TERMS TO KNOW

Closing

A meeting between a buyer and seller (and their respective agents and/or attorneys) at which a sale of a property is finalized and the deed is delivered to the buyer in exchange for the purchase price. Also called "settlement."

Commission

The fee paid to a broker for successfully concluding a real estate or loan transaction. A commission is generally a percentage of the price of the property or loan.

Contingency

A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Contract

An oral or written binding agreement between two or more competent parties to do or not to do some legal act for a legal consideration.

Contract for Sale (or Deed)

A contract between purchaser and a seller of real estate to convey title after certain conditions have been met; a form of installment sale.

Deed

A legal document conveying title to a property.

Deed-in-lieu (of foreclosure)

A deed given by a mortgagor to the mortgagee to satisfy a debt and avoid foreclosure. Also called a "voluntary conveyance."

Deed of trust

The document used in some states instead of a mortgage when title is conveyed to a trustee.

Encumbrance

Limitations against a person's interest in a property, such as mortgages, leases, easements, or restrictions.

Escrow

Money, documents or other items of value in the care of a third party to be released upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay real estate taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow account

The account in which escrow payments are held.

Fixture

Personal property that is attached to real property becoming part of the real property.

Judgment lien

A lien on the property of a debtor resulting from the decree of a court.

Lien

A legal claim on property of some obligation or debt.

Property

A bundle of legal rights for real estate.

Recording

Entering into the public records the written documents affecting title to real property, such as a properly executed legal document (deeds, mortgage notes, satisfactions of mortgage) thereby making it a part of the public record. Constructive notice. See recorder.

Settlement

See closing.

Tax

An enforced charge imposed on persons, property or income. Compulsory payment by a citizen to a unit of government.

Taxable Value

The assessed value less allowable exemptions resulting in an amount to which the tax rate is applied to determine property taxes due.

Title

The group of rights that represent ownership of real property and the quality of the estate owned. A legal document evidencing a person's right to or ownership of property.

Title company

A company that specializes in examining and insuring titles to real estate.

Title insurance

Insurance policies that protect the lender or the buyer against errors or omissions or defects in the title of a property.

Title search or examination

An examination of municipal records to determine the legal ownership of property and to confirm any liens, special assessments, other claims or restrictive covenants filed in the record.

Contract Add-On Options Checklist

We�ve covered what should be included in a typical contract to purchase. But what else could be attached or included? Here are just a few items you may want to add before signing:

• An automatic 30-day extension for financing delays.
• A certified survey prior to closing.
• Maximum interest rate and discount points you are willing to pay.
• A clause stating that the seller will provide current title insurance prior to closing and an owner�s policy of title insurance at closing.
• An immediate occupancy to the buyer or a lease-back to the seller for a specific period of time and the terms of that rental agreement.
• A pest inspection, prior to closing, by a licensed inspector and an agreement for the seller to pay for any treatment and/or repairs due to pest infestation (this includes termites).
• A seller warrants that the ceiling, roof, exterior and interior walls are free of any water damage, leaks or structural damage.
• A seller warrants the septic tank, plumbing and machinery are all in good working condition at the time of closing.
• Buyer may have a home inspection, by a licensed professional, and the seller is financially responsible for any damages or repairs that are needed.
• Seller will make or pay for all repairs as required by the appraiser.

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