Real Estate Glossary
Clicking the terms below reveals brief definitions of a number of frequently used real estate terms.
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
An abstract of title that a lawyer has examined and has certified to be, in his or her opinion, an accurate statement of fact.
A mortgage loan in which the interest rate may increase or decrease at specified intervals over the life of the loan.
A tax levied according to value; generally used to refer to real estate tax; also called the general tax.
The actual, visible, hostile, notorious, exclusive, and continuous possession of another’s land under a claim of title. Possession for a statutory period may be a means of acquiring title.
A federal law to eliminate discrimination against individuals with disabilities by mandating equal access to jobs, public accommodations, government services, public transportation, and telecommunications.
A group of people who hear appeals concerning assessed valuations for tax purposes and recommend or deny changes in values shown of record.
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
1. The person for whom a trust operates or in whose behalf the income from a trust estate is drawn.
2. A lender who lends money on real estate and takes back a note and trust deed from the borrower.
A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project. See setback.
The succession of conveyances from some accepted starting point, whereby the present holder of real property derives his or her title.
The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price.
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage.
The absolute ownership of an apartment or a unit (generally in a multi-unit building) based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.
A contract for the sale of real estate wherein the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until final payment. Also called an installment contract, a land contract, a contract of sale, or articles of agreement for warranty deed.
Part of the federal Consumer Protection Act originally passed in 1973 and made specifically applicable to real estate in 1975 prohibiting a number of false, misleading, or deceptive acts or practices.
A deed to a lender given by an owner conveying mortgaged property on which the mortgage is in default.
A form of deed by which real estate is conveyed to a trustee.
An instrument used to create a mortgage lien by which the mortgagor (trustor) conveys his or her title to a trustee, who holds it as security for the benefit of the lender (beneficiary); also called a trust deed.
Clauses in a deed limiting the future uses of the property.
An amount of money, deposited by a prospective buyer as evidence of good faith under the terms of a contract, that is to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.
The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the price or compensation to be paid to the owner.
A building or some portion of it – a wall or fence, for instance – that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
Any lien (such as a mortgage, tax, or judgment lien or an easement or a restriction on the use of the land) that may diminish the value of a property; a cloud against clear, free title to property.
A contract, used when a transaction is closed through an escrow, that sets forth the duties of the escrow agent as well as the requirements and obligations of the parties to the transaction.
The man/woman appointed in a will to carry out the requests of the will.
The maximum possible estate or right of ownership of real property, continuing forever. Sometimes called a fee or fee simple absolute.
A loan insured by the Federal Housing Administration and made by an approved lender in accordance with FHA regulations.
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease’s expiration.
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.
A person who receives a conveyance of real property from the grantor.
The person transferring title to or an interest in real property to a grantee.
A lease of land only, on which the tenant usually owns a building or is required to build his or her own building as specified in the lease. Such leases are usually long-term net leases; the tenant’s rights and obligations continue until the lease expires or is terminated through default.
A tenancy whereby a lessee retains possession of leased property after his or her lease has expired and the landlord, by continuing to accept rent, agrees to the tenant’s continued occupancy, as defined by state law.
Land that is owned and occupied as the family home. In Texas, a portion of the area or value of this land is protected or exempt from forced sale by creditors for judgments for debts with several exceptions.
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to his or her heirs as provided in the state law of descent.
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of one joint tenant, his or her interest passes to the surviving joint tenant or tenants by the right of survivorship. Not automatically created in Texas.
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than one year must be in writing to be enforceable.
A tenant’s right to occupy real estate during the term of a lease; generally considered to be a personal property interest.
A right given by law to certain creditors to have debts paid out of the property of a defaulting debtor, usually by means of a court sale.
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person.
A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
Good or clear title, reasonably free from the risk of litigation over possible defects.
A statutory lien created in favor of contractors, laborers, materialmen, and others (including architects, engineers, or surveyors) who have performed work or furnished materials in the erection or repair of a building.
A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using direction and distances around the tract back to the place of beginning.
A defined geographic area created by a developer that levies taxes to pay for providing water and sewer utilities to its inhabitants (usually outside a municipality).
A lease requiring that the tenant pay not only rent but also all costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.
An instrument of credit attesting to a debt and promising to pay.
The right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercises the right to purchase.
The difference paid or secured by one cotenant to another for the purpose of equalizing a partition of assets.
An association of two or more individuals who carry on a continuing business for profit as co-owners. In a general partnership each general partner shares in the administration, profits, and losses of the operation. A limited partnership is a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments. A limited liability partnership limits an individual partner’s liability arising from negligence on the part of another partner.
A lease, commonly used for commercial property, whose rental is based on the tenant’s gross sales at the premises; it generally stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
Items, called chattels, that do not fit into the definition of real property; movable objects; personality.
A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
A map of a town, section, or subdivision indicating the location and boundaries of individual properties.
A written instrument authorizing a person, the attorney-in-fact, to act as agent on behalf of another person to the extent indicated in the instrument.
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that otherwise are lost.
Default insurance on conventional loans, normally insuring the top 20 percent to 25 percent of the loan and not the whole loan.
A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets are; literally means “to prove.”
To divide or distribute expenses, either prepaid or paid in arrears, between buyer and seller at the closing (such as taxes, interest, and rents).
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
Land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached thereto, whether by nature or by a person; any and every interest in land.
A subdivision map filed in the county recorder’s office that shows the location and boundaries (lot and block number) of individual parcels of land; contrast with rectangular survey system and with metes-and-bounds description.
The act of entering documents affecting or conveying interests in real estate in the recorder’s office established in each county. Until it is recorded, a deed or mortgage generally is not effective against subsequent purchasers or mortgages.
Something retained by the seller; for example, minerals or a life estate.
A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.
A contract containing the complete terms of the agreement between buyer and seller for the sale of a particular parcel or parcels of real estate.
A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.
Under community property law, property owned solely by either spouse before the marriage, or acquired by gift or inheritance during the marriage, or purchased with separate funds during the marriage, or separated by written agreement during the marriage.
The amount of space local zoning regulations require between a lot line and a building.
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, “by, through or under the grantor but not otherwise.”
A legal action brought in a court of equity in special cases to compel a party to carry out the terms of a contract. The basis for an equity court’s jurisdiction in breach of a real estate contract is the fact that land is unique and therefore mere legal damages would not adequately compensate the buyer for the seller’s breach.
That part of state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable.
A tract of land divided by the owner, known as the subdivider, into blocks, building lots, and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.
The leasing of premises by a lessee to a third party for part of the lessee’s remaining term.
Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
A form of co-ownership by which each owner holds an undivided interest in real property as if he or she were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have no right of survivorship.
One who holds or possesses lands or tenements by any kind of right or title.
1. The right to or ownership of land. 2. The evidence of ownership of land.
A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.
A form required by RESPA for the closing of certain real estate transactions; the “HUD-1" form.
Charging interest at a rate higher that the maximum rate established by state law.
Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception to the zoning ordinances.
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a warranty deed offers the greatest protection of any deed.
The Real Estate Glossary above is made up of excerpts from Modern Real Estate Practice in Texas, (Eleventh Edition), authored by Cheryl Peat Nance, Ed.D., DREI, CREI.
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