Real Estate Terms

The world of real estate comes with its own special jargon. That’s why we put together a glossary of real estate terms for investors to use as a resource throughout the property-buying process. Looking for a term not defined here? Ask the BiggerPockets community within the Forums.

0-9 A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
1031 Exchange
The IRS code's Section 1031 makes it possible for a real estate investor to defer payment of capital gains taxes on an investment property upon its sale, as long as another "like kind" property is bought with the profit from the sale of the investment property.

A

Absentee Landlord
This term refers to a landlord that owns and rents out a property to earn profit and does not live on the property or in the local economic region.

Abstract of Title
This is the summary that provides details of the title deeds and documents that prove the seller/owner’s right to dispose of the property.

Adjustable Rate Mortgage
An adjustable rate mortgage is a type of mortgage in which the rate of the outstanding balance varies throughout the life of the loan. With an adjustable rate mortgage, it is more difficult for the borrower to predict and plan for monthly payments. Traditionally, the initial interest rate will be fixed for a certain period of time until it resets from time to time, based on the current interest rates.

Adverse Possession
Adverse possession is a legal doctrine that allows a person to claim a property right in land owned by another. Common examples of adverse possession include continuous use of a private road or driveway, or agricultural development of an unused parcel of land. By favoring the adverse possessor over the true landowner, the doctrine of adverse possession rewards the productive use of land and punishes landowners who "sleep on their rights."

After Repair Value (ARV)
This estimates the future value of the property after renovations and any repairs that are made to the property. This is not the value of the property at purchase but following the improvements that are made to the property and is an estimation, not a guarantee, based on what comparable properties have recently sold for.

Amenity
An amenity is a desirable or useful feature or facility within a property structure. Amenities are typically features that are highlighted and pitched to renters when they are looking to rent at a certain complex. Amenities can also be found within gated communities or other areas that have an HOA when talking about single family homes, townhomes, or condos. Examples include a pool, workout room, on-site laundry facilities, etc.

Amortization
This is the process of spreading out a loan into a series of fixed payments over a period of time. Although a purchasers total payment remains equal each period, the loan’s interest and principal will be paid off in different amounts each month.

Appraisal
An appraisal will typically happen during escrow or if a person is refinancing their home. It is an unbiased professional opinion of a home’s value, based on recently sold properties nearby.

Appraised Value
Appraised value is the estimated amount from an unbiased professional of the property’s value.

Appraiser
An unbiased professional that is contracted during the escrow or refinance process to assess the value of the property in question.

Appreciation
Appreciation is the increase in a home’s value over time. A home’s appreciation can be calculated based on the fair market value of comparable homes in the neighborhood of the property in question. Appreciation of a home can come through the natural appreciation of the value of the home over time or can be forced into the home through upgrades, remodels, or renovations that add value to the home.

APR
This stands for annual percentage rate and is charged to the borrower. It is expressed as a percentage that represents the actual yearly cost of funds over the term of the loan.

Assessed Value
The assessed value is different from the appraised value in that it is the dollar value assigned to the property to measure applicable taxes. This determines the value of a property for tax purposes and takes comparable property sales and inspections of the property into consideration.

Asset Protection
Asset protection is a part of one’s financial planning in order to protect one’s assets from creditor claims. Both individuals and businesses use this technique to make sure they limit creditors access to claim valuable assets.

B

Bad Title
A bad title is when the current sellers are not granted the ownership of title due to a multitude of reasons. These can be either legal or financial problems that lead to a bad title and therefore can prevent the seller from being able to sell the asset.

Balloon Mortgage
A balloon mortgage is a fixed rate, typically low payment loan, with a large remainder due at the end of the loan period. Frequently, these loans are re-amortized before the balloon payment comes due.

Bank Owned Property
A bank owned property is one that is taken back into a bank’s inventory after the owner defaults on the mortgage loan. This type of property is likely to be sold at a discounted price or lower than other comparables in the same location.

Broker
A real estate broker is not the same thing as a real estate agent. A broker is an agent that has also passed their broker license exam. The main difference between the two is that a real estate broker can also own a real estate agency or firm. Real estate agents are the ones that work for a real estate broker firm.

Broker Price Opinion
A broker price opinion is a report by a real estate agent or broker that is used to support the professional and unbiased opinion that helps determine the potential selling price. Based on comparable properties nearby that have sold recently, a BPO is used frequently by banks to price their properties for a quick sale.

BRRRR
The BRRRR strategy was coined by Brandon Turner and stands for Buy, Rehab, Rent, Refinance, Repeat. This strategy is where an investor buys a fixer-upper property using short-term funds (oftentimes cash, hard money, private money, or other creative means), fixes up the property, rents out the newly renovated property, and seeks a new long-term loan (a refinance) to pay off the old short-term loan. This refinance will free up the short-term capital that was used, allowing the investor to repeat the process again and again. For more information, check out the book “Buy, Rehab, Rent, Refinance, Repeat” by David Greene.

Buy and Hold
The buy and hold strategy is long-term investing, where a real estate investor purchases a property with the intention of holding onto and renting it for the foreseeable future.

Buyer’s Agent
A buying agent or a purchasing agent is an agent that works with buyers to find and purchase a property. The buying agent works for a commission that is typically paid by the seller at closing.

C

Capital Expenditure
Capital expenditure or CapEx refers to large expenses that are performed infrequently but should still be budgeted for. Examples include a new roof or systems like a furnace or air conditioning unit.

Capital Improvement
Capital improvement is the addition of permanent structural changes to a property that add to the property value or adapt the property to new uses.

Capitalization Rate aka "Cap Rate"
The capitalization rate or cap rate is used in the world of real estate investing to indicate the rate of return that an investor can expect on any given real estate investment property. This is measured by a formula based on the net income that the property is expected to produce and is calculated by dividing net operating income by the property asset value and is expressed as a percentage. This calculation is typically used by real estate investors to understand the potential ROI on an investment property. While it is a useful calculation, this should not be the only deciding factor when considering an investment property. The capitalization rate indicates the property’s intrinsic, natural, and un-leveraged rate of return.

Cash-Out Refinance
A cash-out refinance will replace a person’s existing mortgage with a new home loan for more than is currently owed on a property. The difference is refunded to the property owner in cash and can be spent on home improvements, debt consolidation, or any other financial needs. In order to use a cash-out refinance, a property owner would need to have built up equity in the property.

Cash Reserves
Cash reserves refer to the money an individual has set aside for unexpected expenses like home improvement emergencies, such as plumbing issues, appliance replacements, flooding, etc., as well as vacancies, capital expenditures, and non-paying tenants.

Certificate of Title
This is the state-issued document that identifies the owner of real property. A certificate of title provides documentary evidence of the right of ownership so that the seller is actually able to transfer title and sell a property.

Chain of Title
This is the sequence of historical transfers of a title of real property from sellers to buyers. This is a valuable tool to identify the past owners of any given property. This chain will follow the title from the original owners to the current owners.

Clear Title
A clear title is a title that is clear of any type of lien or anything else that might pose a question about legal ownership. An owner with a clear title has legal ownership of the title and property and is able to transfer this title legally to a purchaser.

Closing
The closing is when the buyer and seller sign the official papers to transfer ownership.

Closing Costs
This is any cost that is associated with the purchase of a property that is due at “closing.” This typically includes the down payment on the property and any other fees associated with purchasing a home, such as title insurance, taxes, lender costs, and some upfront housing expenses.

Cloud on Title
This is a document, claim, or unreleased lien that might invalidate or make it difficult to transfer a title. Cloud on title is usually discovered during the title search once a property is under contract.

Co-Borrower
A co-borrower is the second person on a mortgage loan. This can be anyone from a parent or friend to a significant other or spouse. Co-borrowers are used to help qualify for a loan and are also equally responsible for the mortgage should the initial borrower default.

Commercial Property
A commercial property refers to a real estate property that is used for business purposes or large scale residential dwellings, such as apartment buildings.

Comparative Market Analysis
This is an examination of the prices of different properties within the same area as the property a buyer is considering for purchase. Real estate agents perform this analysis to determine an accurate listing price.

Contingency Clause
A contingency clause is a portion of a contract that will require certain things to take place before the contract can be considered valid. This often is a part of a conditional offer made on a property during a real estate transaction.

Co-Tenancy Clause
A co-tenancy clause in retail lease contracts allows tenants to reduce their rent if key tenants or a certain number of tenants leave the retail space.

Curb Appeal
This term is often used to describe the appeal of a property for sale when the property is viewed from the street.

D

Debt-to-Income Ratio
A buyer’s debt-to-income ratio compares how much a buyer owes monthly versus how much they earn monthly. This ratio is used during the underwriting process of escrow to determine how much house you can afford as a buyer. More specifically, it is the percentage of gross monthly income that goes toward payments for rent, mortgages, credit cards, car payments, or any other debt the buyer possesses.

Deed
A deed is a legal document that passes and confirms an interest, right, or property and is signed, attested, delivered, and sealed. It is commonly associated with transferring the title of a property from the seller to the buyer.

Deed Book
Deed books can be found at the county courthouse and are under the jurisdiction of the registrar of deeds. The deed book contains the record of property transfers.

Default
Within real estate, default is when a property owner fails to make monthly mortgage payments and therefore defaults on their mortgage loan. When the mortgage payments are not made and a borrower defaults on the loan, the property can then be taken away by the lender through a process called foreclosure.

Deficiency Balance
This is the amount of the loan that remains unpaid after the lender has taken the property back from the owner.

Delinquent
This term is typically used when a borrower is late or overdue on a mortgage payment.

Depreciation
This term is the opposite of appreciation when considering a real estate property. Depreciation is when a property decreases in value.

Downturn
Downturn is when the economy or real estate market has softened, resulting in properties typically taking longer to sell.

Dual Agency
Dual agency is when a real estate agent represents both the buyer and the seller in a single transaction.

E

Earnest Money
After an offer is accepted, a deposit is made to the seller by the buyer as a symbol of good faith that you will be following through on buying the property. This deposit can be forfeited if the buyer does not follow through on the purchase.

Easement
Easement is the legal right to use someone else’s land for a specific and limited purpose. When someone is granted an easement, they are legally allowed to use the property, but the property title and ownership remain in the possession of the owner.

Effective Gross Income
Effective gross income, or EGI, can be calculated by taking the potential gross income from an investment property, adding other forms of income generated by that property, and subtracting vacancy and collection losses.

Egress
When buying a property, there are certain things that qualify a room as “conforming” or “non-comforming.” For example, a basement room with regular windows would be considered a “non-comforming” bedroom. Egress is a way to exit the property, and in order for a room to be a legal bedroom, it must have two points of egress or exit.

Ejectment
This is a common law term for the civil action to recover the possession of a title to the land.

Eminent Domain
Eminent domain refers to the right of the government to take private property and convert it to public use.

Equity
Equity is the difference between the market value of a property and the amount of money that is still owed on the loan. Equity can accrue naturally through the market or can be forced into the home based on improvements made by the owner.

Equity Stripping
This is a set of strategies designed to reduce overall equity in a property. These can be used by debtors as means of making properties unattractive to creditors.

Escrow Agent
An escrow agent is the person that holds property in trust for third parties while a transaction is finalized on the property in question.

Escrow Agreement
This is the contract that defines an arrangement between parties where one party deposits an asset with a third party. This third party then delivers the asset to the second party when the conditions of the contract are met.

Estate
An estate comprises the houses, outbuildings, supporting farmland, and woods that surround the gardens and grounds of a very large property, such as a country house or mansion.

Eviction
The legal method for removing a tenant from a rental property. Eviction typically takes place after the tenant fails to make their monthly rent payments on time.

F

Fair Housing Act
The Fair Housing Act was initiated to make sure that everyone who applies for housing has the right to be treated the same. For landlords, this means you cannot discriminate against potential tenants based on color, disability, familial status, national origin, race, religion, or sex.

Fair Market Value
This is an estimate of the market value of a property. At its simplest, it is the price that a property would sell for in a fair and open market.

Fee Simple
A fee simple represents absolute ownership of land; therefore, the owner may do whatever he or she chooses with the land.

FHA Loan
This is a type of mortgage loan that is insured by the Federal Housing Administration. These types of loans are popular among first time home buyers due to the low down payment requirements—as low as 3.5%—as well as a more lenient credit score requirement.

First Mortgage
This is the first mortgage loan on a property and has priority over all other liens or claims on a property in the event of a default on the home.

Fix and Flip
This term is coined for properties that need a lot of rehab to make them appealing to buyers. Real estate investors will buy the property, renovate it, and resell the property for a profit.

Fixed Price Purchase Option
A fixed price purchase option is the right, but not the obligation, to buy a leased property at the end of a lease term at a price determined from the onset of the lease agreement.

Fixed Rate Mortgage
This is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan.

Forced Equity
Forced equity is equity that is instantly put into the home by making improvements to it. By improving the home, you not only increase the home's market value, but also increase the market rent, which permits you to make more money each month and pay off your property faster. This is the best way to build equity in a home versus waiting for the home’s market value to increase naturally.

Foreclosure
Foreclosure is the legal process in which a lender or bank takes control of a property, evicts the homeowner and sells the home after a homeowner is unable to make full principal and interest payments on his or her mortgage, as decided upon in the mortgage contract.

Foreclosure
Foreclosure is the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments. At this point, the lender or the bank will take back ownership of the property and it will typically go back up for sale at a lower or discounted price.

For Sale By Owner
For Sale By Owner, or FSBO, is a home that is being sold directly by the seller instead of going through a brokerage firm to sell the property. The benefit to the seller is that there is no commission to pay out at the end of the selling process.

Fractional Ownership
Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a real estate property.

G

Gentrification
Gentrification is the process of improving an area in order to make the location more desirable.

Gift Of Equity
The gift of equity is when a family member sells you a property for below market value. This difference is considered an amount of equity. This equity can be used toward the down payment or to help pay off debt in order to qualify to buy the home.

Graduated Lease
Graduated lease refers to an agreement under which a tenant and landlord agree to a periodic adjustment of monthly payments. This typically occurs when the market conditions increase and the landlord then needs to increase the price on the lease.

Ground Lease
A ground lease refers to an agreement between a tenant and a property owner that allows the tenant to develop a piece of property during the lease period. After the lease, all of these developments are to be transferred over to the property owner.

H

Hard Money Lender
A hard money lender is a private lender that uses property collateral instead of credit scores in order to qualify lending a buyer money.

Hard Money Loan
Hard money is a way to borrow without using traditional mortgage lenders. Loans come from individuals or investors who lend money based (for the most part) on the property you’re using as collateral and not based off of credit scores. When loans need to happen quickly, or when traditional lenders will not approve a loan, hard money may be the only option.

Hazard Insurance
Hazard insurance protects a homeowner against the costs of damage from fire, vandalism, smoke, and other causes. When you take out a mortgage, the lender will require you to take out hazard insurance to protect their investment; many lenders will incorporate the insurance payment into your monthly mortgage payment.

HELOC
A HELOC is a home equity line of credit in which a borrower is allowed to borrow money against the equity that has been built up in a home.

Holding Costs
When real estate investors purchase property, their main goal is to sell the property for a profit. But during this process, the investor must take into consideration the amount of money they will need to pay out before the investment is re-sold. Holding costs are also known as carrying costs. When calculating the holding costs, investors must include the purchase price, and deduct operating income to come to an estimated figure.

Home Equity
This is the current market value of your home, minus what a borrower still owes on a mortgage.

Home Inspection
A home inspection is something that a home buyer will pay to have conducted during the escrow period. A home inspector will come to the property and look at different aspects of the home that may deter a buyer from wanting to follow through with the purchase.

Homeowners Association/HOA
The primary purpose of a homeowners association is to manage a large property’s or neighborhood's common areas, such as roads, parks, and pools. Homeowners are obligated to pay dues, which can be anything from $100 to $10,000 a year, depending on the building/neighborhood and its amenities. This is an added monthly expense on top of a mortgage payment and should be considered as such when home buying.

Home Warranty
A home warranty is an annual service contract that covers the repair or replacement of important appliances’ and systems’ components in the event they break down.

House Hacking
House hacking is a strategy in which the property owner lives within the investment property and lives for free (or almost free) based on other tenants paying rent that covers the whole mortgage. This strategy is typically done with a multifamily unit but can also be done in single family homes by renting out extra rooms.

I

Inflation
In simple terms, inflation is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over a period of time.

Ingress
The right to enter a property.

Interest
Within real estate, interest can be defined as the cost of borrowing money and is usually expressed as a yearly percentage that is paid as part of your monthly loan payment.

Interim Interest
Mortgage interim interest refers to the interest that accrues on your mortgage between the closing date and the date of record. This is the time between when you close on the mortgage and the end of the month.

Intestate
Intestate refers to when a person dies before determining a will. An intestate estate is also one in which the will presented to the court was deemed to be invalid.

J

Joint Tenancy
The holding of an estate or property jointly by two or more parties, the share of each passing to the other or others on death.

Joint Tenants
In estate law, joint tenancy is a special form of ownership by two or more persons of the same property. The individuals, who are called joint tenants, share equal ownership of the property and have the equal, undivided right to keep or dispose of the property.

Judicial Foreclosure
Judicial foreclosure refers to foreclosure cases that go through the court system.

L

Landlord
A person or company who owns property that they allow other people to live in, in exchange for monthly rent.

Land Trust
A land trust is a legal entity that takes ownership of, or authority over, a piece of property at the behest of the property owner.

Land Value
Land value is the value of a piece of property, including both the value of the land itself as well as any improvements that have been made to the property over time.

Lease
The legally binding contract that governs the circumstances in which a landlord will rent their property to a tenant.

Lender
The person or organization that loans money for the purchase of real estate. A lender can be anything from a bank to a private lender or a hard money lender.

Lessee
A lessee is a person who rents land or property from a lessor. The lessee is also known as the "tenant" and must uphold specific obligations as defined in the lease agreement and by law.

Lessor
The lessor is the property owner or landlord that rents out the property to the lessee.

Lien
A legal interest in a property, which must be paid in full before the property can be sold. If there is a lien on a property, this is typically identified in the escrow process and will break the contract.

Listing
A listing is what a property for sale is often referred to as by a real estate broker or agent.

List Price
The price at which a property is listed by the seller.

Live-in Flip
This is when a property purchaser lives in the property as they flip in order to limit costs during the time of the flip.

Loan Estimate
A loan estimate is a three-page form that a potential borrower receives after applying for a mortgage. The loan estimate tells the borrower important details about the loan requested. The form provides important information, including the estimated interest rate, monthly payment, and total closing costs for the loan.

Loan Policy
A loan policy protects the lender's interests and is based on the dollar amount someone is borrowing from the bank, not on the full value of the property.

M

Market Value
Market value is the price an asset would fetch in the marketplace.

Mortgage
A mortgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Mortgage Broker
Mortgage brokers are mortgage experts who provide different lenders, loan types, and rates for buyers without upfront charges.

Multi-Family
A building or structure that is designed to house several different families in separate housing units.

Multiple Listing Service
A multiple listing service (MLS) is a service used by a group of real estate brokers. Once a buyer begins working with a real estate agent/broker, they will typically be set up with an MLS email drip that will send new listings every day.

N

National Housing Act
The American Housing Act of 1949 was a sweeping expansion of the federal role in mortgage insurance and issuance and the construction of public housing.

Negative Equity
Negative equity occurs when the value of real estate property falls below the outstanding balance on the mortgage used to purchase that property. Negative equity is calculated by taking the current market value of the property and subtracting the balance on the outstanding mortgage.

No-Appraisal Refinancing
A no-appraisal mortgage is a type of home loan refinancing for which the lender does not require an appraisal, meaning an independent opinion of the property's current fair market value is not necessary.

Note
Mortgage notes are a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise.

O

Offer
An offer is when a buyer puts in a price offer on a home that the seller can accept or counter.

Open House
An open house is held by the selling agent in order for prospective buyers to come and look at a property. It enables interested parties to view property without scheduling a showing with their agent.

Open Listing
An “open listing” is a non-exclusive real estate contract in which more than one broker may be employed to sell a property, including the owners themselves.

P

Personal Use Property
Personal use property is a type of property that an individual does not use for business purposes or as an investment.

Pocket Listing
A pocket listing is a signed real estate listing that is not entered into the multiple listing service, or MLS.

Power Of Sale
Power of sale is a clause written into a mortgage note authorizing the mortgagee to sell the property in the event of default in order to repay the mortgage debt.

Pre-Approval Letter
A pre-approval letter is a document that states the loan amount a lender is willing to extend to a borrower. It is not a guarantee to lend, but it carries significant weight, especially to other parties in a real estate transaction, such as agents and sellers.

Private Mortgage Insurance
Private mortgage insurance, also called PMI, is a type of mortgage insurance buyers might be required to have if he or she uses anything other than a conventional loan. Like other kinds of mortgage insurance, PMI protects the lender if the buyer stops making monthly loan payments.

Probate
Probate is the legal process through which a deceased person's estate is properly distributed to heirs and designated beneficiaries and any debt owed to creditors is paid off.

Property Manager
A property manager is an individual or a company that is hired by a property owner in order to run the rental property. Typically property owners will hire a property management company to run it day to day because they are unwilling or don’t have the time to do so.

Q

Quiet Title
A quiet title action is a circuit court action, or lawsuit, intended to establish or settle the title to a property, especially when there is a disagreement. It is a lawsuit brought to remove a claim or objection on a title.

Quitclaim Deed
Quitclaim deeds are most often used to transfer property within a family. For example, when an owner gets married and wants to add a spouse's name to the title or when the owners divorce and one spouse's name is removed from the title.

R

Real Estate
Real estate refers to property containing land, buildings, or both.

Real Estate Agent
Real estate agents are licensed professionals who arrange real estate transactions for either a buyer or a seller.

Real Estate Broker
Real estate broker’s are real estate agents but with a broker’s license. They work for a real estate brokerage and assist buyers or sellers in the transfer of ownership of a property, much like a real estate agent.

Real Estate Owned
Real estate owned (REO) is the name given to foreclosed-upon real estate. This happens when a borrower fails to make monthly mortgage payments and therefore defaults on the loan. In this case, the property goes back to the bank or lender for sale. It is typically sold at a discounted price.

Realtor
A person who acts as an agent for the sale and purchase of buildings and land; a real estate agent.

Recession
A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Refinance Rate
One of the best reasons to refinance is to lower the interest rate on your existing loan. Historically, the rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. However, many lenders say 1% savings is enough of an incentive to refinance.

Refinancing
Refinancing is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage.

REIT
REIT stands for real estate investment trust. Essentially, REITs are corporations that own and manage a portfolio of real estate properties and mortgages.

Rent To Own Homes
Rent-to-own is when a tenant signs a rental agreement or lease that has an option to buy the house or condo later — usually within three years. The renter's monthly payments will include rent payments and additional payments that will go towards a down payment for purchasing the home.

Repair Costs
Repair costs within real estate investing are typically applied to fix and flips or even BRRR properties where there is repairs and renovations to be done. Repair costs should be properly calculated before buying any investment property in order to accurately assess a deal. For this, you can use the BiggerPockets Fix and Flip calculator.

Reserve Fund
A reserve fund is a savings account or other highly liquid asset set aside by an individual or business to meet any future costs or financial obligations, especially those arising unexpectedly.

Residential Rental Property
Residential rental property is a type of rented real property, such as a house or apartment complex.

Reverse Exchange
A reverse 1031 exchange is a tax deferment strategy that allows real estate investors to purchase a second investment property before selling their relinquished investment property—and importantly, defer capital gains taxes and other taxes that you would normally need to pay upon sale of a property.

Rural Housing Service
USDA's multifamily housing programs that offers loans to provide affordable rental housing for very low-, low-, and moderate-income residents, the elderly, and persons with disabilities.

S

Sales and Purchase Agreement
A sales and purchase agreement (SPA) is a legal contract that obligates a buyer to buy and a seller to sell a product or service. SPAs are found in all types of businesses but are most often associated with real estate deals as a way of finalizing the interests of both parties before closing the deal.

Security Deposit
A security deposit is a paid amount of money to the landlord meant to ensure that rent will be paid and other responsibilities of the lease performed (e.g., paying for damage caused by the tenant). The laws surrounding these deposits vary from state to state.

Seller-Financed Sale
Seller financing is a loan provided by the seller of a property or business to the purchaser.

Seller-Paid Points
Seller's points (or seller contributions) are lump sum payments (or finance charges) made by the seller to the buyer's lender to reduce the cost of the loan to the buyer.

Shared Equity Finance Agreements
A shared equity finance agreement is a financial agreement entered into by two parties who would like to purchase a piece of real estate together.

Short Refinance
A short refinance is a transaction in which a lender agrees to refinance a borrower's home for the current market value, in effect making it more cost effective for the borrower.

Short Sale
A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property.

Squatter
A person who unlawfully occupies an uninhabited building or unused land.

Sublease
Lease from one tenant (lessee) to another (called subtenant or sublessee). The agreement between the landlord (the lessor) and the first lessee remains in force and governs the terms of the sublease.

Syndicate
A syndicate is a temporary, professional financial services alliance formed for the purpose of handling a large transaction that would be hard or impossible for the entities involved to handle individually.

Syndications
Real estate syndication is an effective way for investors to pool their financial and intellectual resources to invest in properties and projects much bigger than they could afford or manage on their own.

T

Tax Lien
A tax lien is the government's claim on your property and is generally placed when a taxpayer, such as a business or individual, fails to pay taxes owed.

Tenancy In Common
Tenancy in common is a specific type of concurrent, or simultaneous, ownership of real property by two or more parties. All tenants in common hold an individual, undivided ownership interest in the property. This means that each party has the right to alienate or transfer their ownership interest.

Tenants By Entirety
Tenants by entirety (TBE) is a method in some states by which married couples can hold the title to a property. In order for one spouse to modify his or her interest in the property in any way, the consent of both spouses is required by tenants by entirety.

Tenement
Also called tenement house, a run-down and often overcrowded apartment house, especially in a poor section of a large city. By law, any species of permanent property, as lands, houses, rents, an office, or a franchise, that may be held of another.

Timeshare
A timeshare (sometimes called vacation ownership) is a property with a divided form of ownership or use rights. These properties are typically resort condominium units, in which multiple parties hold rights to use the property, and each owner of the same accommodation is allotted a period of time.

Title
In property law, a title is a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest.

Title Commitment
A title commitment (or whatever name yours goes by) is basically the title company's promise to issue a title insurance policy for the property after closing. The title commitment contains the same terms, conditions, and exclusions that will be in the actual insurance policy.

Title Defect
A title defect refers to any potential threat to the current owner's full right or claim to sell a property. The property has a publicly-recorded issue, like a lien, mortgage, or judgment, that gives another party a claim to the property.

Title Insurance
Every title insurance policy covers either a homeowner or the lender that financed the mortgage for the property. Lenders require you to pay for lender's title insurance as part of your mortgage closing costs. Homeowner's title insurance is mostly optional and is paid for by the seller or the buyer of the property.

Title Search
A title search is done to verify the seller's right to transfer ownership. It is used to discover any claims, errors, assessments, debts, or other restrictions on the property.

Turnkey
A turnkey property is a fully renovated home or apartment building that an investor can purchase and immediately rent out.

U

Under Contract
In real estate, being “under contract” means that a buyer’s offer has been accepted by the seller.

Underwriter
In real estate, underwriting is when an individual or business entity seeks funding for a real estate project or purchase and the loan request is scrutinized to determine how much risk the lender is willing to accept. This procedure is performed by an underwriter.

Unsecured Loan
An unsecured loan is a loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral.

Use and Occupancy
Use and occupancy (U&O) refers to a type of permit required by some local governments whenever real property is transferred.

V

Vacancy Rate
Vacancy rate is the ratio of rental units not rented versus the total number in the building.

Voluntary Foreclosure
A voluntary foreclosure is a foreclosure proceeding that is initiated by a borrower who is unable to continue making loan payments on a property in an attempt to avoid further payments and prevent involuntary foreclosure and eviction.

W

Waiver
A waiver is the voluntary action of a person or party that removes that person's or party's right or particular ability in an agreement.

Warranty Deed
A warranty deed is one in which a property owner, when transferring the title, warrants that he or she owns the property free and clear of all liens. A warranty deed is used in most property sales. The warranty deed says that: The grantor is the rightful owner and has the right to transfer the title.

Warranty Of Title
A warranty of title is a guarantee by a seller to a buyer that the seller has the right to transfer ownership and no one else has rights to the property.

Workout Agreement
A workout agreement is a mutual agreement between a lender and borrower to renegotiate terms on a loan that is in default. Generally, the workout includes waiving any existing defaults and restructuring the loan’s terms and covenants.

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