Mechanic's Lien - A lien created by statute for the purpose of
securing priority of payment for the price or value of work performed and materials
furnished in construction or repair of improvements to land, and which attaches to the
land as well as the improvements.
Moisture Barrier - Insulating materials used to prevent the
build up of moisture (condensation) in walls and other parts of a building.
Mortgagee - The party lending the money and receiving the
mortgage. Some states treat the mortgagee as the "legal" owner, entitled to
rents from the property. Other states treat the mortgagee as a secured creditor, the
mortgagor being the owner. The latter is the more modern and accepted view.
Mortgage Insurance - Insurance written by an independent
mortgage insurance company protecting the mortgage lender against loss incurred by a
mortgage default, thus enabling the lender to lend a higher percentage of the sale price.
The Federal government writes this form of insurance through the FHA and the VA.
Mortgagor - The party who borrows the money and gives the
mortgage.
Multiple Listing - An exclusive listing, submitted to all
members of an association, so that each may have an opportunity to sell the property.
Note - A unilateral agreement containing an express and
absolute promise of the signer to pay to a named person, or order, or bearer, a definite
sum of money at a specified date or on demand. Usually provides for interest and,
concerning real property, is secured by a mortgage or trust deed.
Notice of Action - A recorded notice that property may be
subject to a lien, or even that the title is defective, due to pending litigation. Notice
of a pending suit, also called "Lis Pendens".
Notice of Cessation - A notice stating that work has stopped
on a construction project. Done to accelerate the period of filing a mechanic's lien.
Notice of Completion - A notice, recorded to show that a
construction job is finished. The length of time in which mechanic's liens may be filed
depends upon when and if a notice of completion is recorded.
Notice of Default - A notice filed to show that the borrower
under a mortgage or deed of trust is in default (behind on the payments).
Offer - A presentation or proposal for acceptance, in order
to form a contract. To be legally binding, an offer must be definite as to price and
terms.
Offer and Acceptance - Necessary elements of a contract to
sell real estate.
Origination Fee - A fee made by a lender for making a real
estate loan. Usually a percentage of the amount loaned, such as one percent.
Owner Occupied - Property physically occupied by the owner.
Ownership - Rights to the use, enjoyment, and alienation of
property, to the exclusion of others. Concerning real property, absolute rights are rare,
being restricted by zoning laws, restrictions, liens, etc.
Payment Cap - A maximum amount for a payment under an
Adjustable Mortgage Loan, regardless of the increase in the interest rate. If the payment
is less than the interest alone, negative amortization is created.
Payoff - The payment in full of an existing loan or other
lien.
Personal Property - Any property which is not designated by
law as real property.
Piggyback Loan - A loan made jointly by two or more lenders
on the same property under one mortgage or trust deed. A 90% loan, for example, may have
one lender loaning 80% and another (subordinate) lender loaning the top 10% (high risk
portion).
PITI (Principal, Interest, Taxes and Insurance) - Used to
indicate what is included in a monthly payment on real property. Principal, interest,
taxes (property) and insurance (hazard) are the four major portions of a usual monthly
payment.
Power of Attorney - An authority by which one person
(principal) enables another (attorney in fact) to act for him. (1) General power -
authorizes sale, mortgaging, etc. of all property of the principal. Invalid in some
jurisdictions. (2) Special power - specifies property, buyers, price and terms. How
specific it must be varies in each state.
Preliminary Title Report - A report showing the condition of
title before a sale or loan transaction. After completion of the transaction, a title
insurance policy is issued.
Prepaid Items - Those expenses of property which are paid in
advance and will usually be prorated upon sale, such as taxes, insurance, rent, etc.
Prepayment Penalty - A penalty under a note, mortgage, or
deed of trust, imposed when the loan is paid before it is due.
Principal - (1) The person who gives authority to an agent or
attorney. (2) Amount of debt, not including interest. The face value of a note, mortgage,
etc.
Private Mortgage Insurance - Insurance against a loss by a
lender in the event of default by a borrower (mortgagor). The insurance is similar to
insurance by a government agency such as FHA, except that it is issued by a private
insurance company. The premium is paid by the borrower and is included in the mortgage
payment.
Promisee - One to whom a promise has been made, such as the
lender under a promissory note.
Promisor - One who makes a promise. The borrower under a
promissory note.
Promissory Note - A promise in writing, and executed by the
maker, to pay a specified amount during a limited time, or on demand, or at sight, to a
named person, or on order, or to bearer.
Proration - To divide (prorate) property taxes, insurance
premiums, rental income, etc., between buyer and seller proportionately to time of use, or
the date of closing.
Public Records - Usually at a county level, the records of
all documents which are necessary to give notice. The records are available to the public.
All transactions for real estate should be recorded.
Purchase Agreement - An agreement between a buyer and seller
of real property, setting forth the price and terms of the sale.
Quitclaim Deed - A deed operating as a release: intended to
pass any title, interest, or claim which the grantor may have in the property, but not
containing any warranty of a valid interest or title in the grantor.
Real Estate - (1) Land and anything permanently affixed to
the land, such as buildings, fences, and those things attached to the buildings, such as
light fixtures, plumbing and heating fixtures, or other such items which would be personal
property if not attached. The term is generally synonymous with real property, although in
some states a fine distinction may be made. (2) May refer to rights in real property as
well as the property itself.
Reconveyance - An instrument used to transfer title from a
trustee to the equitable owner of real estate, when title is held as collateral security
for a debt. Most commonly used upon payment in full of a trust deed. Also call a deed of
reconveyance or release.
Recording - Filing documents affecting real property as a
matter or public record, giving notice to future purchasers, creditors, or their
interested parties. Recording is controlled by statute and usually requires the witnessing
and notarizing of an instrument to be recorded.
Recording Fee - The amount paid to the recorder's office in
order to make a document a matter of public record.
RESPA - Real Estate Settlement Procedures Act. A federal
statute effective June 20, 1975, requiring disclosure of certain costs in the sale of
residential (one to four family) improved property which is to be financed by a federally
insured lender.
Retaining Wall - A wall used to contain or hold back dirt,
water, or other materials of a similar nature.
Right of Survivorship - The right of a survivor of a deceased
person to the property of said deceased. A distinguishing characteristic of a joint
tenancy relationship.
Sales Contract - Another name for a sales agreement, purchase
agreement, etc.
Second Mortgage - A mortgage which ranks after a first
mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust,
or land contracts, as liens at the same time. Legal priority would determine whether they
are called a first, second, third, etc. lien.
Septic System - A sewage system, whereby waste is drained
through pipes and a tile field (a system of clay tiles and gravel) into a septic tank.
Found in areas where city or county sewers have not yet been installed.
Septic Tank - An underground tank into which a sanitary sewer
drains from a building. The sewage is held until bacterial action changes the solids into
liquids or gasses, which are then released into the ground.
Signed, Sealed and Delivered - A phrase indicating that
everything necessary to convey has been done by the grantor. Modernly, signed and
delivered are still necessary, but the only seals commonly used are by governments,
corporations, and notaries.
Simple Interest - Interest computed on principal alone, as
opposed to compound interest.
Special Assessment - Lien assessed against real property by a
public authority to pay costs of public improvements (sidewalks, sewers, street lights,
etc.) which directly benefits the assessed property.
Specific Performance - An action to compel the performance of
a contract, when money damages for breach would not be satisfactory.
Statement of Identity - Also called Statement of Information,
a confidential form filled out by buyer and seller to help a title company determine if
any liens are recorded against either. Very helpful when people with common names are
involved.
Statute - A law which comes from a legislative body. A
written law, rather than law established by court cases.
Subordinate - To make subject or junior to.
Succession - The passing of real property by will or
inheritance, rather than by grant of a deed or any other form of purchase.
Survey - The measurement of the boundaries of a parcel of
land, its area and sometimes its topography.
Take Out Loan - The "permanent" (long term)
financing of real estate after completion of construction.
Tax Base - The assessed valuation of real property, which is
multiplied by the tax rate to determine the amount of tax due.
Tax Lien - (1) A lien for nonpayment of property taxes.
Attaches only to the property upon which the taxes are unpaid. (2) A federal income tax
lien. May attach to all property of the one owing taxes.
Tenancy By The Entirety - A form of ownership by husband and
wife whereby each owns the entire property. In the event of the death of one, the survivor
owns the property without probate.
Tenancy in Common - An undivided ownership in real estate by
two or more persons. The interests need not be equal, and, in the event of the death of
one of the owners, no right of survivorship in the other owners exists.
Tenant - (1) A holder of property under a lease or other
rental agreement. (2) Originally, one who had the right to possession, irrespective of the
title interest.
Terms - The considerations, other than price, in a sale,
lease, mortgage, etc. For example: the way the money will be paid, time to take
possession, conditions, etc.
"Time Is Of The Essence" -
Clause used in contracts
to bind one party to performance at or by a specified time in order to bind the other
party to performance.
Title - The evidence one has of right to possession of land.
Topography - The contour of land surface, such as flat,
rolling, mountainous, etc.
Transfer - The act by which the title to property is conveyed
from one person to another.
Transfer Tax - Tax collected by the country on the transfer
of real property. Based on purchase price or money changing hands. Also called documentary
transfer tax. This tax is generally $1.10 per $1,000.00
Trust - A fiduciary relationship under which one holds
property (real or personal) for the benefit of another. The party creating the trust is
called the trustor, the party holding the property is the trustee, and the party for whose
benefit the property is held is called the beneficiary.
Trustee - (1) One who is appointed, or required by law, to
execute a trust. (2) One who holds title to real property under the terms of a deed of
trust.
Trustor - The borrower under a deed of trust. One who deeds
his property to a trustee as security for the repayment of a loan..
Veterans Administration (VA) - An agency of the Federal
government which, among other things, insures and guarantees loans for veterans.
Warrant - To legally assure that title conveyed is good and
possession will be undisturbed.
Wrap-Around Mortgage - A second or junior mortgage with a
face value of both the amount it secures and the balance due under the first mortgage. The
mortgagee under the wrap-around collects a payment based on its face value then pays the
first mortgagee. It is most effective when the first has a lower interest rate than the
second, since the mortgagee under the wrap-around gains the difference between the
interest rates, or the mortgagor under the wrap-around may obtain a lower rate than if
refinancing.
