Real Estate Glossary
Are you confused with real estate terminology? Sharpen your knowledge with these terms to help you better understand the buying and selling process. Below is our Real Estate glossary.
ACCEPTANCE: An act to show that Seller and Buyer are bound by the terms when Seller and Buyer agree in writing.
ACKNOWLEDGMENT: An act signifying that signing is a voluntary act and genuine signature of specific person.
ADDENDUM/ADDENDA (singular/plural): Additional material attached to and made part of the transaction.
AGENCY: The relationship created establishing a fiduciary or statutory relationship and imposes certain duties, obligations and high standards ofgood faith and loyalty.
APPRAISAL: The evaluation of a property to determine its price based on previous sales of smiliar properties.
ARBITRATION: A process where Seller and Buyer select a third party to resolve a dispute between them. The third party, called an arbitrator,conducts a hearing and renders a decision in favor of one party and against the other.
ASSESSMENTS: An official valuation of real property for tax purposes based on appraisals by local government.
ASSUMED OBLIGATIONS: Debts which Buyer takes over from another party and for which Buyer is responsible to repay.
ASSUMPTION OF MORTGAGE: Agreeing to be liable for terms and conditions of existing mortgage.
BREACH OF CONTRACT: When one breaks an agreement or refuses to do what was promised.
BUILT-IN FURNITURE: Fixtures such as bookcases, shelving, cabinets, or furniture permanently affixed to real property.
BY-LAWS: Document that establishes the rules for the operation of a common interest community.
CC & R’s: Document outlining the conditions covenants and restrictions of Property.
CLOSING COSTS: Expenses incurred in the purchase and sale of property that are paid at the time of closing including: title insurance, attorney fees, appraisal fees, recording fees, and taxes.
CODE OF ETHICS: Written standard of ethical conduct. Members of the National Association of REALTORS® subscribe to a Code of Ethics.
COMMON ELEMENT: Property that is necessary or convenient for existence, maintenance or safety of a planned development.
COMMON INTEREST COMMUNITY: Refers to condominium, cooperative and planned unit development projects.
CONVEY: To sell or transfer ownership of Property to another party.
CONVEYANCE DOCUMENTS: Documents that transfer title or interest in real property.
COVENANTS: An agreement with another party promising to do or not to do something.
DECLARATION: Controlling document which creates and defines a condominium project or planned unit development.
DEFAULT: Nonperformance of a duty or obligation that is part of a contract.
DISCLOSURE STATEMENT: An information report on Property.
DOWN PAYMENT: The amount of money a buyer pays upfront to purchase the property. This is typically around 10% of the total cost.
EARNEST MONEY DEPOSIT: The deposit a buyer makes at the time of submitting an offer to demonstrate the true intent to purchase.
EASEMENT: A limited right one has in lands owned by someone else or rights owned by someone else on one’s land. For example, a right for you to cross over someone else’s land to get to your own Property.
ENCROACHMENT: An intrusion of an improvement on another’s real property.
ESCROW: An objective third person who holds money and/or documents until satisfaction of the terms of the contract are completed.
EQUITY: The difference between what something is worth and any outstanding mortgage due.
FAIR MARKET VALUE: The price for a property agreed upon between a buyer and seller in a competitive market.
EXTENSION: An agreement to continue the performance period beyond a specific period.
FEE SIMPLE: An interest in land which gives you full right of ownership and which does not end by the passage of time. You can freely transfer this right or leave property to be inherited.
FIDUCIARY: A person, such as an agent, placed in a position of trust. A fiduciary owes his/her client a duty of loyalty and obedience; a duty of exercising due care; and must act in good faith.
FIXED-RATE MORTGAGE: A loan in which the interest rate does not change throughout the term of the loan.
FIXTURE: An article that was once personal property that has been affixed to real estate.
FIXED-RATE MORTGAGE: A loan in which the interest rate does not change throughout the term of the loan.
FORECLOSURE: The lender, under a defaulted mortgage, takes title to the property for the purposes of selling it to recoup money owed under the mortgage.
HOLDING PERIOD: The length of time a property is owned.
IMPROVEMENTS: Additions of value made to Property.
LAND COURT (Torrans System): A system of recordation of documents affecting land.
LACK-IN RATE AGREEMENT: A guarantee from the lender that the applicant will receive a specified interest rate on the mortgage loan.
LEASEHOLD: An interest in land which is less than fee simple and which allows one defined use for a stated period of time.
LESSEE: A tenant under a lease.
LESSOR: The landlord under a lease.
LIABILITY: A debt or claim that is owed. This is used to determine Net Worth.
LIENS AND ENCUMBRANCES: Claims against the title or right of ownership to one’s Property held by another party.
LIMITED COMMON ELEMENT: A common element which use is restricted to a specific owner or owners.
LIQUIDATED DAMAGES: An agreed upon reasonable amount of money which is paid to the party injured by the other party.
LITIGATION: The formal court process started by filing a lawsuit.
MARKETABLE TITLE: Title or right of ownership to Property which is free of any claims or reasonable doubts which would affect one’s ability to sell Property.
MARKET VALUE: An estimation of the price for a property in relation to the current real estate market.
MEDIATION: A non-adversarial process where Seller and Buyer select a third party to act as a facilitator. The third party, called a mediator, assists the parties in finding a creative solution to their dispute.
NET WORTH: The difference between your assets and your liabilities. This is used to determine if you qualify for a loan.
NULL & VOID: Having no legal force or effect, of no worth.
OFFER: A promise Buyer makes to buy Property under the terms set forth in the Purchase Contract if Seller accepts those terms.
ORIGINATION: The first step in the mortgage loan process consisting of the completion of the application.
POSSESSION: To control or occupy Property.
PRE-APPROVAL: A lender’s estimate of how much you could be eligible to borrow based on credit history and income.
PRELIMINARY TITLE REPORT: A report that is made before a title insurance policy is issued.
PREVAILING PARTY: The party determined to be in the right in a disagreement.
PRORATE: To divide or distribute as agreed.
PURCHASE CONTRACT: Purchase Contract form used to purchase real property.
REAL ESTATE BROKER: An individual employed as an agent to bring buyers and sellers together and assist in negotiating real estate contracts between them.
REAL PROPERTY: The land, the air above and the ground below, as well as any improvements on the land. It includes the interests, benefits and rights inherent in the ownership of real estate.
RECORDING: The act of entering the documents affecting title to real property into the book of public records.
REFINANCING: The proceeds of a new loan used to pay off an existing mortgage on the same property.
REGULAR SYSTEM: A system of recordation of documents affecting land in the State of Hawaii.
RESERVATIONS: Rights which one will keep in the land when selling to another party.
RESERVE STUDY: An analysis done by or on behalf of a common interest community that examines and estimates the future costs of major repairs and maintenance that the
community will encounter, and determines how much money will need to be collected each year to pay for there pairs and maintenance.
RISK OF LOSS: A responsibility for damages caused to Property.
SPECIFIC PERFORMANCE: When the party is required to do what was promised.
SUBDIVISION: Land that is divided into two or more parcels.
SUPERSEDE: To take the place of or replace.
TENANCY: How title of real property is held.
TERMINATION: End or cancel. TITLE: Right of ownership to Property.
TRANSFER OF TITLE: The act of changing the legal right of ownership.
WARRANTIES VESTING MARKETABLE TITLE: Seller guarantees to Buyer that the title or right of ownership to Seller’s Property is free of any claims or reasonable doubts which would affect the ability to sell Property.
WARRANTY: To guarantee.