ABSTRACT (OF TITLE)- A set of documents that records the ownership over time of a particular property.

AD VALOREM TAX- A tax with a foundation on the assessed value of a piece of Real Estate or personal property. Property Ad Valorem taxes are the most substantial source of revenues for state governments.

ALIENATION - The legal transfer of property from one entity to another, whether voluntary or involuntary. A making over of legal ownership.

AMORTIZATION - The gradual elimination of a liability as in a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest. Also, the reduction of the value of an asset by prorating its cost over a period of years.

BPO - brokers price opinion

BALLOON PAYMENT - A large, lump sum payment scheduled at the end of a series of considerably smaller periodic payments , at the end of a mortgage lease or loan. Many times a benefit is a lower interest rate.

BID RIGGING - An illegal form of collusive price-fixing behavior, an illegal agreement between two or more competitors. A form of price fixing and market allocation, involving an agreement in which one party of a group of bidders is designated to win the bid.

BINDER - (or Offer to Purchase) A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate upon the agreed terms for a limited amount of time.

BUY-DOWN MORTGAGE - A mortgage on which an initial lump sum payment is made by any party to reduce a borrowers monthly payments during the first few years of the mortgage, possibly for the life of the loan, a permanent buy down reduces the interest rate over the entire mortgage.

CAPITAL GAIN - An investment that has been sold at profit, the asset’s selling price exceeds its initial purchase price. A capital gain may be short term or long term and must be claimed on income taxes.

CAVEAT EMPTOR - Latin for “Let the buyer beware”. A principle in commerce that the buyer alone is responsible for assessing the quality of a purchase before buying.

CHAIN OF TITLE - The succession of a title ownership to real property from the present owner back to the original owner at some distant time

CHATTEL MORTGAGE - A lien on assets other than real estate backing a loan, using movable personal property rather than real estate as security.

CLOUD - An invalid hindrance on real property that may impair the title or make it doubtful, usually removed by a quit claim deed or suit to quiet title.

DEFEASANCE CLAUSE - The clause in a mortgage agreement that gives the borrower the right to redeem title to the property upon payment to the lender of the complete debt obligation.

DUAL AGENCY - Occurs when a real estate agent is representing both buyer and seller in the same transaction. Since the agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously, it is necessary to limit these duties in this situation, if both parties consent.

EARNEST MONEY - A deposit paid by a buyer to a seller to demonstrate intention to complete the purchase also called a Good Faith Deposit.

EASEMENT - A right held by one person, other than the owner giving permission to use a property for a specific limited purpose.

EMINENT DOMAIN - The right of a government to seize pieces of private property for public use and in exchange the owner receives payment, of fair market value.

ENCROACHMENT - Real property that extends onto adjacent land owned by someone else and may result in court-ordered removal of the structure.

ESTOPPEL CERTIFICATE - A term used often in commercial real estate and mortgage industries, a written statement setting forth facts about a piece of real estate such as the unpaid principal balance of a mortgage and the interest rate. The purpose is to stop a failure claim that the amount owed is different from the actual unpaid balance, or that the interest rate is other than the contracted rate.

FIRST MORTGAGE - A mortgage that creates a lien against real property with the lien having first priority against other claims in the event of foreclosure and over all other mortgages on a specified . Also called a senior mortgage.

GARNISHMENT - The seizure of personal wages of a defaulted borrower through a court-assisted process to repay a loan, with or without their consent

HYPOTHECATE - To promise a specific piece of property as security for a loan or obligation without having to actually relinquish possession of it.

JUDICIAL FORECLOSURE - A means of selling property through a court procedure to satisfy a lien, the property of a defaulted borrower is sold and the amount received is sanctioned by the court.

LIEN - The right to retain the legal possession of a property of another until the owner fulfills a legal duty to the person holding the property, securing the repayment of a loan. It also affects the ability to transfer ownership.

LIS PENDENS - A recorded legal notice used to show pending lawsuits; a warning that the right of possession of certain property is in litigation.

MARKETABLE TITLE - A title that is free and clear of liens, clouds or other title defects that will legally be accepted without objection, ownership of land that can be sold with out complication. (Also called Perfect Title, Clear Title and Good Title).

PITI - Principal, Interest, Taxes and Insurance, indicating the monthly payment on real property, calculated by a mortgage lender.

QUITCLAIM DEED - A deed that transfers whatever ownership interest the grantor has in a particular property to someone else used commonly on inherited property or after divorce to transfer the property to the other involved party.

RECISSION - The cancellation of a transaction or contract by mutual consent or ordered by law, and the return of the parties to the positions they would have had if the indenture had not been made

REDEMPTION PERIOD - A period of time established by state law, during which a borrower has the right to reclaim the title and possession of a property by paying the debt it secured including sales price, interest and costs. Many state do not have such a period.

RESTRICTIVE COVENANTS - Private restrictions limiting the use of property created by a deed and bind all subsequent purchasers of the land or only between the original buyer and seller. Most are frequently created by a developer in a real estate project to protect the value of the development.

SHORT SALE - A sale of a house where the earnings are lower than what the owner still owes on the mortgage. Some lenders will agree to accept the profits of a short sale and pardon the remainder of the mortgage when the borrower can not successfully make the payments.

SIMULTANEOUS CLOSING - A term used to describe transactions occurring at closing when there are two separate transactions conducted with in minutes of each other a seller financing technique.

STATUTORY REDEMPTION - A law in some states that permits a mortgagor a limited time, after a foreclosure to pay off the appropriate fees and charges to reclaim the mortgaged property.

SWEAT EQUITY - Acquired equity on complimentary terms used to reveal the value added to real estate by owners who make improvements on their own labor.

TORRENS TITLE - A system of recording ownership of a property and dealing with property, the most common and simplest form of residential property ownership. (Also known as Certificate of Title)

UNLAWFUL DETAINER ACTION - A legal action brought by a landlord against a tenant to remove them from the rental property, usually for non-payment of rent or keeping possession of a rental property without right, after a lease expires, after being served notice to vacate.

WRAPAROUND MORTGAGE - A mortgage that includes an existing balance on a first mortgage is combined with an additional amount, a new loan, requested by the mortgagor with a resulting interest rate somewhere between the old rate and the current market rate.