Some Of The Most Common Terms In Real Estate That You Should Know
Bill of Sale: A written document that is utilized to transfer the ownership of personal property.
Closing (Settlement): The last step in a real estate transaction for the seller and buyer. At this stage, the documents are completed and funds are disbursed as stated by the terms of the loan commitment or contract.
Cloud on Title: An apparent or actual claim on a title to real property that could negatively affect the owner’s capacity to transfer the title to another party.
Commitment Letter: A written arrangement where the lender agrees to loan money as long as the borrower satisfies specific conditions.
Contract: A written agreement made between capable parties where a buyer agrees to buy – and a seller consents to sell – a particular real property bound by stated conditions.
Deed: A written record that is used to transmit the title of real property from a seller to a buyer. Deeds must include an accurate and detailed legal description of the property, and must be provided by the seller to the buyer in order to be valid.
Disbursement: The payment of all funds owed to the seller, seller’s mortgage holder, real estate agent, and any other parties involved in the transaction.
Earnest Money Deposit: This is a deposit made to the seller demonstrating the buyer’s credibility in a transaction. After the transaction is finalized, earnest money deposits are included in the buyer’s down payment. If the deal fails, it is not guaranteed that the buyer will be capable of recovering the deposit.
Encumbrance: An encumbrance is anything that hinders the title to a property. This can include easements, liens, mortgages, or anything else that can restrict the title.
Escrow: Funds that are set aside to pay for homeowner’s insurance premiums and taxes as they are due.
Hidden (Latent) Defect: A limitation on a title that is not evident in public records. This can include forged documents and unknown heirs.
Lien: A legal claim on a property that functions as security for the settlement of a debt. A mortgage is the most widely used kind of lien.
Marketable Title: A title to real property that is free of all liens, litigation risks, encumbrances, or other title flaws.
Material Defect: Defects that should be disclosed to the buyer such as property damage, major system malfunctions, and environmental hazards impacting the condition and safety of a home.
Mortgage: A loan that is used to finance the acquisition of real estate. Mortgages typically contain interest rates and specified payment periods, and the lender retains a lien on the property as collateral for providing the loan.
Mortgage Note: A document signed by a borrower that guarantees their repayment of a loan in accordance with the agreed-upon terms protected by the mortgage.
Mortgage Policy or Loan Policy: A title insurance policy given to the lender that covers the lender for the amount of the mortgage.
Owner’s Policy: A title insurance policy that is provided to a property’s owner that gives the owner protection against the inability to sell the property as a result of problems related to the title.
Real Property: Land and all of the modifications that are permanently attached to it.
Seller Disclosure: A report made by the seller that indicates any known defects or problems that a house/real property has that could reduce its value.
Survey: A process where a parcel of land is precisely located and calculated. Surveys indicate a property’s boundaries, easements, right of ways, and improvements.
Title: The rights of possession and ownership of a certain property, which includes the document that offers evidence indicating who the owner is.
Title Insurance: Title insurance is insurance that safeguards the policyholder from any financial losses that can result from issues with the title.
Trust Account: A bank account that is established by an attorney that holds funds for the use of the attorney’s clients. (Trust accounts can also be called Escrow Accounts.)
Unrecorded Matters: Any property claim that is not apparent in official public records. This can include an unrecorded municipal utility lien or an unknown heir.