Selected Real Estate Law Glossary
Santillán Law P.C. has provided the selected real estate law glossary for clients so they can understand the most common terms used within the real estate law discipline. Real estate law can be confusing especially for first time home buyers or tenant landlord situations. Hopefully this real estate glossary will take some of the mysticism out of that. This glossary is not and should not be construed as legal advice it is provided for informational purposes only and does not constitute “Legal Advice” For proper legal advice please consult a qualified attorney.
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a
- AccommodatorThe company which holds Taxpayer’s funds between sale of the Relinquished Property and purchase of the Replacement Property. Read More
- AmortizationThe gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest. Read More
- Assignment of agreementsAn assignment of rights under specifically identified agreements (such as construction contracts, architect’s agreements, laundry services etc). Read More
- Assignment of leasesAn assignment of rights under specifically identified leases. Read More
- AttornmentThe agreement by a tenant to recognize a replacement or successor landlord in the event of a foreclosure or other enforcement of rights under an assignment of leases or agreement of similar effect Read More
b
- Bankruptcy-remoteAn entity created to be a borrower in a commercial loan which is less likely to put itself into or be entangled in a federal bankruptcy or state insolvency proceeding. Read More
- Business dayThe part of a day during which most businesses are operating, usually from 9 am to 5 pm Monday through Friday. Often, this term is defined in the relevant document as a day other than a Saturday, Sunday or national holiday. Read More
c
- Cognovit noteA promissory note which contains a provision by which the borrower agrees to let the lender, without notice to the borrower or guarantor, file an answer on behalf of the borrower confessing judgment in favor of the lender, which then allows a court to issue a judgment immediately rather than(...) Read More
- Collateral (real estate law)An item of economic value, such as real estate, pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default. Read More
- Credit scoreA number that reflects the borrower’s credit risk level, typically with a higher number indicating lower risk. Credit scores are generated through statistical models using elements from the borrower’s credit history report, and change over time to reflect changes in the borrower’s credit history. Read More
d
- Deed of trustOne form of real estate security agreement granting a security interest in real estate which typically contains a power of sale allowing a.trustee to hold a non-judicial public sale much more quickly than would be the case in a judicial foreclosure. Read More
- Default (Real estate)Failure to make required payments on a timely basis or to comply with other conditions of an obligation or agreement. Read More
- DelinquencyFailure to make payments when payments are due. For most mortgages, payments are due on the first day of the month. Even though they may not charge a “late fee” for a number of days, the payment is still considered to be late and the loan delinquent. When a loan payment is more than 30 days(...) Read More
- Due on saleThe concept of accelerating the maturity of a loan if the mortgagor/borrower sells or conveys an interest in mortgaged property prior to the contractually agreed maturity date of the loan. Read More
e
- EBITDAA commonly used accounting term which refers to a formula for analyzing cash flow of a property as “earnings before interest, taxes, depreciation and amortization”. Read More
- Environmental indemnityAn agreement under which a borrower (and often a guarantor) contracts to indemnify, defend and hold another person (typically the lender) harmless from any liability arising out of existing of potential environmental violations (such as contamination from a release of prohibited substances(...) Read More
- Equal Credit Opportunity Act (ECOA)A federal (US) statute which prohibits creditors from requiring information concerning a spouse or former spouse of an applicant, except when: (1) the spouse will be permitted to use the account; (2) the spouse will be contractually liable on the account; (3) the applicant is relying at least(...) Read More
- Equitable subordinationThe lowering of priority of a claim because the holder of the claim is found to be guilty of some kind of improper conduct. Read More
- EquityA homeowner’s financial interest in a property. Equity is the difference between the value of the property and the amount still owed on its mortgage and other liens. Read More
- Escrow accountAn account that is held by a lender or an escrow agent, for a particular purpose defined in the escrow agreement controlling the account. When the conditions in the escrow agreement are triggered, such as when the tax bill comes due, the funds needed for that purpose are paid out of the escrow(...) Read More
- Escrow agentA third party who holds and delivers funds and documents under specific instructions. Often when purchasing a property, the escrow agent acts as a custodian of the earnest money or deposit and ensures that the appropriate funds are paid at the closing. In some states, all of the closing(...) Read More
- Estoppelthe concept of being prevented (or “estopped”) from raising or denying a fact or circumstance, typically used in connection with the issuance of an estoppel certificate. Read More
- Estoppel certificateA statement from one party to another, providing information on which the recipient is entitled to rely. For example, a purchaser of a property may require a tenant to give an estoppel certificate to a new owner or that new owner’s lender identifying information regarding the nature and status(...) Read More
- Exchange ValueThe amount of proceeds from sale of a Relinquished Property which a Taxpayer must spend on Replacement Property in order to have a fully deferred exchange Read More
f
- Fair Market ValueThe highest price that a buyer, willing but not compelled to buy, would pay, and the lowest a seller, willing but not compelled to sell, would accept. Read More
- Fee mortgageA mortgage granted by the owner of the fee simple estate of real property. Read More
- Fee simple estateThe highest and most complete form of real property ownership. Read More
- FHAAn acronym for the Federal Housing Administration. The FHA is a government agency whose primary purpose is to insure residential mortgage loans. Read More
- FICO scorean acronym for Fair Isaac Credit Organization. Fair, Isaac and Company, Inc. is a developer of data management systems used to rate credit risk. The term has evolved into a shorthand reference to credit scores created using their system. You can visit www.fairisaac.com for more information. Read More
- Financing statementA form created in connection with the UCC and designed to be filed in one or more official government offices to perfect a creditor’s security interest. Read More
- FixturePersonal property which is permanently affixed or attached to real property such that it is considered to be an integral part of the real property. Read More
- ForeclosureThe legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. Read More
g
- Gross earningsAn individual's taxable income before any adjustments (such as deductions, depreciation and other calculations) are made. Read More
- GuarantyThe agreement of a person or entity to pay amounts due, or otherwise perform the obligations, of another person or entity (for example, the promise by Ed to pay the loan Harry owes to Tom). Read More
h
- Homeowners associationAlso know as an HOA, it is an an association of two or more homeowners created for the ownership and maintenance of commonly owned real estate and improvements, from a simple duplex up to a huge development with thousands of homes, condominiums and townhouses, typically created in a recorded(...) Read More
i
- IndemnificationOne party’s agreement to compensate someone else for loss or damage. Read More
- Intercreditor agreementAn agreement between two or more creditors of the same borrower, governing joint or unilateral action, and the manner in which common collateral will be held and foreclosed. Read More
j
- Junior financingA loan relationship which is junior or lower in priority to a first or more senior loan. Read More
- Junior lienA lien which is subordinate to or lower in priority to another (senior) lien Read More
l
- LeaseA contract granting use or occupation of property during a specified time for a specified payment. Read More
- Leasehold estateAn interest in real estate granted by a lease, typically limited to a specified term of years, and which estate terminates at the end of the lease. Read More
- Leasehold mortgageA mortgage and security interest in a leasehold estate. Read More
- Lending regulationsRegulations and rules issued periodically by federal (US) or state governmental agencies (such as the Federal Reserve Bank, the Federal Deposit Insurance Corporation or the Office of Thrift Supervision) which govern the lending and other business practices of banking and thrift/savings institutions. Read More
- LienAn interest in real or personal property which secures a debt; the lien may be voluntary, such as a mortgage in real property, or involuntary, such as a judgment lien or tax lien. Read More
- Loan origination feeA fee charged by a lender for processing a loan application, typically calculated as a percentage of the mortgage amount. Read More
m
- Mezzanine loanA loan usually secured not by a lien on property, but secured by the ownership of equity interests of a borrower (for example, the shares of a corporation or the membership units of a limited liability company). Read More
- MortgageAn agreement creating a security interest and other rights in a parcel of real property for the benefit of a lender or other secured party. Read More
- Mortgage brokerAn individual or company who brings borrowers and lenders together for the purpose of loaning money. Read More
- Mortgage insuranceInsurance protecting a lender against loss from a mortgagor's default. Mortgage insurance is issued by the FHA or a private mortgage insurer. If the borrower defaults on the loan, the insurer would pay the lender the lesser of the loss incurred or the insured amount. Read More
n
- Neighborhood associationA voluntary membership organization that deals with social, political, zoning and other issues which typically affect the members' properties and usually does not maintain commonly owned property. Read More
- Non-disturbanceThe concept of consenting to (i.e., not disturbing) the rights of another, used typically in the context of a lender agreeing to permit a tenant to remain in its leasehold when the tenant’s landlord (who would be the lender’s borrower) defaults under its loan to the lender. Read More
- Non-recourseThe concept of a lender not having recourse against (i.e., the right to pursue recovery from) any assets of a borrower other than those assets specifically given as collateral. Read More
- Non-recourse carve-outsExceptions to non-recourse provisions of a loan, identifying circumstances and events for which a lender could seek recovery from a borrower’s assets other than the specific pledged collateral. Read More
p
- PACER (Public Access to Court Electronic Records)A service provided by the court system that gives case filing information. PACER requires an IBM-compatible computer equipped with internet access. Read More
- Participation agreementA document providing for an allocation and ordering of rights and obligations of two or more lenders who are jointly funding a loan, or to whom a piece of a loan is sold after the loan closing. Read More
- Participation loanA loan funded by two or more lenders, or a loan funded by one lender who then sells off pieces of the loan to another lender. Read More
- PerfectionWhen a secured creditor has taken the required steps to perfect his lien, the lien is senior to any liens that arise after perfection. A mortgage is perfected by recording it with the county recorder; a lien in personal property is perfected by filing a financing statement with the secretary(...) Read More
- Personal PropertyProperty that is not real property or affixed to real property, such as cars, stock, furniture, etc. Read More
- PITIAcronym for principal, interest, taxes, and insurance, the four components of a mortgage payment. Read More
- Power of saleThe right to hold a sale of an asset (such as real property secured by a deed of trust) without the requirement of a judicial process. Read More
- Pre-approved or pre-qualifiedEvidence that a potential borrower has passed a preliminary credit screening. A pre-approval from a lender shows that a potential borrower has a solid credit history and is qualified for a mortgage loan of a specified size. In a competitive market, a pre-approval letter can provide greater(...) Read More
- PrepaymentThe act of paying all or a portion of an outstanding loan balance prior to the contractually agreed date for such payment. Read More
- Prepayment penalty or feeA fee assessed by a lender on a borrower who repays all or part of the principal of a loan before it is due. The prepayment penalty compensates the lender for the loss of interest that would have been earned had the loan remained in effect for its full term. Read More
- Principal - Real EstateThe amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). This term is also used to describe that part of a monthly payment that reduces the outstanding balance of a mortgage. Read More
- Pro ratalegal term, from Latin, meaning proportionately. Read More
q
- Quiet Title ActionsA quiet title action, also known as an action of quiet title, is a circuit court action—or lawsuit—that is filed with the intended purpose to establish or settle the title to a property. They are particularly prevalent in cases where there is a disagreement on the title. The lawsuit is meant(...) Read More
r
- Real EstateReal estate is the land along with any permanent improvements attached to the land, whether natural or man-made—including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property. Read More
- Real propertyThe legal definition of real property is land, and anything growing on, affixed to, or built upon land. This also includes man-made buildings as well as crops. Real property is best characterized as property that doesn’t move, or that is attached to the land. This is in contrast to personal(...) Read More
- Realized ProceedsThe sales proceeds received by the Taxpayer from sale of the Relinquished Property including the amount used to pay off the mortgage or deed of trust. Read More
- Recognized ProceedsThe portion of the realized proceeds which is recognized as or in Read More
- Regulation BThe most commonly known rule under the Equal Credit Opportunity Act (ECOA). Read More
- Regulations.The Internal Revenue Service regulations authorizing and regulating deferred exchanges in which the Taxpayer sells the Relinquished Property to a Buyer and acquires Replacement Property from a different Seller rather than exchanging directly. Read More
- Relinquished PropertyThe property being exchanged. Read More
- Replacement PropertyThe property being acquired in the exchange. Read More
- RepossessionOnce in default, as defined by the creditor in the security agreement, occurs, the creditor can: repossess the collateral by self-help (depending on state law) or with the aid of a court order, dispose of the collateral by public or private foreclosure sale, retain the collateral in(...) Read More
- RESPAAn acronym that stands for the Real Estate Settlement Procedures Act, a federal consumer protection law originally implemented in 1974 governing loans on one to four-family properties and requires, among other matters, that a lender provide an advance notice of estimated closing costs,(...) Read More
s
- Secondary financingA junior priority loan. Read More
- Security agreementA document granting a lender the right to execute against certain specified real and/or personal property as collateral for a loan or other obligation. Read More
- Security interestThe interest granted to a lender by a borrower in a security agreement. Read More
- SellerThe seller of the Replacement Property Read More
- Sheriff's salesA public auction at which property that he been defaulted on is repossessed. The proceeds from the sale are used to pay mortgage lenders, banks, tax collectors, and other litigants who have lost money on the property. Read More
- Single purpose entitySometimes called the special purpose entity or “SPE” is an entity (typically but not always a limited liability company) designed to provide bankruptcy-remote protections for a lender. Read More
- SubmortgageAn arrangement in which a mortgage lender pledges a mortgage as collateral for his/her own loan. Read More
- Subordinate the feeThe act of a landlord property owner granting to the tenant’s lender a right to foreclose the landlord’s interest, upon default of the tenant under its loan agreements, sometimes in return for a fee. Read More
- SubordinationThe concept of agreeing to make an otherwise senior interest junior (or subordinate) to an interest which otherwise would be a junior interest. Read More
- Subordination, non-disturbance and attornment agreementA document providing for subordination, non-disturbance and attornment obligations by parties with diverse interests in the same property. Read More
t
- TaxpayerA person who pays taxes and/or is responsible for paying property taxes. Read More
- Title insuranceAn insurance policy issued to protect a property owner or the owner of a security interest against losses resulting from undisclosed defects which affect or impair the ownership rights of the insured person. Read More
- Title policy endorsementSpecific individual agreements by a title insurance company adding to or altering the basic provisions of a title policy (for example, specifically insuring that the subject property (1) has access to a dedicated street, (2) is a single tax parcel, or (3) is the same land as the land(...) Read More
u
- UnderwritingThe process by which a lender decides whether a potential debtor is creditworthy and should receive a loan. Read More
- Uniform commercial codeSometimes refereed to as UCC it is a uniform law created by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and adopted in essentially identical form by all fifty of the United States, governing goods and personal property transactions. Read More
y
- Yield maintenance feeA component of a prepayment penalty, stated to be designed to replace interest earnings a lender would have received on a loan if the borrower had not prepaid the loan. Read More
More Resources From The Web
Investopedia – What does a real estate lawyer do?
LawInfo – What Do I Need To Know About Buying A Home?
Nolo – Overview of Landlord-Tenant Laws in Pennsylvania
Other Legal Glossaries of Interest
General Bankruptcy Glossary
General Bankruptcy Glossary
Wills & Estate Glossary
Wiils & Estate Glossary
Divorce & Family Law Glossary
Divorce & Family Law Glossary
Divorce & Family Law Glossary
Divorce & Family Law Glossary
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