We are committed to making the purchase or sale of your home as simple and easy as possible. During this process, you may encounter real estate terminology that is new to you. Following is a guideline of real estate terms, as well as financial and architectural terms to help you during the purchase or sale of your home.
Derived from Latin battere, “abatement” a common legal term meaning “the beating down, removal, or diminishment” of something. For example, lead abatement refers to finding and removing lead paint. Abatement…
The rate at which rentable space is filled, divided into gross absorption and net absorption. Gross absorption is a measure of the total square feet leased over a specified period,…
Abstract of title is a historical summary of the recorded instruments and proceedings on the title of a property.
A clause in your mortgage which allows the lender to demand payment of the outstanding loan balance for various reasons. The most common reasons for accelerating a loan are if…
An ARM is a loan that has a varying interest rate and payment based on an adjustment period. The adjustment is dependent on the variation in a benchmark index, usually…
Adjusted sales price is the price on the contract less all credit concessions by the seller.
Air rights are the legal ability to use or control the space above a property. Air rights can be sold, rented or leased to another party.
Amenities are the enhancements that buildings offer its owners or tenants. These usually include a doorman, health club, garage, children’s playroom, common lounge, etc.
Amortization is the periodic payment of principal and interest on a liability (including a mortgage), or the write-off of a non-depreciable asset over a scheduled term.
An amortization schedule is the designation of periodic payments of principal and interest toward the principal to eventually pay off a debt.
The APR is the actual effective rate of interest charged on a loan expressed on a yearly basis and represents the full cost of all elements associated with obtaining a…
An appraisal is the evaluation of a property by a licensed appraiser on its price based on previous sales of similar properties. The appraised value is used by a bank…
An opinion of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property. Since an appraisal is based primarily on comparable sales, and the…
An individual qualified by education, training, and experience to estimate the value of real property and personal property. Although some appraisers work directly for mortgage lenders, most are independent.
An assessment is a levy against property and can be an extraordinary payment called for by the board of directors of a cooperative or condominium for the purpose of making…
An asset is something that is owned that has value.
Assignment is the process by which a right or contract is transferred from one party to another. Examples of typical assigned contracts are mortgages, leases and deeds of trust.
An attorney-in-fact is a person appointed to perform legal acts for another under a power-of-attorney.
Board approval is a condition in the standard cooperative sales contract requiring that the buyer obtain approval from the board of directors of the cooperative corporation as a prerequisite to…
A bridge loan is a loan for a short duration of time and can be used when one is purchasing one property but is dependent on the equity from another…
A brownstone is a townhouse that is usually a 3 to 5 story building, named for traditional “brown stone” used in the façade. It may be a single family building…
Building restrictions are the requirements in building codes that affect the size and appearance of the building.
Buy down is the voluntary paying of discount points by a borrower to reduce mortgage interest rate at the time the loan is made.
A buyer’s broker is a broker who represents the buyer in effectuating a purchase. Normally in residential real estate transactions, the buyer’s broker shares the commission received by the listing…
By-laws are the rules by which the cooperative corporation or condominium operates, including those regulating elections, officers, and authorizations.
A capital expenditure is an improvement that will have a life of one year or more and will increase the value of the property.
Capital gain is the seller’s gain on an asset used in a trade or business or for investment, including real estate. This gain is taxed at varying rates depending on…
Capital improvement is an item that adds value to the property, adapts the property to new uses, or prolongs the life of property. Maintenance is not a capital improvement.
The percentage of the investment the investor will receive back each year from the net income from the property.
Caps are percentage restrictions on an ARM which limit the amount the interest rate may change per year and over the life of the loan.
The carry-cost rule is used by banks to evaluate borrowers for loans. It gives the maximum percentage of a borrower’s income that the bank will find acceptable to carry the…
Cash flow is the income produced by an investment property after deducting operating expenses and debt.
In a mortgage commitment, some lenders require that the borrower have on deposit in their bank accounts at the time of the closing an amount equal to a predetermined number…
Caveat is a warning or caution that may be an amendment to a contract of sale.
Caveat emptor in Latin means “let the buyer beware”, which applies in most real estate transactions.
The Certificate of Occupancy is a certificate issued by a local governmental entity responsible for the use of land in the community where the property is located stating that the…
Certificate of Title Opinion is a report based on a title examination, which states the examiner’s opinion of the quality of a title to real property.
A cession deed is used to relinquish real property to a municipality for a road or other public work project.
A chain in land measurement is a distance of 66 feet.
Chain of Title is a successive conveyance of title to a specific parcel of land.
Chattel is personal property.
The Civil Rights Act of 1866 is a federal law that prohibits all discrimination on the basis of race.
The Civil Rights Act of 1964 is a federal law that prohibits discrimination in many instances, but in Title VI it prohibits discrimination on the ground of race, color, or…
The closing is when the transfer of ownership of a property from the seller to the buyer occurs according to the sales contract.
Closing costs are the expenses incurred in the purchase and sale of real property paid at the time of settlement or closing. Some examples of closing costs are title insurance,…
A closing statement is an accounting of the funds received and distributed in a real estate transaction.
Cluster zoning is a form of zoning that provides for several different types of land use within a zoned area.
Co-broke is an arrangement between two brokerage firms to share a commission. Normally used when one broker is the seller’s exclusive listing agent and the other broker represents the buyer.
Co-ownership occurs when title to real property is held by two or more persons at the same time; also called concurrent ownership
The Code of Ethics is a standard of conduct required by license laws and by the National Association of Realtors.