of Energy for labeling the most energy-efficient products and appliances on the market.

EPA

The U.S. Environmental Protection Agency (EPA or USEPA) is an agency of the federal government charged to protect human health and the environment, by writing and enforcing regulations based on the laws passed by congress.

epicenter

The point on the earth’s surface vertically above the location in the crust where a seismic rupture begins.

Equal Credit Opportunity Act (ECOA)

The federal law that prohibits discrimination when giving credit because of race, color, religion, national origin, sex, age or marital status.

equity

Current cash value of a property, less any debts – including a mortgage that’s still owed.

escrow

An account set up by an independent third party to hold funds, documents and instructions for completing a sales transaction. In some states, escrow is the process of having a neutral party, the escrow officer or agent, oversee the closing of the transaction between seller and buyer.

escrow account

An account created by a lender to hold funds to pay expenses, such as property taxes and homeowner’s insurance when they are due.

escrow agent or officer

A trained professional who is qualified to manage the closing of your real estate transaction.

escrow disbursements

The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.

escrow instructions

A document that outlines the duties of the escrow agent/officer or attorney who will oversee the final steps in the transaction between buyer, seller and lender. Escrow instructions include all the terms and conditions that must be met by each party before a property can change hands.

escrow number

The number assigned to the file where all the documents related to a closing are kept.

estate

All the real and personal property that you own at the time of your death.

eviction

The legal process of removing an individual from real property.

examination of title

A report that examines the title history of a property during the title search.

exceptions

Items listed on a preliminary title report that affect title. An exception, for example, could refer to a portion of land that would be excluded from coverage by a title insurance policy.

exclusion

An omission in the terms and conditions of a warranty policy that has been documented.

exclusive listing

A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time.

execute

To sign documents so that a transaction can be completed.

executor

A person named in a will or appointed by a court to administer an estate.

exposure time

The length of time a specific mail-in device must be in contact with radon or radon decay products to get an accurate radon measurement.

F

Fair Credit Reporting Act

A law that protects consumers by regulating the release of credit reports and setting guidelines for correcting errors in credit records.

fair market value

The highest price that a buyer would pay and the lowest a seller would accept, on the current market.

Fannie Mae (FNMA)

The Federal National Mortgage Association, the nation’s largest supplier of home mortgages. This government body sets the standards for mortgage loans that lenders follow. For more information, visit www.fanniemae.com.

fault

A fracture in a rock mass where some movement has taken place.

feasibility analysis

A study undertaken to determine if a project is feasible. For a rehabilitation project, the analysis considers how much repair work is required, how much it will cost and whether the market value of the property after the improvements will be greater than the purchase price.

Federal Housing Administration (FHA)

An agency of the U.S. Department of Housing and Urban Development (HUD) that insures residential mortgage loans made by private lenders. For more information, visit http://www.fha.com/

fee appraiser

A certified, professional appraiser who forms an opinion of the fair market value of property and receives a set fee in exchange.

fee simple

The greatest possible interest a person can have in a real estate property. Also called fee title.

FEMA

The Federal Emergency Management Agency, the U.S. Government agency in charge of protecting the nation from both man-made and natural disasters, including floods, fires, earthquakes, hurricanes, tornadoes, hazardous spills and acts of terrorism. For more information, visit http://www.fema.gov/.

FHA mortgage

A loan that is guaranteed by the Federal Housing Administration that allows buyers to make a smaller down payment than most conventional mortgage loans. The FHA insures institutional lenders against losses that result from defaults on loans made according to FHA requirements.

FICO Score

FICO is an abbreviation for Fair Isaac Corporation and refers to a person’s credit score based on credit history. Lenders and credit card companies use the number to decide if the person is likely to pay his or her bills. A credit score is evaluated using information from the three major credit bureaus and is usually between 300 and 850.

fiduciary

An individual or entity that is entrusted with financial responsibility on someone else’s behalf.

FIRM

Flood Insurance Rate Map (FIRM), is an official map of a community, on which the Federal Insurance and Mitigation Administration has delineated both the special flood hazard areas and the risk premium zones applicable to the community. Most FIRMs include detailed floodplain mapping for some or all of a community’s floodplains.

firm commitment

A lender’s agreement to make a loan to a specific borrower for a specific property.

first mortgage

The mortgage that is in first place among any loans on a property.

fissures

Small cracks or clefts usually in a mass of rock.

fixed-rate mortgage

A mortgage with an interest rate that does not change during the entire term of the loan.

fixture

Personal property that becomes real property when it’s permanently attached to a property, such as a built-in refrigerator, wine cooler or dishwasher.

flashing

Strips of sheet metal or other material that prevent leaks around roof valleys, chimneys, sky-lights, joints near windows and doors, etc.

flood insurance

Insurance that covers property damage caused by flooding. It is required for properties located in federally designated flood areas. It does not cover burst pipes or water leaks in your basement.

flood plain

A low piece of land often adjacent to a river that is subject to flooding.

flue

A chamber through which smoke, hot gases, and combustion byproducts are vented.

fluoride

Fluoride is a compound that contains fluorine, a natural element. Often added to public water sources to prevent tooth decay.

foreclosure

The legal process in which a property is taken away because the owner has not made timely mortgage loan payments. In most cases, the property is sold at auction and the proceeds are used to pay off the loan.

frame inspection

An inspection to determine a home’s structural integrity and whether or not it complies with local building codes.

freehold estate

A legal term to describe any structure you own. Owners are eligible for tax benefits that are not available for people who lease or rent.

friable asbestos

Any material containing more that 1 percent asbestos as determined using Polarized Light Microscopy, that, when dry, can be crumbled, pulverized, or reduced to powder by hand pressure.

FSBO (fiz-bo)

Acronym that stands for “For Sale By Owner.”

fungi

A biological kingdom of organisms that includes among many others, mushrooms, puffballs, yeasts, and molds. There are between 100,000 and 10 million species of fungi.

fungicide

A chemical that kills microorganisms such as fungi.

G

gable roof

A roof that is “A” shaped with two upward sloping sides that meet in the middle at the ridge forming a symmetrical triangle.

garbage fees

Unnecessary charges tacked on to your closing or mortgage costs. Also called junk fees.

geological hazard

Conditions that can cause damage to property and loss of life. These can include earthquakes, land and rock slides, avalanches, mudflows, and volcanic eruptions. A geotechnical engineer or an engineering geologist is trained to assess and, when possible, mitigate these types of hazards related to the earth’s structures.

geological report

A report that determines whether a property is located in an earthquake fault zone, prone to flooding, or likely to suffer from slope stability problems.

GFCI outlet

Stands for Ground-Fault-Circuit-Interrupter. This is an electrical outlet that can stop power instantly as a safety precaution. Often installed in rooms where there is running water and the chance of electrical shock.

Ginnie Mae (GNMA)

The Government National Mortgage Association, a government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that provides funds for lenders to make government home loans. For more information, visit http://www.ginniemae.gov/

good-faith estimate

An educated estimate of closing costs that a buyer is likely to owe. A lender is required to provide this estimate to the borrower within three days of receiving a home-loan application. The final amount due may vary, but should be close to the lender’s estimate.

government loan (mortgage)

A mortgage that is insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the Rural Housing Service (RHS). Mortgages that are not government loans are classified as conventional loans.

grant

To convey title of property with a deed.

grant deed

Commonly used in California, this is a deed that conveys title to property.

grantee

The person who acquires title to property usually by deed or grant. In most transactions, this is the buyer.

grantor

The person who transfers title of property usually by deed or grant. In most transactions, this is the seller.

greywater

Domestic wastewater including bath, lavatory, laundry and sinks.

groundwater

Water found beneath the earth’s surface that fills pores between sand, soil particles, or gravel creating a saturated zone. In aquifers, groundwater is in sufficient quantities that it can be used for drinking water, irrigation, or other purposes.

guy section

A bracing attachment for tall chimney structures that provides protection from wind displacement.

H

hard water

Water that contains a high level of calcium, magnesium and other minerals that diminish the cleansing power of soap and produce scale in hot water lines, boilers and appliances.

hazard insurance

Insurance that covers your property if it is damaged by such hazards as fire, wind or vandalism.

Hazardous Materials (HAZMAT)

Chemicals, combustible liquids, compressed gases, controlled substances, corrosives, explosives, flammable materials, oxidizers, poisons, radioactive materials, and toxic materials.

heat pump

An HVAC unit that heats or cools by moving heat. During the winter, a heat pump draws heat from outdoor air and circulates it through your home’s air ducts. In the summer, it reverses the process and removes heat from your house and releases it outdoors.

heavy metals

Metallic elements with high atomic weights, such as, mercury chromium cadmium, arsenic, and lead that can cause health problems in plants, animals and humans.

HEPA

Acronym for High Efficiency Particulate Air. It refers to a filtering system capable of trapping and retaining at least 99.97 percent of all monodispersed particles 0.3m in diameter or larger.

HEPA filter

A high-efficiency particulate air filter that can remove particles of 0.3 microns or larger from air at 99.97percent or greater efficiency.

hip roof

A four-sided roof that slopes down to the walls of the house.

home equity line of credit

A mortgage loan that allows the borrower to use his home as collateral for cash up to a certain amount.

home inspection

A complete inspection (foundation to roof) by a licensed professional who evaluates the structural and mechanical condition of a property. The buyer often includes this inspection as a contingency in a purchase agreement. Learn more.

home warranty insurance

An insurance policy that covers repairs to mechanical systems, such as heating, air-conditioning, plumbing and built-in appliances (dishwashers, disposals) in a home. Some title companies offer package deals that include this insurance. Either buyer or seller can pay for a home warranty policy. Learn more

homeowners’ association

A nonprofit association that manages the common areas of a planned unit development or a condominium.

homeowner’s insurance

An insurance policy that combines personal liability insurance and coverage for certain hazards, such as fire and burglaries.

homeowner’s warranty

An insurance policy that covers repairs to mechanical systems, such as heating, air-conditioning, plumbing and built-in appliances (dishwashers, disposals) in a home. Some title companies offer package deals that include this insurance. Either buyer or seller can pay for a home warranty policy.

homestead

The home and land you own, secured by a deed that is underwritten by a title policy.

HUD

The U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.

HUD-1 settlement statement

An itemized list of funds printed by the Department of Housing and Urban Development and paid at a closing by both buyer and seller, including loan fees and points, commissions, initial escrow deposits.

HVAC

Short for “heating, ventilation and air conditioning.” It’s always a good idea to have these systems checked by a professional home inspector before you buy a home.

I

impound account

An account set up by a lender for a borrower to cover various payments as they come due, for example, mortgage insurance, homeowners insurance and taxes. The funds are collected in advance and held in escrow for the borrower.

improvements

Additions that add to a property’s value, such as a garage, deck, patio, buildings, streets, sewer, etc.

in kind

An agreement to replace a damaged home appliance with a new or similar appliance instead of cash as stated in a home warranty policy.

indemnify

To protect against or make payment for a loss, damage or injury.

independent appraisal

An estimate of the value of a property prepared by a professional appraiser who has no interest in the property and nothing to gain from a high or low valuation.

index

A number used by lenders to measure interest rate changes.

infrared

Infrared (IR) radiation is electromagnetic radiation of a wavelength that is longer than visible light, but is shorter than microwave radiation. The name means “below red” (from the Latin infra, “below”) red being the color of visible light of the longest wavelength. Infrared radiation spans three orders of magnitude and has wavelengths between 0.7 µm and 1000 µm (1 mm).

ingress

A way of entering your property without trespassing on your neighbor’s property.

inspection fee

The amount paid for home inspection services, such as a termite inspection.

installment note

A promise to pay principal and interest at specific times over a period of time.

instrument

A written legal document, such as a contract or a deed.

insulation

Any material that offers resistance to heat transmission. When insulation is placed in walls, ceilings or floors it reduces the loss or gain of heat from outside sources.

insurable title

A title to property that a title insurance company will insure.

insurance loan

Borrowing the cash value of an insurance policy.

insured premises

Refers to the home, land, and other fixed structures on the property of a homeowner’s insurance policyholder.

inter vivos trust

A Latin phrase that means among the living‚ usually used to describe a living trust.

interim financing

A short-term loan, often replaced with a long-term mortgage.

intestate

To die intestate is to die without leaving a will.

iron

Iron is a natural element that can stain pool surfaces.

J

joint

A device that connects two or more adjacent parts of a structure; a roller joint allows adjacent parts to move past one another; a rigid joint prevents adjacent parts from moving or rotating past one another.

joint tenancy

A form of ownership in which each party owns the entire property. If one party dies, ownership of the entire property passes to the survivor.

judgment

A decision made by a court of law.

judgment lien

A charge on a debtor’s property determined by a court.

jumbo loan

A loan that exceeds Fannie Mae’s and Freddie Mac’s loan limits, currently at $417,000, for a single family first-mortgage loan. Also called a nonconforming loan. For the latest loan limit information visit, www.fanniemae.com.

junk fees

Unnecessary charges tacked on to your closing or mortgage costs. Also called garbage fees.

K

L

late charge

A late payment penalty fee that a borrower is charged if he misses a due date, usually by 16 days.

leaching field

The entire area where many materials (including contaminants) dissolve in rain, snowmelt, or irrigation water and are filtered through the soil.

leaching system

The part of a septic system that returns water to the ground for re-absorption.

lead

A toxic metal. In the past it was used in household products until it was recognized as a health hazard. Since the 1980′s, the Environmental Protection Agency (EPA) and other organizations have worked to ban or reduce lead use in consumer products.

lead-based paint

Any paint, varnish, shellac, or other coating containing lead equal to or greater than 1.0 mg/cm2 as measured by XRF or laboratory analysis.

lead-free dwelling

A dwelling without lead-based paint, in which interior dust and exterior soil lead levels are below the applicable HUD and EPA standards.

lease

A written agreement between the property owner and a tenant.

lease option

An alternative financing option that allows home buyers to lease a home with an option to buy. Each month’s rent payment may consist of not only the rent, but an additional amount that is applied to an agreed-upon down payment.

LED

Illumination technology that is long-lasting and more energy efficient than incandescent lamps. Unlike fluorescent lamps, LED lamps do not contain mercury and can be readily dimmed.

legal description

The description of a piece of property that is recognized by law with enough detail to locate and identify the property without oral testimony.

lender

A financial institution, such as a bank, that makes a loan. A representative of that institution is also referred to as a lender.

lessee

The person who receives a property in a lease agreement.

lessor

The person who grants a property in a lease agreement.

liabilities

Debts that you owe, such as a mortgage, car loan, credit card expenses, etc.

liability insurance

Insurance coverage that protects a property owner against claims that an injury or damage was caused by the owner’s negligence. It is usually part of a homeowner’s (hazard) insurance policy.

lien

A legal claim on a property that must be paid when the property is sold. A mortgage is considered a lien.

limitations

Coverage in a contract that has been omitted or disqualified.

line of credit

An agreement by a commercial bank or other financial institution to extend credit up to a certain amount for a specific amount of time.

liquid asset

Cash or possessions you can convert into cash quickly, such as stocks or bonds.

listing

A piece of property that is for sale by a real estate agent and brokerage company.

load

Weight distribution throughout a structure; loads caused by wind, earthquakes, and gravity, for example, affect how weight is distributed throughout a structure.

loan

A sum of borrowed money (principal) that is generally repaid with interest.

loan officer

A loan officer can solicit loans, represent a lending institution, or represent a borrower to a lender. Also known as a lender, loan representative, loan rep or account executive.

loan origination

How a lender refers to the process of getting a new loan.

loan servicing

After you receive a loan, the company you make the payments to is a loan servicing company.

loan-to-value (LTV)

The percentage relationship between the amount of a loan and the appraised value or sales price (whichever is lower). For example, an LTV of 80% is a loan equal to 80% of the property’s value.

lock-in

An agreement in which the lender guarantees a specified interest rate for a certain amount of time (lock-in period) at a certain cost.

lot

A measured piece of land that has fixed boundaries.

lot line

The borders around a specific piece of land.

M

mandatory flood insurance

Under the provisions of the Flood Disaster Protection Act of 1973, individuals, businesses, and others buying, building, or improving property located in identified areas of special flood hazards within participating communities are required to purchase flood insurance. This is a prerequisite for receiving any type of direct or indirect federal financial assistance (e.g., any loan, grant, guaranty, insurance, payment, subsidy, or disaster assistance) when the building or personal property is the subject of or security for such assistance.

margin

The difference between the interest rate and the index on an adjustable rate mortgage. The margin remains stable over the life of the loan. It is the index that moves up and down.

marketable title

A title that has no encumbrances.

masonry

Building materials such as stone, clay, brick or concrete.

maturity

The date when the principal balance of a loan is due.

mechanic’s lien

If a property owner hires a contractor, subcontractor, other workers or suppliers to help improve a property and fails to pay for the services, any one of those providers may place a mechanic’s lien on the property. The dispute must be resolved before the property can be sold.

mechanical breakdown

An appliance that stops functioning due to a mechanical failure.

mobile notary

A notary that is willing to drive to a client’s location.

modification

Any change in the terms of an agreement.

mold

A fungus that is present just about everywhere-even in the air, both indoors and out.

mortgage banker

A lender who provides real estate loans.

mortgage broker

A licensed broker, not a banker, who brings together a borrower in search of a mortgage loan and a willing lender for a fee.

mortgage insurance (MI)

Insurance that protects the lender from some of the losses incurred as a result of a default on a home loan.

mortgage insurance premium (MIP)

The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (MI) company.

mortgage life and disability insurance

A type of term life insurance often bought by a borrower to cover the cost of a mortgage in the event of his or her death. The amount of coverage decreases as the principal balance declines. Some policies also cover the borrower in the event of disability.

mortgage loan

A property loan. The borrower pledges a property to the lender as security for payment of a debt. Instead of mortgages, some states use First Trust Deeds.

mortgage survey

A standard survey that measures the borderlines of a property so that lenders and title companies can be certain that any structures on the land meet zoning and building code requirements. If they do not, or, if the survey identifies any encroachments, financing may not be available.

mortgagee

The lender in a mortgage agreement.

mortgagor

The borrower in a mortgage agreement.

mud tubes

Mud tubes are produced by termites and are a good indicator of termite activity; subterranean termites will build a tunnel like structure from underneath the soil (where they reside) to the cellulose that they are currently devouring above soil.

multi-dwelling units

Properties with separate housing units for more than one family, although they secure only a single mortgage.

multiple listing service (MLS)

The computerized source for nearly 90% of all homes in the U.S. that are listed for sale with a realtor.

mutual consent

When both parties agree to the terms of a contract.

mycotoxin

A harmful substance produced by a fungus, which affects the structural or functional integrity of cells or tissues.

N

named perils

Perils specifically covered on insured property.

National Flood Insurance Program (NFIP)

National Flood Insurance Program that covers some 20,000 communities in the U.S.

natural hazard report

A written document that discloses any existing risks to a property from such natural hazards as earthquakes, landslides and sinkholes. In California, this report is required.

negative amortization

A mortgage arrangement in which the loan balance increases with each payment because the payments do not cover the principal or interest.

net income

The amount of income that is left after you pay expenses.

NFIP

National Flood Insurance Program that covers some 20,000 communities in the U.S.

NFPA

National Fire Protection Association – an International Codes and Standards Organization.

no-cost loan

A refinance loan in which the lender pays the borrower’s settlement costs. The lender offers this type of loan in exchange for a higher interest rate.

non-conforming loan

This is a loan that does not meet a bank’s criteria for funding.

non-recurring closing costs

Closing costs that you pay only once, such as title insurance and transfer taxes.

notary public

A public official who has the legal right to certify an oath, such as a signing of a deed or other important document, to make it legally authentic.

notary seal

An official stamp or embosser used by a notary to seal notarizations. The seal must be kept under the direct and exclusive control of the notary at all times.

note

A written promise to repay a mortgage loan at a stated interest rate during a specified period of time.

note rate

The interest rate stated on a mortgage note.

notice of default

A written notice to a borrower that a default has occurred and that legal action may be taken.

O

official records

Repository for copies of all publicly-recorded documents in a county kept up to date by the county recorder.

on-demand hot water

A system to quickly deliver hot water to a bathroom or kitchen when needed, without wasting the water that has been sitting in the hot-water pipes, which circulates back to the water heater. On-demand hot water heaters not only save energy, but they never run out of hot water.

opinion of title

A lawyer’s written certification that a title is accurate based on a careful examination of the titles history (abstract of title).

original principal balance

The total amount owed on a mortgage before any payments are made.

origination fee

The fee a lender charges a borrower for establishing a loan (usually a percentage of the total amount of the loan). On a conventional loan, the origination fee refers to the total number of points a borrower pays. For a government loan, the fee is one percent of the loan amount.

owner financing

A property transaction in which the seller provides all or part of the financing.

owner’s title insurance

A policy that protects the owner from a loss due to defects, liens or encumbrances that affect title to a property.

P

parcel

A plot of land that fits a single description, often a division of a larger area.

partial reconveyance

The release of part of someone’s interest in real property secured by a mortgage or deed of trust.

pathogen

An organism, generally a micro-organism that is capable of causing disease or death; any worms, viruses, bacteria or fungi that cause disease.

pathogenic

A microbe capable of causing disease by direct contact, typically through infection.

payee

Person or institution that receives the sum due on a note.

payment change date

The date when a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM) or a graduated-payment mortgage (GPM). Generally, the payment change date occurs in the month immediately after the interest rate adjustment date.

payor

Person or entity that pays the sum that’s due on a note to the payee.

periodic payment cap

A limit on the amount that adjustable-rate mortgage payments can increase or decrease during any one adjustment period.

periodic rate cap

A limit on the amount that the interest rate on an adjustable-rate mortgage can increase or decrease during any one adjustment period.

personal property

Any property that is not real property and not permanently attached to real property.

personally known

Having familiarity with another individual based on interactions with that individual over time.

pest inspection

An inspection performed by a state-licensed professional who is hired to look for signs of pest infestation damage to a house or other structure before the property is sold.

pH

Potential Hydrogen, the hydrogen ion concentration of water to denote acidity or alkalinity. Measured on a scale of 0 to 14. Below 7 denotes acidity; 7 denotes alkalinity.

pier and beam foundation

In layman’s terms a foundation built over a crawlspace. A pier and beam foundation allows for a shallow open area between the floor of a structure and the ground, normally enclosed by the foundation wall. A pier is a column of masonry, or base that supports other structural members, such as beams, posts and girders.

pitch

The angle of the slope of a roof.

pitched roof

A roof made up of two angled pieces that meet in the middle, with gables at either end.

PITI

An acronym for principal, interest, taxes and insurance.

PITI reserves

A cash amount that a borrower must have on hand after making a down payment and paying all closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for a predefined number of months.

planned unit development (PUD)

A situation in which individuals own the building or unit they live in, but share common areas with the other members of the development or association.

plat map

A map showing subdivided land and adjacent streets.

PMI (Private Mortgage Insurance)

Insurance that protects a lender if a borrower is not able to repay his/her loan. This is usually required if your loan amount is more than 80% of the property’s purchase price.

point

A point is one percent of the amount of a mortgage. Lenders charge points as a way of reducing the interest rate on your loan. Points may be tax deductible.

pollutant

Waste material that causes harm to organisms and to their environment.

possession date

The day the buyer moves into the property he or she has purchased.

post and beam construction

A common method of building using posts to hold up beams to create the wall frame and support the entire structure.

power of attorney

A legal document that authorizes another person to act on your behalf.

pre-approval

A formal review of your finances (income, debts, savings) that a lender makes to approve a home loan.

predatory lending

Abusive lending practices that include approving a mortgage loan for someone who does not have the ability to repay. It also pertains to repeated refinancing of a loan charging high interest and fees each time.

preliminary title report

A document that describes the current status of title to a property. A title company issues a preliminary report.

premium

The premium is the regular payment made by a policyholder to an insurance company to keep the policy in good standing.

prepayment

Any amount paid to lower your principal loan balance before it is due.

prepayment penalty

A fee that may be charged to a borrower who pays off a loan before it is due.

prequalification

An informal review of your finances that a lender makes to determine the amount you may borrow to buy a property.

prime rate

The interest rate that banks charge to their preferred customers. Changes in the prime rate are reported in the news and used as the indexes in some adjustable rate mortgages, especially home equity lines of credit.

principal

The amount borrowed or the amount that remains unpaid on a loan.

principal balance

The remaining balance on a mortgage. The principal balance does not include interest or any other charges.

private mortgage insurance (PMI)

An insurance policy that protects a lender if a borrower defaults on a loan.

probate

The legal process of handing over the estate of a deceased owner to the heirs and beneficiaries.

promissory note

A written promise to repay a specified amount over a specified period of time.

property line

The legal boundary of a piece of property, usually determined by a professional land surveyor.

property tax

An annual or semi-annual tax that is based on the amount of the property assessment. The tax may be paid as part of the mortgage payment.

public records

Records that, by law, make available details about a property to the public.

purchase agreement

A written contract signed by the buyer and seller stating the terms of the sale.

Q

quiet title

A court action brought to remove defects or liens on title.

quiet title proceeding

A court action designed to make clear who has the right to own a specific property.
When a lien or “cloud on title” cannot be resolved, it may go to court for a final determination.

quit claim deed

The equivalent of a what-you-see-is-what-you-get deed. The seller gives up the property, without any assurances of his claim to it.

R

R-value

A measure of resistance to the flow of heat through a certain material. The greater the thermal insulating capability, the higher the R-value.

radon chamber

An airtight enclosure in which operators can induce and control different levels of radon gas and radon decay products. Volume is such that samples can be taken without affecting the levels of either radon or its decay products within the chamber.

radon levels

The measureable amount of radon.

radon system

A ventilation system beneath the floor of a basement and/or structural wood floor and designed to fan exhaust radon gas to the outside of the home.

rafter

The main structural support for the roof of a building, extending from the peak of the roof to the eave line.

rate cap

The maximum increase allowed on an adjustable-rate mortgage.

rate lock

A guaranteed interest rate offered by a lender at the time of a loan commitment. It is honored for a period of time whether interest rates rise or fall before the closing is settled.

real estate agent

A person licensed to conduct the sale of real estate.

Real Estate Settlement Procedures Act (RESPA)

A law that protects consumers by requiring lenders to give borrowers advance notice of all the costs involved in closing their property transaction. For more information, visit http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/rmra/res/respa_hm

real property

Another term for real estate.

Realtor®

A real estate agent, broker or an associate who is an active member in a local or state affiliate of their industry’s professional trade association, the National Association of Realtors or NAR.

recall period

Timeframe in which a claim should be filed, if an appliance or built-in system is in need of repair that is covered by the warranty policy.

recharge area

The land where rainwater and other surface water soaks through the earth to replenish an aquifer, lake, stream, river, or marsh. Also called a watershed.

reconveyance

Transferring title from a trustee back to an owner, which takes place when a loan has been fully paid.

recorder

The public official who keeps records of transactions that affect real estate.

recording

Filing a document with the county recorder. It can then be viewed by the public.

recording date

The date when an executed document is placed on file with the county recorder.

recording fees

Cost of filing the documents related to the sale of a property.

recurring closing costs

Costs and fees that will be paid each month or each year, such as mortgage insurance and property taxes.

refinance rate

When used with title insurance, a reduced rate charged for a lender‘s policy in a refinance situation, when the original loan was insured for a certain number of years.

refinance transaction

The process of paying off one mortgage with the proceeds from a new loan (usually at a lower rate) using the same property as security.

refrigerant

A chemical that produces a cooling effect while expanding or vaporizing. Most residential air conditioning units contain the standard R-22 refrigerant, or Freon.

rehabilitation escrow account

An account established by a HUD-certified lender to hold funds for repair work and improvements to a property that is being financed by a 203k loan.

rehabilitation loan agreement

An agreement executed between a HUD-certified lender and borrower to establish the conditions under which the lender will release funds from a rehabilitation escrow account.

reissue rate

When used with owner’s title insurance, a discounted rate offered for a property that has been previously insured.

release clause

An allowance for the release of a piece of property from a lien that covers it and other property in exchange for a payment for that piece of property.

remaining balance

The amount of principal that is still owed.

rent loss insurance

Insurance that protects a landlord against loss of rent if a rental unit is damaged and the tenant is excused from paying rent.

repayment plan

An arrangement made to repay delinquent payments or advances.

replacement cost

Replacement cost is the cost of replacing damaged or destroyed property at current market rates.

replacement coverage

Coverage that includes replacing an item that is listed in the warranty policy.

replacement period

The amount of time allowed for buying a primary residence to defer the gain earned on the sale of a previous residence.

replacement reserve fund

Money set aside by a condominium or co-operative association to pay for repairs, improvements or replacements in the common areas of the property.

replacement value

An amount used to calculate how much you will be paid for the loss of an asset or property based on the estimated cost to replace it. (This value does not factor in ordinary wear and tear.)

residential property survey

A residential boundary survey identifies the borderlines of the property from corner to corner.

restriction

A limit placed on the use of a property, often by a previous owner.

retaining wall

A wall most often constructed of rock or cement that serves as a lateral means of support.

rider

A clause added to an agreement that covers specific terms or conditions. Also, an addition to a document.

right of first refusal

An owners promise to allow an individual or entity to make the first offer to buy or lease a property when it is for sale.

right of ingress or egress

The right to enter or leave a property.

right of rescission

The right of a borrower to cancel a credit contract within three business days.

right of survivorship

If two people own a property as joint tenants and one dies, the survivor automatically owns the property.

right-of-way

The right to pass over or through a property, as in the case of a road or driveway; also the right to place power lines or underground pipes across the property.

right, title and interest

Terms used in a deed to declare that all claims to a property are being transferred from a seller to a buyer.

rigid

An idealized concept meaning something which does not deform under loading. In fact, all objects deform under loading, but in modeling it can be useful to idealize very stiff objects as rigid.

risk rate

When used with title insurance, a rate that does not include the cost of a title examination or other closing costs.

roof flashing

Sheet metal installed at any break in a shingled roofline to prevent leaks. Also around sewer vents, fluepipes.

rough-in

The portion of a plumbing installation that includes running the water supply lines and drain, waste and vent lines to the proposed location of each fixture.

S

sale-leaseback

An arrangement in which a seller deeds property to a buyer for a certain amount, and the buyer simultaneously leases the property back to the seller.

sales comparison approach

A method of appraising a property that estimates value by comparing it to properties that are similar in size and amenities that have been sold in that neighborhood during the previous six months.

sand bed filter septic systems

A type of system in which the effluent is intermittently spread across the surface of a bed of sand through a network of distribution lines.

satisfactory evidence

Information that establishes that something is true, also known as credible evidence.

second mortgage

A second loan on a property that already has one mortgage. Usually it comes with a higher interest rate and is offered for a shorter period of time.

secured loan

A loan that is backed by something of value (asset), such as a piece of property.

security

The property that will be pledged as a guarantee to a lender until a loan is repaid (collateral).

sediment

The solid material that settles to the floor of the pool.

seismic hazard

Ground shaking and other movement related to an earthquake and the subsequent potential for damage.

seller carryback

An agreement in which the owner of a property provides financing, often combined with an assumable mortgage.

seller disclosure

A form required in many states in which the seller describes any known defects affecting a home.

seller’s agent

A real estate agent who represents the seller (not the buyer) in the sales transaction.

selling broker

The real-estate broker who actually finds the buyer.

separate property

Property that is held by a husband or a wife, separately.

septic pump

A septic system pump empties excess water and waste from a septic tank so that the septic tank can continue to function properly.

septic system

A system that removes waste in homes that do not have access to a sewer line.

septic tank

A tank meant to store sewage waste while it settles. Septic tanks are used by nearly 25% of the population in the U.S.

service contract

A written agreement in which the warranty provider agrees to repair or replace a listed appliance or built-in system.

setback line

The minimum distance a building or other improvement can stand from a property line, according to local zoning rules.

settlement

Another term for a real-estate closing.

settlement agent

The individual who oversees the closing of a real estate transaction. Also called an escrow officer or closing agent.

settlement statement

A document listing the information needed to prepare a closing, such as the property description, names of the buyer and seller, sales price, loan information, etc.

shear walls

Solid concrete walls that resist shear forces; often used in buildings constructed in earthquake zones.

short-term rate

A reduced rate for title insurance given to an owner or a lender that has been insured previously.

signing agent

A notary public who has been trained by the National Notary Association (NNA) to handle the execution and notarization of mortgage, refinancing and real estate transactions.

single-entity coverage

An insurance policy for a condo or co-op that protects all the fixed (attached) parts of the building, including the individual units and the common areas.

site inspection

The second stage of a site assessment. A review of existing data about the site and limited soil and water sampling to determine the nature and extent of contamination.

slab foundation

A concrete foundation that supports the structure, without the building of a concrete wall over a crawlspace.

Soil Vapor Extraction (SVE)

A treatment technique that removes vapors from subsurface soils by removing air from the soils through special extraction wells.

solar cover

Swimming pool cover placed on the swimming pool between uses and absorbs the heat from the sun. A solar cover allows less water to evaporate into the air and keep debris from falling into your pool.

sole ownership

Possession of a property by a single person or entity.

spore

A specialized reproductive cell. Mold spores are individually microscopic and many are very buoyant. As such, they readily stay suspended in the air and can be dispersed by air movement.

streamline loan

An FHA government loan that allows borrowers to finance upgrades and improvements up to $35,000 in mortgage funds. There is no minimum threshold.

sub-agent

A real estate agent who is working with a buyer but who represents the seller in the transaction.

subdivision

A housing development created by dividing a tract of land into individual lots for sale or lease.

subprime

A classification of borrowers with a tarnished or limited credit history. Subprime loans are more risky and have higher interest rates.

subprime lender

A lender who will make a mortgage loan to a borrower who does not qualify for a prime loan. A subprime lender‘s prices are usually higher than those quoted by a mainstream lender. It is best to avoid subprime lenders and either shop around or improve your credit rating so that you can qualify for a prime loan.

subsurface soil

Soil that is more than two feet below the ground surface.

subterranean termite

The most common and destructive termite in the US, which operates underground.

sump pump

A pump that removes water, usually from a basement to keep it dry.

support

Keeping a structure in place.

survey

A drawing or map showing the legal boundaries of a property, plus the location of the structures on the lot along with improvements, easements, rights of way, encroachments, and other physical features.

surveyor

A trained professional who is qualified to measure and analyze the size, shape, boundaries, contours, etc. of a piece of land.

swing loan

A short-term loan to bridge the gap between the purchase of a new home and the sale of an old home.

T

tax lien

A legal claim filed against a property to ensure payment of taxes due on the property.

tenancy by the entirety

A form of joint ownership available only to married couples. If one spouse dies, ownership is automatically passed to the surviving spouse.

tenancy in common

A form of joint ownership in which a deceased owner’s interest in a property is passed to his or her heirs (rather than to the other owners).

tenant

A person who has the owner’s permission to possess a piece of property.

tension crack

Cracks that appear on the surface of a soil mass that is often adjacent to a retaining wall or the top of a failing slope.

Tent

A fire retardant polyethylene enclosure that includes walls, ceiling and floor as required to remove asbestos material.

term

The length of a loan.

termite inspection

An inspection performed by a state-licensed professional who is hired to look for signs of termite infestation damage to a house or other structure before the property is sold.

termite report

A written summary provided by a state-licensed termite or pest inspector that details the results of a structural inspection.

termiticide

A liquid pesticide used to kill termites. Termiticide is usually injected into the ground along the foundation of the structure, under concrete slabs or inside foundation walls to work effectively.
It should be administered by a licensed professional.

testimonium clause

Wording at the end of many documents and certificates that states “witness my hand and seal” or some variation.

thermal imaging camera

A camera that can detect infrared radiation, to graphically show heat loss or difference between areas.

thermology

The study of heat. A thermologist is trained to operate a thermal imaging camera to determine heat loss in a building.

third-party origination

A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package the mortgages it plans to deliver to the secondary mortgage market.

time integrated sampling

Sampling conducted over a specific time period (e.g., from two days to a year or more) producing results representative of the average value for that period.

title

A legal document that declares a person’s right to own a property.

title agent

An individual who is licensed to issue title insurance.

title company

A company that specializes in examining and insuring titles to real estate.

title defect

Any claim on a property that interferes with the owner’s ability to sell a property.

title examination

Making a thorough investigation of title records to ensure that the seller is the legal owner of a property and that there are no liens or other outstanding claims on the property that could prevent a sale.

title flaw

Any claim on a property that interferes with the owner’s ability to sell a property.

title hazard

Any claim on a property, such as a lien, that interferes with the owner’s ability to sell a property.

title insurance

Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against any loss arising from disputes over ownership of a property.

title report

A document that describes any existing defects, such as liens, that currently affect the title to a property. Usually issued by a title company following a title examination.

title search

Making a thorough investigation of title records to ensure that the seller is the legal owner of a property and that there are no liens or other outstanding claims on the property that could prevent a sale.

topographic map

A map that shows the features of an area of land including elevations and contour lines.

TPH

Acronym for total petroleum hydrocarbons, a measure of the concentration or mass of petroleum hydrocarbon present in a given amount of air, soil, or water.

transfer fee

A state or local tax that is due when title passes from one owner to another. It is usually calculated as a percentage of the purchase price.

transfer of ownership

Passing ownership of a property from one to another.

transfer tax

A state or local tax that is due when title passes from one owner to another. It is usually calculated as a percentage of the purchase price.

trustee

A fiduciary who holds or controls property for someone else’s benefit.

truth-in-lending

A federal law that requires lenders to document, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

truth-in-lending disclosure statement

The form that lenders are required to give borrowers, which details the terms of the mortgage.

two to four-family property

A real estate property with one deed, but living spaces that can accommodate two to four families.

U

umbrella policy

Coverage for losses above the limit of an underlying policy or policies such as homeowner’s and auto insurance.

underwriter

An issuer of insurance policies.

underwriting guidelines

The rules that lenders use to determine whether a borrower is eligible to take out a loan.

V

VA mortgage

A mortgage that is guaranteed by the Department of Veterans Affairs (VA) and available only to veterans, their spouses and dependents.

valid contract

A legally binding agreement.

variable rate mortgage

A loan in which the interest rate fluctuates.

variance

Allowing a property to be used in a way that does not conform to zoning regulations.

vendee

The buyer.

vendor

The seller.

vestee

The owner of the property in a title policy or title report.

Veterans Administration (VA)

The federal government agency that guarantees residential mortgages, patient care and benefits for eligible veterans of the military services.

W

walk-through inspection

An appraisal method in which the professional appraiser does a careful inspection of the interior of a property to determine its fair market value. Also, the process of inspecting a property for any damage before it is bought or sold. Often done before closing on a property.

WAP

The US Weatherization Assistance Program (WAP) was created in 1976 to help low-income families reduce energy consumption and costs. WAP reaches across all fifty states, the District of Columbia, and Native American tribes. The goal of WAP is to assist low-income families by reducing energy bills and decrease dependency on foreign oil by decreasing energy use.

warranty

A guarantee that a property is in the condition described.

warranty deed

A deed with written guarantees of title.

water table

The upper level of the saturated zone. This level varies greatly in different parts of the country and also varies seasonally depending on the amount of rain and snowmelt.

well cap

A tight-fitting, vermin-proof seal designed to prevent contaminants from flowing down inside of the well casing.

well casing

The tubular lining of a well. Also a steel or plastic pipe installed during construction to prevent collapse of the well hole.

well head

The top of a structure built over a well. Term also used for the source of a well or stream.

witness

A person who watches an action take place.

wood decay

Deterioration of wood.

Wood-Destroying Organism (WDO) inspection

Commonly referred to as a “termite inspection,” a WDO inspection looks for evidence of infestation by termites (both subterranean and dry wood types) and wood-devouring beetles, in addition to wood decay, past infestations, damage to wood, or conditions conducive to infestation. It also checks for evidence of past treatments.

worksite preparation level

A set of measures designed to protect residents and the environment from leaded dust, paint chips, or other forms of lead contamination.

X

Y

Z

zoning

City or county regulations that determine how property is allowed to be used.