Real Estate Definitions
These definitions encompass usual real estate terms buyers and sellers come across during property transaction.
“As Is” Contract: a real estate contract in which the buyer agrees to buy the property in its current condition without the seller having to make any repairs. The seller is still obligated to disclose anything that is wrong with the property.
Closing: The final transaction between a buyer and seller of real property. At the closing, all agreements between buyer and seller are finalized, documents are signed and exchanged, money passes to the seller, and title to the property passes to the buyer.
Deed: a written document, signed and delivered by someone (the grantor), that conveys title to real property to someone else (the grantee).
Earnest Money Deposit: a part of the purchase price that accompanies a buyer’s offer to show that the offer is serious and made in good faith.
Easement: a right of use over the property of another. Easements can be created by written agreement, included in subdivision plats and declarations, or can arise by necessity, for example, for land without access to a road.
Escrow: Money that is put into a special account in the custody of a third person (usually the closing agent) by a buyer, to be retained until all contract and title conditions have been met, or disbursed to the buyer or seller according to the contract if the conditions are not met.
Eviction: legal process by which a landlord takes possession of rental premises from a tenant because the tenant has failed to pay rent, has stayed beyond the expiration date of the lease, or has violated some other term of the lease. Evictions usually have their own expedited procedure.
Financing Contingency: a clause in a real estate contract allowing the buyer to cancel the contract and receive the deposit back if the buyer, using good faith and diligence, is unable to obtain a mortgage loan within the time provided.
Foreclosure: legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender or has breached some other promise to the lender, by forcing the sale of the collateral for the loan.
Inspection Period: a period of time specified in a real estate contract in which the buyer can conduct inspections, notify the seller of the results, and depending on the wording, cancel the contract and receive the deposit back.
Lien: a right given to someone by the owner of property to secure a debt, or one created by law in favor of certain creditors, such as construction contractors.
Mortgage: a legal document by which the owner allows a lien to be placed on real estate to secure the repayment of a debt, evidenced by a promissory note. If the debt is not paid, the lender can foreclose on the property.
Partition: division of property between co-owners, either voluntary or by court order, resulting in (1) the owners each becoming the owner of a portion of the property, or (2) the sale of the property if the property cannot be divided.
Promissory Note: a written, signed unconditional promise to pay a certain amount of money on demand at a specified time.
Real estate: land and anything that is permanently affixed to it, that carries with it corresponding legal rights.
Specific Performance: a remedy that forces one party to a contract to perform according to the precise terms agreed upon. This is the preferred remedy for a buyer to force a seller to sell real estate to the buyer and close the deal.
Title Commitment: after a contract is signed and before closing, the title company will issue an offer to provide title insurance called a title commitment. It will contain the new owner’s or lender’s name, property description, amount of insurance, requirements and exceptions to coverage based on what was found in a title search.
Title Insurance: Title insurance assures that the title to the property is marketable. It protects real estate owners and lenders against property loss or damage they might experience because of liens, encumbrances or defects in the title to the property.
Title Search: The process of examining official county records to determine whether an owner's rights in real property are good. The search will confirm legal ownership and reveal recorded liens, easements, and other instruments.
Unlawful detainer: legal process by which an owner takes possession of real estate and removes people who never had or no longer have the right to occupy the real estate. This is the procedure used when there is no landlord-tenant relationship.