Real estate can be quite overwhelming and confusing at times. Here is a list of every real estate related term you could ever want to know in alphabetical order:

ABSTRACT OF TITLE: History of title and ownership of a parcel of land culled from a search of public records, summarizing transfers of title and liens against the property

ACCELERATION PROVISION: Clause in a mortgage creating a condition that if terms are breached, the holder has the option to declare the entire debt immediately due and payable. Option to call in the mortgage where there is a “due on sale” provision and the mortgagor transfers title.

ACKNOWLEDGMENT: A formal declaration before a public official that a person has signed an instrument or document and a verification of this fact by the official, usually a notary public, who signs and affixes his stamp and seal.

ADJUSTABLE RATE MORTGAGE (ARM): A loan whose interest rate fluctuates to keep up with a financial index, such as the one year treasury bill rate, cost of funds for savings and loan interest, or national average mortgage contract interest rate. The lender usually adds a “margin” or number of percentage points to the index to calculate the ARM interest rate at each adjustment. Limits on periodic adjustments in interest rates are known as Caps. There is usually a yearly cap and a lifetime cap.

ADVERSE POSSESSION: The hostile, exclusive, and continuous possession of another’s land under a claim of title. Possession for a statutory period maybe a means of acquiring title. For instance, if you held yourself out as an owner of a particular plot of land, used it and paid the taxes on that property, after holding it continuously for the requisite statutory period of time you can be declared the owner by a court. This is also called “squatters rights.” The law, particularly as to the requisite period, varies from state to state.

AFFIDAVIT OF TITLE: A sworn statement by seller certifying the history of his ownership and his marital status and verifying that there are currently no defects or encumbrances to title except for liens to be paid at closing.

AGENT: One who acts or has the power to act for another. Under the law of agency a fiduciary relationship is created when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent. An agent owes undivided loyalty to his principal to represent him without conflicting interest.

AMORTIZED LOAN: Gradual payment of principal as well as interest through regular installments. The payments remain level but the amount allocated to principal and interest changes as each payment is credited. As the principal is reduced the amount of interest decreases as the interest rate is applied against a lower principal balance.

ANTITRUST LAWS: Acts prohibiting conspiracies in restraint of trade, such as price-fixing by brokers to fix commission rates or allocations of customers or markets to minimize competition.

APPRAISAL: Report setting forth the opinion of an expert as to the value of property. Sometimes there is a confusion with the term “assessment,” which is the opinion of the value of the property for taxation purposes, which is usually lower than market value.

APPRECIATION: Increase in the value of property due to economic or related causes, such as inflation or demand for location.

ASSIGNMENT: The written transfer of a right or interest in property.

ATTACHMENT: The seizure of property by court order at the commencement of a legal action to make it available for application to a person’s debts by a judgment creditor.

BALANCE: The amount due at any given time for the payoff of a loan.

BALLOON PAYMENT: Final payment on a loan in a lump sum, where the loan was not fully amortized by the installments paid. For instance, where there is a 10-year loan with payments based on a 20-year schedule, there will be a balance of principal due at the end of 10 years, when the loan is due.

BARGAIN AND SALE DEED: A deed without covenants or warranties by the grantor, other than the implied representation that he has the right to convey title.

BENEFICIARY: Recipient of the proceeds of a life insurance policy or one who receives a monetary gift or property under a will.

BREACH OF CONTRACT: Default or non-performance in meeting the terms of an agreement, such as failure to pay when due.

BROKER: Licensee acting as agent for buyer or seller for an agreed commission or fee, whose function it is to bring willing and able parties together in a transaction, usually involving real estate.

BUILDING CODE: Governmental regulations specifying minimum standards for the construction or alteration of structures to protect the public.

BUILDING PERMIT: Written permission by authorized governmental official to construct, alter or demolish an improvement.

BUY-DOWN: Funds paid to lender by parties to a real estate transaction to reduce monthly payments on mortgage for the early years of the loan.

CAPITAL GAIN: Taxable profit on the sale of an asset (difference between the sales price and the adjusted cost basis of the property).

CAVEAT EMPTOR: Let the buyer beware (a Latin phrase).

CHAIN OF TITLE: The succession of ownership of a particular property tracing its derivation back to a given starting point from its present owner.

CLOSING STATEMENT: A written accounting of debits and credits prepared for a closing or transfer of title summarizing all of the funds paid or received. A federal act (the Real Estate Settlement Procedures Act or RESPA) requires a uniform statement for all covered transactions. This statement shows each of the parties all costs and disbursements of the transaction.

CLOUD ON TITLE: An undischarged lien or encumbrance impairing fie title to real estate, which can be removed by release, quitclaim or lawsuit to quiet title. Any lien or encumbrance detracting from the marketability of the title and preventing a title company from issuing unconditional insurance to an owner and/or lender.

COMMISSION: Fee paid to broker or agent for procuring a buyer for property (almost invariably paid by seller as a percentage of the purchase price.)

COMMON ELEMENTS: The undivided areas of a condominium property used by the owners for their safety, convenience or recreation, such as walkways, roads, tennis courts, or swimming pools. Each condominium owner has an undivided proportional interest in these areas.

CONDEMNATION: Exercise by a governmental body or entity authorized by statute of the power to take private property for a definite public use for just compensation to the private owner.

CONDOMINIUM: Form of real estate ownership of a dwelling unit in a multi-unit complex where each owner owns his own unit plus an undivided percentage of common areas, such as walkways, recreation and other shared areas.

CONSIDERATION: Anything of value given as an inducement for one to enter into an agreement. Every contract must be supported by something given in exchange, even a promise.

CONTINGENCY: Condition in an agreement that must be satisfied before the agreement becomes binding.

CONTRACT: A legally enforceable promise based on consideration embodying a meeting of the minds of the parties as to a common objective, the breach of which gives rise to a legal remedy.

CONVENTIONAL LOAN: A loan not insured or guaranteed for a fixed term at a fixed rate of interest usually given by a lender for the purchase or refinance of a residence. The vast majority of mortgage loans are of this familiar type.

COOPERATIVE: A form of ownership where the entire complex is owned by the cooperative corporation and each individual member owns a share of stock and a proprietary lease giving him the right to occupy a residential unit. There is usually much greater power and control in the board of directors than in a condominium, particularly as to consent for sale of stock.

CORPORATION: A fictional entity with perpetual existence used to conduct business in its own name. The use of this form of ownership gives the stockholders limited liability, limiting their risk to the amount of their investment, and immunizes their individual assets.

COUNTEROFFER: The rejection of an offer by a qualified acceptance made by the offeree conditioned on the acceptance of new or modified terms.

COVENANT: A promise or commitment made under oath, usually contained in real estate documents such as deeds, mortgages and leases. One consequence is that the time to sue is longer than on other contractual obligations.

CREDIT: Charge in your favor; as distinguished from debit, a charge against you.

DECEDENT: One who dies leaving an estate and heirs, whether with a valid will (testate) or without (intestate).

DEED: Instrument whereby title or an interest in real estate is passed from one person or entity to another, recorded in the central recording office of the appropriate governmental subdivision.

DEED RESTRICTIONS: Limitations on the future use of a particular property usually created by a developer of a tract to preserve the residential nature and value, which runs with the land and can be enforced by any landowner in the subdivision. For instance, a restriction that no business shall be conducted on any lot in the tract.

DEFAULT: Breach of performance of the terms of an agreement, such as one contained in a mortgage note or bond, giving rise to certain remedies (such as foreclosure.) For instance, non-payment of installment on mortgage or non-payment of taxes or assessments within the prescribed time gives rise to a breach.

DEPRECIATION: Reduction in value of land or property based upon location and/or economic forces. For example, if a developer overbuilds and cannot sell all of the new homes, he will lower his price and all of the homes in the development will go down in market value.

DEVELOPER: Builder who has assembled a tract of land and subdivided the tract into individual lots and built dwellings based on an integrated plan, including off-site improvements such as streets, sidewalks, curbs and utilities.

DUAL AGENCY: Where an agent represents two principals, usually with adverse (opposing) interests (like both seller and buyer). This is an attempt to overcome the built-in conflict of interest that seller’s brokers must deal with.

DURESS: Pressure imposed by one side over the other in a contractual relationship dominating the will of the party on whom it is practiced, who enters the agreement involuntarily. Forcing a party to enter into a contract by threat of force or economic harm.

EARNEST MONEY: Deposit given at the inception of an agreement to show good faith intention to complete the transaction.

EASEMENT: Right granted by a landowner giving another permission to use the land in a limited way, such as a utility easement. The party granting the easement usually cannot build over the land on which it is granted and the grantee agrees to maintain the area and not cause any damage to the property.

EMINENT DOMAIN: The right of condemnation given to a governmental or private entity such as a utility to acquire ownership of private property for public use conditioned upon just compensation to the owner.

ENCROACHMENT: An improvement extending and intruding upon the adjacent property of another owner that can affect the marketability of the property.

ENCUMBRANCE: An easement, right, claim, lien or restriction on the use of land that may diminish its value or prevent its sale until removed.

EQUITY: Value of property above any indebtedness pertaining to it.

ESCROW: An instrument or funds held in trust pending the occurrence of a specific event or compliance with a condition. Usually held by one of the attorneys or a named trustee based upon specific instructions for release.

ESTATE TAXES: Federal taxes payable by an estate on a decedent’s property.

EVICTION: Legal process to dispossess a tenant or occupant who is in possession of real estate.

EXCLUSIVE-AGENCY LISTING: Where one agent has the listing to sell an owner’s real estate for a commission upon stated terms for a specific period of time, reserving to the owner the right to sell without a commission to any buyer not found by the broker.

EXCLUSIVE-RIGHT-TO-SELL LISTING: A listing giving the broker the exclusive right to a commission no matter who introduces the buyer, even the owner, if sold during the listing period.

EXECUTED CONTRACT: A contract in which all the parties have performed and all conditions have been complied with.

EXECUTION: The act of signing a contract or other legal instrument. Also a process to enforce a judgment where the debtor’s property is seized by a judicial officer and sold.

FEE SIMPLE ABSOLUTE: The highest form of real estate ownership. Distinguished from a life estate, which is ownership only during the life of the life tenant.

FHA LOAN: Loan insured by the Federal Housing Agency made by an approved lender in accordance with strict regulations.

FIDUCIARY RELATIONSHIP: A relationship of trust and confidentiality, such as between attorney and client, principal and agent and trustee and beneficiary.

FIXTURE: Item of personal property affixed to the realty, which cannot be removed without substantial damage, e.g. gas range.

FORECLOSURE: Legal procedure where lien on property given as security for a debt or loan is sold to satisfy the obligation, cutting off all ownership rights.

FRAUD: Misrepresentation and deception inducing one to relinquish lawful right, property or funds. False statement of fact or opinion relied upon to the detriment of one to whom it is made.

GENERAL WARRANTY DEED: The highest form of deed, in which the grantor warrants clear title to not only the immediate grantee but to a remote grantee. Other forms of deed are: bargain and sale with covenant against grantor, bargain and sale and quitclaim.

GRADUATED-PAYMENT MORTGAGE (GPM): one where the monthly interest and principal payments increase by a certain percentage each year for a certain number of years in order to make up for the early years’ reduced payments. The disadvantage is negative amortization: Instead of the principal balance reducing, it increases to make up for the lower payments during the earlier years.

GRANTEE: The recipient of title from the grantor.

GRANTOR: The transferor of title to the grantee.

HEIR: Successor and inheritor under the laws of descent when the owner of land dies intestate (without a valid will). One who inherits land under a will is called a devisee. The term is regularly confused with beneficiary.

HOME EQUITY LOAN: Usually a second mortgage on real property for a loan or line of credit. The interest is usually tax deductible if you itemize.

HOMEOWNER’S INSURANCE POLICY: Packaged multi-peril policy covering residence owner for common risks and naming mortgagee as lien holder. Covers risks such as fire, burglary, and liability and can be for fair market value or replacement value.

HOMESTEAD: In certain states land declared by the owner to be the family home, which is exempt from judgment for debt.

IMPROVEMENT: Structure or amenities, such as utilities, sidewalks, streets or curbs, which enhances the value of the property.

INDEPENDENT CONTRACTOR: One who performs a contracted work, where the owner specifies the result but not the manner or details of how the job is to be done.

INFLATION: Gradual reduction of the purchasing power of money resulting from economic forces.

INHERITANCE TAXES: State tax on the privilege of a beneficiary to receive inheritance from an estate, which tax is technically payable by the beneficiary. The federal tax is on the privilege of the decedent to leave property to his beneficiaries and is called an estate tax.

INSTALLMENT CONTRACT: A real estate contract in which the purchaser pays the purchase price to the seller in periodic payments until a certain time, not necessarily the time of final payment, when title is transferred to the purchaser (sometimes called “contract for deed”). The purchaser pays the balance due or gets a mortgage from a lender or the seller takes back a purchase money mortgage.

INTEREST: Charge made by a lender for the loan of funds. In effect, a rental fee payable until the funds are repaid.

INTESTATE: One who dies without a valid will resulting in his property passing to his legal heirs in accordance with the laws of descent. These laws dictate who receives property in order of classification by closeness of blood lines.

JOINT TENANCY: A form of undivided ownership of real property by two or more persons characterized by the incident of survivorship where upon the death of a joint owner his interest passes to the surviving joint tenant. Where the joint tenancy is between husband and wife it is called a tenancy by the entirety.

JUDGMENT: The result of an adjudication in a lawsuit which, if for money, can become a lien on real estate owned by the judgment debtor. Where a verdict is rendered by a judge or jury it results in a judgment, which gives rise to enforcement remedies such as execution sale.

LACHES: An equitable principle applied to bar a legal claim because of an unreasonable delay or failure to assert a legal right in a timely manner.

LAND: The surface of the earth extending upward into space and downward to the center of the earth. Some landowners sell mineral rights to oil drilling, mining or chemical companies. In places like New York City, air rights have also been sold.

LEASE: Contract allowing the possession, use and occupancy by tenant of real property owned by landlord upon specified terms.

LEASE PURCHASE: Tax or financing technique in which the purchase of real property is preceded by a lease where at least a portion of the rent is credited to the purchase price on exercise by tenant of the option to purchase.

LEGAL DESCRIPTION: Description of real estate by metes and bounds (courses and distances) or by reference to a filed map or tax map.

LEGALLY COMPETENT PARTIES: Those of legal age and sound mind who have the capacity to enter into a binding contract.

LICENSE: Privilege or right granted by the federal government, state, county or municipal governing body to conduct a business or profession sometimes conditioned on an examination testing competency.

LIEN: A charge or claim on property giving the holder the right to enforce a court-ordered sale to satisfy the debt.

LIQUIDATED DAMAGES: Predetermined compensation to a part,’ for breach (non-compliance or non-performance) of an obligation by the other party.

LISTING AGREEMENT: Agreement between an owner and broker for the sale of the owners realty for a limited period at a designated commission.

MARKETABLE TITLE: A clear title insurable by a reputable title insurance company at regular rates.

MARKET VALUE: The probable price at which real estate will be sold based upon supply and demand.

MECHANIC’S LIEN: Charge or claim on property filed pursuant to law by subcontractor or materialman to the extent that the value of the property has been enhanced. The law creates a lien on the property to protect people in this protected class who have a contractual relationship with the contractor but not the owner of the real estate.

METES-AND-BOUNDS DESCRIPTION: A legal description of property expressing its boundaries by courses (directions) and distances measured from stakes or other fixed objects known as monuments.

MORTGAGE: Lien given on real estate as security for a debt or obligation wherein the holder has the remedy of foreclosure upon default. The sheriff or other official conducts a public sale where the property is sold to satisfy the amount due.

MORTGAGEE: The lender in a mortgage loan transaction.

MORTGAGOR: The borrower in a mortgage loan transaction.

MULTIPERIL POLICIES: Insurance policies covering fire, casualty, hazard, burglary and public liability. Homeowner’s policies are package policies covering a multitude of risks. Most commercial policies cover these risks by separate policies.

OFFER AND ACCEPTANCE: Essential components of a valid contract. The combination of these two factors constitute a “meeting of the minds,” which is the essence of an agreement.

OPTION: Agreement to keep offer open for a designated period of time usually granted for a consideration paid, the exercise of which must conform to specific notice requirements and other conditions, such as the payment of a deposit.

PARTNERSHIP: Association of two or more individuals to carry on a business for profit as co-owners.

PARTY WALL: Wall located on the boundary line of property used in common by the owners of the two properties.

PERSONAL PROPERTY: Movables or chattels which are not real estate.

PHYSICAL DETERIORATION: Decline in value of property resulting from decay and neglect.

POWER OF ATTORNEY: Written instrument giving one the power to act as agent (attorney in fact) in the name of another (principal). A “durable” power of attorney remains in effect even if the principal becomes incompetent. All powers of attorney expire on the death of the principal.

PREPAYMENT PENALTY: A charge imposed by a lender for paying off a loan before its due date. Illegal in many states.

PRINCIPAL: Person for whom an agent or attorney in fact acts.

PRIORITY: Preference or seniority of claim or lien. For instance, a first mortgage has priority over a subordinate mortgage, judgment or mechanic’s lien placed on record against the property subsequent to the recording of the first mortgage.

PRIVATE MORTGAGE INSURANCE (PMI): Coverage given to a lender to insure a given percentage of its lien for which the mortgagor pays a premium. The lender relies on the insurer to guarantee that portion of the loan that it would not have granted without the insurance.

PROBATE: Legal process of lodging a will for proof with a probate court or surrogate to determine who will inherit the property of a decedent. The surrogate is the public official charged with the duty of keeping the records and qualifying the named executors, who carry out the wishes expressed in the will.

PROMISSORY NOTE: Legal instrument evidencing an obligation, which makes formal proof of the underlying debt unnecessary.

PRORATIONS: Division of expenses at closing between buyer and seller based upon those that are prepaid or in arrears. Adjustments are based upon the date of closing.

PUFFING: Exaggerated claims as to features or value of real estate.

PURCHASE-MONEY MORTGAGE (PMM): Mortgage taken back by a seller in a real estate transaction for a portion of the price.

QUITCLAIM DEED: Deed in which grantor transfers only his right, title and interest in the real property without covenants or warranties. This, however, does not relieve the grantor of his obligations under any mortgage and note affecting the property.

READY, WILLING AND ABLE BUYER: Prospective purchaser prepared to buy property on terms acceptable to seller having the unconditional present ability to complete the transaction. Usually the standard by which it is judged whether a broker has earned a commission.

REALTOR: Registered trademark of local Realtor boards affiliated with National Association of Realtors.

RECORDING: The act of filing of an instrument affecting the title to real estate in the central recording office of the governmental subdivision having jurisdiction, such as county clerk’s office.

REDEMPTION: The act of curing a default and reinstatement of rights of a defaulting property owner.

REGULATION Z: Requires lenders to disclose to borrowers the true interest rate on a mortgage loan. Required by federal law (RESPA).

REPLACEMENT COST: The actual cost of restoration of original property that was damaged or destroyed in a casualty, such as fire, flood, or hurricane.

REVERSE-ANNUITY MORTGAGE (RAM): A loan arrangement in which a homeowner receives periodic payments based upon his equity in the property, which loan is repaid upon sale of the property or death of the owner.

RIPARIAN RIGHTS: Right of owner of property bordering on a river, lake or ocean, including access to and use of the water.

SALE AND LEASEBACK: Sale by owner of real estate and, as part of the same transaction, signing a long-term lease to remain in possession.

SALESPERSON: Person selling real estate under the supervision of a licensed broker.

SATISFACTION OF MORTGAGE: Discharge acknowledging the payment of a mortgage debt.

SECONDARY MORTGAGE MARKET: A market for the purchase of existing mortgages; as distinguished from primary mortgage market where mortgages are originated.

SETBACK: A building and zoning regulation requiring vacant space between the property line and the building line.

SHARED-APPRECIATION MORTGAGE (SAM): A mortgage in which the borrower gets a favorable interest rate in exchange for agreeing to share a portion of the profit upon sale of the property with the lender.

SPECIAL WARRANT( DEED: A deed in which the warranties are limited: The grantor guarantees only against defects in title arising during the period of his ownership and not against defects in title existing before that time.

SPECIFIC PERFORMANCE: An extraordinary legal remedy in which a court orders a party to carry out the terms of a contract, particularly suitable to real estate because every parcel is regarded as unique. A condition for the granting of this remedy by a court is a showing that monetary damages will not be adequate to grant relief and that irreparable injury will ensue if the party sued is not ordered to perform. For example, no two parcels of real property have the same view and exposure to light and air and if the seller defaults the court probably will order the seller to convey title to the buyer of that parcel.

STATUTE OF FRAUDS: The law that requires certain instruments to be in writing in order to be legally enforceable.

STATUTE OF LIMITATIONS: The period of time within which a lawsuit must be commenced or thereafter barred.

STATUTORY LIEN: A lien imposed on real property by law, such as a tax lien.

SUBDIVIDER: Developer of land, who gets governmental permission, on conditions to divide tract into separate, usable lots.

SUBDIVISION: The division of a tract into lots and blocks shown on a filed map, subject to local ordinances and regulations.

SUBORDINATION: The relegation of a security to an inferior position, such as subordination of a first mortgage to a new construction mortgage.

SUBROGATION: Acquisition of the rights of another to make a claim or sue, usually upon payment to the assignor by an insurance carrier.

SUIT TO QUIET TITLE: Action to settle or establish a clear title where there is a dispute or “cloud” on the title. “Quieting” the title refers to the removal of the encumbrance or other alleged defect to make title marketable and insurable.

SUPPLY AND DEMAND: The economic forces that dictate the market value of property.

SURETY BOND: Undertaking by an insurance company guaranteeing the debt, default or miscarriage of a required performance.

SURVEY: Plot plan showing the measured boundaries and area of a lot and location of structures, encroachments and easements.

TAX LIEN: A charge against property having priority over other liens created by operation of law and giving the right to the holder to sell the property in satisfaction of the balance due.

TAX SALE: Court-ordered sale of real property to cover delinquent taxes.

TENANCY BY THE ENTIRETY: Joint ownership of real property by husband and wife where survivor becomes absolute owner upon death of spouse. Recognized by less than one-half of the states in this country. Not recognized in those states having community property.

TENANCY IN COMMON: A co-ownership in which each owner holds an undivided interest in the entire property where the interest of each owner can be inherited and is not subject to survivorship.

TESTATE: One who dies leaving a valid will. One who dies without a valid will is said to have died intestate.

TESTATOR/TESTATRIX: Male/Female who makes a valid will.

TIME IS OF THE ESSENCE: Words used in a contract or written notice requiring strict and punctual performance at a given time and place.

TITLE: Evidence of ownership of real estate transferred by deed.

TITLE INSURANCE: Policy covering the owner and/or mortgagee of real estate against loss resulting from defect in title. For a onetime premium the policy insures marketability of the title.

TRUST: A confidential relationship in which property is held and administered for the benefit of another called the beneficiary.

TRUST DEED: An instrument creating a mortgage lien.

TRUSTEES DEED: Deed signed by a trustee transferring title to property held in trust.

UNIFORM COMMERCIAL CODE: Uniform law codifying regulations pertaining to commercial transactions, such as sales, banking, warehouse receipts, or liens on personal property.

UNMARKETABLE TITLE: Defective title that is usually uninsurable for title insurance unless defects and encumbrances are satisfied or removed.

USURY: Interest exceeding the maximum rate legally permitted.

VARIANCE: An exception to the requirements of a zoning ordinance allowing the use or construction of a structure otherwise prohibited. When the zoning code official of the municipality rejects a building and zoning permit, an appeal must be made to the zoning board of adjustment or similar body to prove hardship or special need and no detriment to neighboring properties or to the master zoning plan.

WRAPAROUND MORTGAGE: Form of mortgage financing in which the new mortgage is placed in a subordinate position and the existing mortgage remains in place with the owner paying the new mortgagee on both mortgages. Permission from the first mortgagee must be obtained if the mortgage has a “due on sale” provision.

YIELD: Return on investment.

ZONING ORDINANCE: Regulation by a municipality under its police power of the use and character of real estate. Zones are designated where certain uses are permitted and others are prohibited. The principal purposes of zoning are to prevent congestion, noxious odors, noise and other factors that will reduce the value of real property.