Absolute Auction:
Auction with no minimum bid amount. The highest
bidder wins.
Abstract (of title):
A history of all transactions shown in the public
records affecting a particular tract of land.
Acceleration Clause:
A provision is a promissory note that specifies
conditions under which the lender may advance the
time when the entire debt which is secured by the
mortgage becomes due.
Adjustable Rate Mortgage (ARM):
Mortgage loans under which the interest rate is
periodically adjusted, in ccordance with some
market indicator, to more closely coincide with the
current rates.
Affidavit:
A written statement made under oath before a
notary public or other judicial officer.
Agreement:
A legally binding contract made between two or
more persons.
Appraisal:
A report from an independent third party detailing
the estimated value of real estate.
Balloon Note/Balloon Payment:
A promissory note with amortization payments
scheduled for a long term, usually 30 years, but
maturing in a shorter term, often five to seven
years. It requires a substantial final balloon payment
for the remaining principal.
Bankruptcy:
A federal court proceeding under the United States
Bankruptcy laws where an insolvent debtor either
has its estate liquidated and debt discharged,
or is allowed to reorganize its affairs under the
protection of the bankruptcy court.
Beneficiary:
A person or entity that is legally entitled by a
will, trust or insurance policy to receive money or
property.
Chain of Title:
The history of successive ownership and transfer in
the title to a tract of land.
Clear Title:
Real property ownership free of liens, defects and
encumbrances or claims.
Closing (also called settlement):
The completion of a real estate transfer, where the
title passes from seller to buyer or a mortgage lien is
given to secure debt.
Closing Costs:
Expenses involved in closing a real estate transaction
over and above the price of the land.
Clouded Title:
A land title having an irregularity, possible claim or
encumbrance that, if valid, would adversely affect
or impair it.
Contract of Sale:
Agreement by one person to buy and another
person to sell a specified parcel of land at a
specified price.
Conveyance:
The transfer of title or property from one person to
another.
Deed:
An instrument for conveying real estate
Deed of Trust:
A form of security instrument for mortgage loans.
Default:
A failure to meet legal or contractual obligation.
Deficiency Judgment:
When the proceeds from a foreclosure sale are less
than the amount due on the debt.
Encumbrance:
Any interest, right, lien or liability attached to
a parcel of land (such as unpaid taxes or an
unsatisfied mortgage) that constitutes or represents
a burden upon the property.
Equity:
The market value of real property, less the amount
of existing liens.
Escrow:
Closing a real estate transaction when all required
documents and funds are in place with a third party
for processing and distribution.
Execute:
To sign a legal instrument. A deed is said to be
executed when it is signed, sealed, witnessed and
delivered.
Federally-Insured Loan:
A mortgage loan that originates in a federally-
insured government program like the Federal
Housing Authority (FHA).
Foreclosure:
A legal proceeding following a default by a
borrower in which real estate secured by a
mortgage of deed of trust is sold to satisfy the
underlying debt.
Instrument:
A written document
Judgment:
The decision of a court regarding the rights of
Parties in an action.
Junior Mortgage:
A mortgage lower in lien priority than another. For
Example, a second mortgage or home equity line.
Lawsuit:
A dispute between two or more parties that has
been filed in the court system by one of them.
Lien:
A monetary charge imposed on a property, usually
arising from some debt or obligation.
Lis Pendens:
A recorded legal notice that there is litigation
pending relating to the land, and a warning that
anyone obtaining an interest subsequent to the
date of the notice be bound by the judgment.
Market Value:
The average of the highest price that a buyer would
pay and lowest price a seller would accept.
Mortgage:
A conditioned pledge of property to a creditor as
security for the payment of a debt.
Note: (Also called a Promissory Note)
A written promise to
pay a sum of money, usually at a specified interest
rate, at a stated time to a named payee.
Power of Attorney:
A written instrument by which one person, the
principal, authorizes another, the attorney-in-fact,
to act on his or her behalf.
Principal:
A sum of money owed as a debt on which interest
Is payable.
Public Records:
Records which by law disclose constructive notice of
matters relating to the land.
Real Estate (also called Real Property)
Land and anything permanently affixed to the land
such as buildings, fences, and those things attached
to the buildings, such as plumbing and heating
fixtures, or other such items that would be personal
property if not attached.
Recording:
The noting in a public office of the details of a legal
document, such as a deed or mortgage, affecting
the title to real estate.
Redemption:
The right of the owner in some states to reclaim
title to property if he or she pays the debt to
the mortgagee within a stipulated time after
foreclosure.
Release:
To relieve from debt or security or abandon a right,
such as release of a mortgage lien from a part or all
of the land mortgaged.
RESPA:
The Real Estate Settlement Procedures Act (12
U.S.C. 2601 et.seq.) that, together with Regulation
X promulgated pursuant to the Act, regulates
real estate transfers involving a “federally-related
mortgage loan” by requiring, among other things,
certain disclosures to borrowers.
Satisfaction:
An instrument releasing the lien of a mortgage.
Senior Lien or Mortgage:
If there is more than one lien on land, those liens
are ranked by priority. A senior lien or mortgage is
entitled to be paid first in foreclosure or bankruptcy,
before a junior lien.
Tenant:
One who has right of possession of land by any
kind of title.
Title Defect:
Any possible or patent claim or right outstanding
in a chain of title that is adverse to the claim of
ownership.
Title Insurance Policy:
A contract of title insurance under which the
insurer, in keeping with the terms of the policy,
agrees to indemnify the insured against loss arising
from claims against the insured interest.
Trustee:
Person or entity who is given the legal authority to
manage money or property on behalf of somebody
else. In a foreclosure action, this is often the title
company.
Trustor:
A person who creates a trust by transferring
property to a trustee. When a borrower signs the
Deed of Trust, the borrower becomes a trustor.