Common Real Estate Terms

NOTE: The following terms are defined only in their real estate or title insurance context. These terms may have different meanings when used in other contexts. For more precise definitions, you are advised to seek legal counsel.


- A summary of the history of the legal title to a piece of property; all changes in ownership, liens, mortgages or any other matter that might affect the title.

Adjustable Rate Mortgage (ARM)

- Mortgage loans under which the interest rate is periodically adjusted, in accordance with some market indicator, to more closely coincide with the current rates. The extent and number of these adjustments are agreed to at the inception of the loan.


- A legally binding contract made between two or more persons.

ALTA (American Land Title Association)

- The trade association of the title insurance industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.


- The reduction of a loan or debt by periodic payments according to agreed upon terms. Your mortgage is being amortized every month that you send a payment to the lender.


- A procedure in which a qualified individual estimates the value of a piece of property.


- -Sometimes called- preliminary certificate or commitment. (a) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (b) An offer to purchase property which is accompanied by a sum of money, smaller than a down payment, to show good faith prior to a formal agreement.

Chain of Title

- The successive ownerships or transfers in the history of title to a tract of land.

Clear Title

- Real property ownership, free of liens, defects, encumbrances or claims.


- The final meeting at which the transfer of title of property passes from the seller to the buyer.

Closing costs

- Includes all the charges attached to closing. These one time fees include, but are not limited to, charges for title search and insurance, attorney's fee, survey, and points charged by lender of mortgage. These are also known as settlement costs.

Clouded title

- An irregularity, possible claim or encumbrances that, if valid, would adversely affect or impair the title. This could possibly affect the ability of a title insurance company to issue a title insurance policy on the property.


- A document issued by a title insurance company that contains the conditions under which a policy of title insurance will be issued.

Contract of Sale

- A written agreement by which a buyer agrees to purchase and a seller agrees to sell according to terms set forth in that agreement.

Conventional loan

- A loan secured by a mortgage or deed of trust for which the loan-to-value ratio is within an acceptable range for a particular lending institution.


- The transfer of title to property from one person to another.


- The setting aside of certain property by the owner and declaring it to be for public use. Examples: streets, sidewalks, parks.


- A legal document whereby title to real estate is transferred from one person to another.

Deed Restriction

- A covenant contained in a deed imposing limited on the use or occupancy of the real estate, or the type, size, purpose or location of improvements to be constructed on it.


- Loss in value occasioned by ordinary wear and tear, destructive action of the elements, or functional or economic obsolescence.

Earnest money

- A deposit of funds by the purchaser of property as evidence of good faith.


- A right to use all or part of the land owned by another for a specific purpose.


- Any improvement located on one property (such as a building, wall, fence or driveway), that intrudes upon the property of another.


- Any interest, right, lien or liability attached to a parcel of land that constitutes or represents a burden or charge upon the property.


- The difference between the market value of a house and the balance owed on the mortgage, usually referring to the owner's interest or value on real estate.


- Money, securities, or other property placed in the keeping of a third party until obligations by the other two sides, set out in the escrow agreement, have been fulfilled.

Escrow Officer

- An attorney, or bona fide employee of either an attorney licensed as an escrow officer, bona fide employee of a direct operation, or bona fide employee of a title insurance agent whose duties including any or all of the following: (a) countersigning title insurance forms; or (b) supervising the preparation and delivery of title insurance forms; or (c) signing escrow checks; or (d) closing the transaction.


- Search and examination of a title to real property to determine the conditions of the title to be insured and to evaluate the risk to be undertaken in the issuance of a title insurance policy or other title insurance form.


- A provision in a title insurance binder or policy that excludes liability for a specific title defect or an outstanding lien or encumbrance.

Fee simple

- Absolute ownership of a tract of land.

Fixed Rate Mortgage

- A mortgage in which the interest rate remains the same for the life of the loan.


- Personal property attached to real property and is legally treated as real property which it is so attached.


- One to whom a grant is made.


- One who makes a grant.

Homeowners insurance

- Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc. depending upon the terms of the policy.

HUD (Department of Housing and Urban Development)

- The Federal department responsible for the major housing programs in the United States.

Junior Mortgage

- A mortgage lower in lien priority than another.


- A written document containing the conditions for the exclusive possession of real estate by the owner to another for a definite period of time.


- The right to possession and use of land for a fixed period of time.


- Tenant under a lease


- Landlord under a lease.


- A claim or charge upon property for payment of a debt, obligation or duty.


- An agreement between a broker and an owner, that the broker may sell or lease the real estate.

Market Value

- The highest price that a buyer will pay and the lowest price a seller will accept for a property.

Metes and Bounds

- A land description in which boundaries are described by courses, directions, distances and monuments.


- The conditional transfer of title to real estate as security for a loan.

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 sales price.


- The holder of a mortgage, generally the lender.


- A person who mortgages property, generally the property owner.


- A map dividing a parcel of land into lots.

Points or discount

- The fee charged by a lending institution for making a loan at an interest rate below the conventional rate. One point equals one percent of the loan.


- The amount payable for an insurance policy.

Real estate

- (a) 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 that would be personal property if not attached. (b) May refer to rights in real property as well as the property itself.


- The noting in a public office of the details of a legal document, such as a deed or mortgage, affecting title to real estate.


- Process of paying off an existing loan with proceeds from another.

Restrictive covenants

- Limitations on the use of property imposed or created by deeds or other documents in the chain of title.

Second mortgage

- Financing real estate with a loan or loans that are subordinate to the first mortgage. It usually calls for a higher interest rate and a shorter repayment period.


- An exact measurement of a parcel of land to ascertain corners, boundaries and divisions.


- Evidence, usually in the form of a deed, that a person has the right to ownership of the property in question.

Title defect

- Any possible or patent claim or right outstanding in a chain of title that is adverse to the claim of ownership. Any material irregularity in the execution or effect of an instrument in the chain of title.

Title insurance

- Insuring, guaranteeing or indemnifying owners of real property or others interested therein against loss or damage suffered by reason of liens, encumbrances upon, or defects in the title to real property.

Title plant

- Also referred to as abstract plant. A geographically arranged plant that allows the assembly of information necessary for title examinations and issuance of title insurance.

Title search

- A detailed investigation to ensure that any property is purchased from the legal owner and that there are no liens or special assessments against it.


- An insurance company that issues insurance policies to the public or to another insurer.

Veterans Administration (VA) loans

- Housing loans to veterans by banks, savings and loan associations, or other lenders that are guaranteed by the Veterans Administration, enabling veterans to buy a residence with little or no down payment.


- Procedure that classifies real property for a number of different users: residential, commercial, industrial, etc., in accordance with a land-use plan. Ordinances are enforced by a governing body or locality.