Definitions

Abstract of Title: A summary of the public records relating the title to a particular piece of land. An attorney or title company reviews an abstract of title to determine whether there are any title defects.
Agent: A person acting on behalf of another, called the principal.
Appraisal: An expert judgment or estimate of the quality or value of real estate as of a given date.
Assessed Value: The valuation placed upon property by a public tax assessor as the basis for taxes.
Bill of Sale: An instrument which transfers title to personal property (chattels); a "Deed" transfers real property.
Closing Settlement Statement: The computation of financial adjustments between buyer and seller as of the day of closing a sale to determine the net amount of money which buyer must pay to seller to complete purchase of the real estate, and seller's net proceeds.
Commission: Payment of money or other valuable consideration to a real estate broker for services performed.
Convey: To deed or transfer title of property from one person to another.
Deed: A formal written instrument by which title to real property is transferred from one owner to another. Also "conveyance."
Earnest Money: The money given by the potential buyer upon the signing of the agreement of sale to show that buyer is serious about buying the house. Also, "deposit;'
Easement: The rights of certain parties to enter upon and use for specified purposes part or parts of someone's land.
Equity: The interest or value which owner has in real estate over and above the debts against it. (Sales Price-Mortgage Balance = Equity)
Escrow: Funds, property, or other things of value left in trust to a third party. The escrow may be released upon the fulfillment of certain conditions or by agreement of the parties.
Fixture: What was formerly personal property which is now permanently attached to real property and goes with the property when it is sold.
Hazard Insurance: Protects against damages caused to property by fire, windstorms, and other common hazards.
Lien: An interest in real property, usually to secure a debt, which is enforceable by foreclosure of title. Mortgages, tax liens and judgments are examples of liens on real property.
Listing Contract: Between a home owner (as principal) and a licensed real estate broker (as agent) by which the broker is employed to sell the real estate within a given time for which service the owner agrees to pay a commission. Also, "listing agreement."
Market Value: The highest price which a buyer, ready, willing and able but not compelled to buy, would pay, and the lowest price a seller; ready, willing and able but not compelled to sell, will accept. Basis for "listing price" or "asking price."
Market Price: The actual amount for which a piece of property is sold. Also, "sale price;' "purchase price."
Mortgage: A lien or claim against real property given by the buyer to the lender as security for money borrowed.
Mortgage Note: A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid.
Opinion of Title (Title Opinion): A document signed by an attorney, stating whether the seller has good marketable and insurable title.
Owners Duplicate Certificate of Title: A duplicate of the Certificate of Title which is issued to the owner of registered land as a safeguard against erroneous or fraudulent documents being filed and to evidence title in case the original is destroyed. The duplicate will be needed at closing to record documents.
P.I.T.I.: Principal, interest, taxes, and insurance. Most residential mortgage payments include the above and are therefore referred to as P.I.T.I. Also, "carrying charges."
Prequalifying: Prequalifying is a process whereby a loan officer takes information about you, either over the telephone or face-to-face and indicates how big a loan of a particular type you will qualify for.
Pre-approval: Preapproval is a step beyond prequalifying. In a preapproval we send the credit part of the loan package to the lender and get you approved for a certain type of loan with a particular lender before you have found or made an offer on a property. With a preapproval you can close the loan faster and often will find your offer more acceptable to the seller. Sometimes sellers are anxious and will take somewhat less in price from someone who can close quickly.
Private Mortgage Insurance (PMI): PMI is needed on all loans where the loan-to-value (the loan amount divided by the value of the property) exceeds 80%.
Points: Sometimes called "discount points." A point is one percent of the amount of the mortgage loan.
Prepayment Penalty: Penalty for the payment of a mortgage note or deed of trust note before it actually becomes due.
Principal: This word has several meanings: to denote the most important; a capital sum lent on interest; one who appoints an agent to act for and in principal's stead; either party to a contract.
Proceedings Subsequent to Initial Registration: A District Court procedure or action which must be brought to change the contents of a Certificate of Title.
Property Management: The operation of real property, including the leasing of space, collection of rents, selection of tenants, and the repair and renovation of the buildings and grounds.
Prorate: To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, a prorate of real property taxes, fire insurance, or condominium fee.
Purchase Agreement: Known by various names, such as "agreement of sale," or "sales agreement" according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.
Restrictive or Protective Covenants: Conditions that have been placed upon the use or occupancy of someone's land.
Survey: A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure a building is actually sited on the land according to its legal description.
Title: As generally used, documents that indicate rights of ownership and possession of particular property.
Title Insurance: Protects lenders and home owners against loss of their interest in property due to legal defects in title.
Title Insurance Commitment: A commitment on the part of a title insurer to issue its policy and insure title, subject only to those exceptions shown in the commitment and upon payment of the required premium.
Title Opinion: A document signed by an attorney, stating whether the seller has good, marketable and insurable title.
Title Search or Examination: A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims.
Transfer Tax: State tax and local tax (where applicable) required by law when title passes from one owner to another.