Real Estate Glossary

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Cancellation clause
Stipulation in a contract that allows a buyer or seller to cancel the contract in the event of a certain specified occurrence.

Capital gain
Profit earned from the sale of an asset.

Caveat emptor
Latin for “Let the buyer beware.” Under this legal phrase, the buyer is expected to judge and evaluate property carefully before buying, or purchase at their own risk.

Stands for covenants, conditions and restrictions. They are the rules by which a property owner in a condominium agrees to abide.

Act of finalizing a transaction in which all the concerned parties meet to transfer title to a property. Also, when real estate formally changes ownership.

Closing costs
Expenses over and above the price of property that must be paid by buyers and sellers before title is transferred. Also known as settlement costs.

Closing statement
Written account of all expenses, adjustments, and disbursements received by the buyer and seller when completing a real estate transaction.

Cloud on title
Defect in the title that impairs the owner’s ability to market the property. This might be a lien, claim, judgment, or encumbrance.

Something of value given or pledged to a lender as security for the repayment of a loan.

Commingle funds
Mixing of a clients’ funds, or escrow, with an agent’s personal funds in an account; considered to be grounds for the suspension or revocation of the broker’s real estate license.

Payment, or brokerage fees, given by the seller of a property to a real estate agent for services rendered. Usually paid at the closing.

Common elements
Parts of a condominium, cooperative, or private home association shared by all residents, so that each unit owner holds an undivided interest in, for example, the hallways, parking facilities, or swimming pool.

Properties similar to a specific piece of property that are used to help estimate the value of that property.

Competitive market analysis
A method of determining home value that looks at recent home sales, homes presently on the market, and homes that were listed but did not sell.

Type of housing where buyers own their units outright, plus an undivided share, or joint ownership, in the common elements of the building or community.

Something of value, usually money, given to induce another to enter into a contract.

Construction loan
Type of loan where money is doled out as construction takes place; borrower must obtain a permanent long-term mortgage from another source to repay the construction loan. Also called an interim loan.

A provision in a contract that keeps it from becoming binding until a certain event happens. A satisfactory inspection report might be a contingency.

A legally enforceable agreement between two or more parties. To be valid, a real estate contract must be dated, in writing, include a consideration, have a description of the property, the place and date of delivery of the deed, and spell out all terms and conditions that were mutually agreed upon. It also must be executed (signed) by the buyer and seller.

One who contracts to do something for another. For example, in construction, a specialist who enters into a formal construction contract to build a real estate structure or handle renovations, improvements, and additions to an existing structure.

Conventional loan
Real estate loan that is not insured by the FHA or guaranteed by the VA.

To transfer property from one person to another.

Document used to transfer title. A deed is a conveyance.

Land and building owned or leased by a corporation which in turn leases space to its shareholders, who are also part owners of the building and have a proprietary lease. In lieu of rent, they each pay a proportionate monthly or quarterly fixed rate to cover operating costs, mortgage payments, taxes, etc.

An offer made in response to an earlier, unacceptable one; it terminates the original offer.

Credit report
A past history of debt repayment used by creditors as an indicator of future readiness to responsibly repay debt.

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