Definitions
A
Addendum
A document added to the original purchase agreement that includes additional terms, conditions, or information.
Amendment
A formal change or addition proposed during the negotiation of a real estate contract.
Appraised Value
The value of a property determined by a professional appraiser, which is used by lenders to determine the amount of money they are willing to loan.
B
Bargain and Sale Deed
Implies that the seller holds title to the property, but offers no protection against claims or defects in the title.
Business days
The standard working days of the week, typically Monday through Friday, excluding weekends and public holidays, used for official transactions and legal deadlines.
C
Closing
The final step in a real estate transaction where the title is transferred from seller to buyer, and payment is made.
Closing Costs
The various fees and expenses paid by the buyer and seller at the closing of a real estate transaction. These can include loan origination fees, title insurance, escrow fees, and more.
Contingency Clause
A provision in a contract that requires a certain event or action to take place in order for the contract to be considered binding. Common contingencies include financing, inspections, and the sale of the buyer's current home.
Covenant
A formal, legally-binding agreement or promise in a contract or deed.
D
Deed
A legal document that transfers ownership of real property from one party to another. Types include Warranty Deed, Quitclaim Deed, and Special Warranty Deed, each offering different levels of protection for the buyer.
Deed of trust
Also known as a trust deed. Involves three parties (borrower, lender, and trustee), and is used to secure a loan on the property, where the trustee holds the title until the loan is paid off.
Disclosure
The obligation of a seller to reveal any known issues or defects related to the property to potential buyers, ensuring transparency and informed decision-making.
Down Payment
An upfront payment made by a buyer, typically a percentage of the total purchase price, when acquiring a property or financing a loan, with the remainder covered by a mortgage or other financing.
Due Diligence
The investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party.
E
Earnest Money Deposit
A deposit made by a buyer to demonstrate their serious intent to purchase the property. This deposit is typically held in escrow and applied towards the closing costs or down payment.
Easement
A right to cross or otherwise use someone else's land for a specified purpose.
Effective Date
The date when all parties have signed the contract, making it legally binding and starting the timeline for contractual obligations like inspections, contingencies, and closing.
Encumbrance
A claim, lien, charge, or liability attached to and binding real property, such as a mortgage, lien, or easement.
Escrow
A financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction, ensuring that both parties meet the conditions of the agreement.
Executor's or Adminstrator's Deed
Used to transfer property from an estate, it conveys title from the deceased owner’s estate to the buyer, with limited or no warranties.
F
Financing Clause
A clause in a real estate contract that makes the purchase contingent upon the buyer obtaining financing.
G
General Warranty Deed
Provides the highest level of protection for the buyer, guaranteeing that the seller holds clear title to the property and will defend against any future claims.
Grant Deed
Guarantees that the seller has not transferred the property to someone else and that the property is free from encumbrances made by the seller, but it does not fully protect against prior claims.
H
HOA (Homeowners Association)
An organization in a residential community that enforces rules, maintains shared spaces, and manages services, typically funded by fees paid by homeowners within the community.
L
Legal Description
A precise, legally recognized written statement that defines the boundaries and location of a property, typically using metes and bounds, lot and block, or government survey systems.
M
Mineral Rights
The ownership rights to underground resources, such as oil, gas, coal, or metals, allowing the holder to explore, extract, and sell these minerals, often separate from the surface property ownership.
P
Personal Property
Movable items that are not permanently attached to or part of real estate, such as furniture, vehicles, or electronics, and can be owned, bought, or sold separately from land or buildings.
Possession Date
The date on which the buyer is allowed to take physical possession of the property.
Proof of Funds
A document verifying that a buyer has sufficient financial resources to complete a transaction, often required in real estate to confirm available funds for a purchase.
Q
Quitclaim Deed
Transfers the seller's interest in the property without any guarantees or warranties about the title, commonly used between family members or to clear up title issues.
R
Right of First Refusal
A contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party.
S
Seller Concession
When the seller agrees to pay for certain costs on behalf of the buyer, such as closing costs, repairs, or other fees.
Sheriff's Deed
Issued to the purchaser of a property sold through a foreclosure auction, it conveys the foreclosed owner’s interest but offers no warranties on the title.
Special Warranty Deed
Protects the buyer by guaranteeing the seller has not incurred any title issues during their ownership, but it does not cover prior owners' claims.
Survey
A precise measurement of a piece of property to determine its boundaries, area, and any easements or encroachments.
T
Tax Deed
Transfers property ownership after a tax sale, often when property taxes have not been paid; typically does not guarantee clear title.
Terms or Conditions
Specific provisions or requirements outlined in a contract or agreement that define the rights, responsibilities, and obligations of the parties involved.
Title
Legal ownership of property, signifying who has the rights to use and sell the property.
Title Search
A process conducted to ensure that the seller has clear title to the property and that there are no liens, claims, or encumbrances that could affect the buyer’s ownership.
Trust Deed
Also known as a Deed of Trust. Involves three parties (borrower, lender, and trustee), and is used to secure a loan on the property, where the trustee holds the title until the loan is paid off.
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