A Glossary of
Real Estate Terms (A-C)
 Real estate transactions are more complicated than they were years
ago. As these transactions are governed by numerous federal
and Pennsylvania state laws, it's helpful if buyers and sellers are familiar
with some of the terms commonly used today. Below is a
glossary of real estate terms - a sort of "dictionary" of real
estate.
If you have any questions about any of these terms, or if you can't
find a definition,
click here.
A - C
D - F
G - L
M - Q
R - S
T - Z
A
Abandonment
- Non-payment of taxes
Abstract of Title -
A history of the ownership of a parcel of land which lists transfers of
title, rights, and liabilities.
Acceleration Clause -
States that upon default, all of the
principal installments come due immediately.
Accession
- The idea that the owner of land is entitled to all that the soil
produces or all that is added to the land either intentionally or by
mistake. Trade fixtures not removed are "assessed" by the owner of the
property.
Accretion
- Refers to land which is accumulated by the gradual washing or motion of
water.
Acknowledgment -
A formal declaration made by the grantor
conveying the property to the grantee; a necessary element for
validity of a deed.
Acre
- A measure of land equal to 43,560 square feet.
Action to Quiet Title -
The lawsuit filed by a person to remove or clear the claims of others
against property.
Actual Notice -
The actual knowledge that a person has about the existence of a
particular fact.
Ad Valorem -
A prefix meaning "based on value." Most local governments levy an ad
valorem tax on property.
Adverse Possession -
A method of acquiring original title to property by open, notorious and
hostile possession for a statutory period of time; also referred to as
prescription. POACH.
Agency
- A relationship in which one party (the principal) authorizes another
party (the agent) to act as the principal's representative in dealing
with third parties.
Agent
- One who acts for and in place of a principal for the purpose of
affecting the principal's legal relations with third persons.
Air Rights -
The right to use, control and occupy the space above a particular parcel
of land.
Alienation Clause -
A provision in a mortgage requiring full payment of the debt upon the
transfer of title to the property, due on sale. Prevents loan
assumptions.
Allodial
- The free and full ownership of rights in land by individuals, which is
the basis of real property in the United States.
Amortization
- The repayment of a financial obligation over a period of time in a
series of periodic installments. In a level-payment mortgage, this is
the portion of the debt service that reduces the principal.
Amortized Loan -
A financial debt that is paid off over a period of time by a series of
periodic payments. A loan can be fully amortized or partially amortized
or partially amortized requiring a balloon payment to satisfy the debt
at the end of the term.
Annual Percentage Rate (APR) -
The yearly cost of credit. Interest Rate
plus finance charge.
Appraisal
- An opinion or estimate of value.
Appreciation
- An increase in value.
Appurtenance
- Any right or privilege which belongs to and passes with land.
Arms-length Transaction -
Occurs between willing buyer and willing seller with each party
completely knowledgeable about the market. A purchaser of property
between relatives (father & son) would not be an "arms length
transaction."
Arrears
- Not on time; late in making payments or completing work. Interest is
paid in arrears. Taxes are paid at the end of the year, i.e., in
arrears.
As is
- A phrase which disclaims any promises or warranties. A person purchasing
real estate "as is" takes it in exactly the condition in which it is
found. Seller cannot hide latent defects.
Assemblage
- Bringing two or more lots together under one ownership.
Assessed Value -
The value placed on property, by the tax assessor, for the purpose of
determining the property tax.
Assignment
- (1) the means by which a person transfers contract rights;(2) occurs
when the lessee parts with the entire estate, retaining no interest.
Attachment
- The process of taking a person's property into legal custody by a court
order called a writ of attachment. Property is frozen.
Attestation
- The act of witnessing a person's signing of an instrument by a notary
public.
Attorney in Fact -
A person given the authority to act on behalf of another under a power
of attorney.
Attorney's Opinion of Title -
A statement issued by an attorney after
analyzing an abstract as to quality of title.
Avulsion
- Occurs in cases where there is a sudden loss of land through nature.
B
Bad Title -
Title with defects making it unmarketable.
Balloon Payment -
The remaining balance, at maturity, on a loan that has not been
completely repaid through periodic payments. Once paid, the outstanding
balance is zero. Partially amortized loan.
Bargain and Sale Deed
- An instrument conveying title which recites a valuable consideration and
commonly uses the words "bargain and sale" or words of similar import.
Bench mark -
A bronze disk permanently placed and precisely identified by government
survey teams.
Bilateral Contract -
A contract in which a promise is given for the promise of another. It
becomes binding when mutual promises are communicated. (A real estate
contract).
Bill of Sale -
A document used to transfer ownership of personal property.
Blanket Mortgage -
A mortgage which covers more than one piece of real estate. Often used
by a developer in the financing of undeveloped lots. Contains a partial
release clause.
Block A
- Means of subdividing large tracts of land into smaller sections, each of
which is numbered. For example, Lot 4, Block 8.
Blockbusting
- Any activity which attempts to drive prices down for the purpose of
causing transition from one ethnic group to another. This is a violation
of Federal Fair Housing Laws. Also called "panic selling".
Bounds
- Refers to boundaries; used with the word "metes" in the metes and bounds
method of land description.
Breach of Contract -
A failure to perform, as promised, at the time the performance was due.
Buffer Zone -
A means by which planners use space to separate two adjoining districts
which have incompatible uses. A buffer zone consists of uses which are
compatible with uses in each adjoining district.
Building Code -
Ordinances passed by local governments with special minimum standards of
construction for new buildings. They also apply to major additions to
old construction.
Bundle of Rights -
The rights of an owner to possess, control, enjoy, sell, lease,
mortgage, and dispose of the property.
Bylaws
- Legal documentation in a condominium regime which provides the
establishment of the home-owner's association; provides the powers and
authority given to the board of directors; and indicates various rights
and responsibilities of the unit owners.
C
Capital Gains -
The tax profit realized from the sale of
property. (A "tax free" exchange is a deferment of capital gains).
Capitalization
- Used in the income approach to value. To capitalize income means to
convert future income into present (current) value.
Capitalization Rate -
The rate of interest considered to be a reasonable return on investment
- given the risk.
Caveat Emptor -
"Let the Buyer beware."
(Latin)
Certificate
- The first thing a veteran should request if attempting to purchase a
property using VA eligibility.
Certificate of Eligibility
-
Given to veterans bearing evidence of
their qualifications for a VA mortgage loan.
Certificate of Reasonable Value (CPR) -
Issued by the Veterans Administration to
certify the value of property secured by a VA mortgage. Appraisal.
Certificate of Title -
A document given by the title examiner stating the quality of title the
seller possesses.
Chain of Title -
A history of the ownership affecting title to a parcel of land.
Chattel Mortgage -
One in which personal property is pledged to secure a note.
City Planning -
The effort on the part of the city to coordinate, direct and control the
type of development taking place, so as to ensure maximum benefits to
the populace.
Civil Rights Act of 1866 -
A law which prohibits discrimination in
all real estate transactions based on race - commercial and residential.
Closing Costs -
The expenses incurred and paid at the time of settlement in the
transferring of property.
Cloud on Title -
Any claim affecting title to property.
Collateral
- Property which has been pledged as security for a loan.
Color of Title -
Adverse possession.
Commercial Banks -
The largest financial intermediary directly involved in the financing of
real estate. Their primary real estate activity involves short-term
loans.
Commingling
- Illegally mixing deposits or monies, collected from a client, with one's
personal or business account. Taking money out too soon or putting it
into escrow too late (10 banking days).
Common Elements -
Property jointly owned on a pro-rata basis with other unit owners in a
condominium regime.
Common Law -
(1) a body of legal rules derived from accepted customs and procedures
in England. Serves as the foundation for most laws in every state except
Louisiana, which uses the system of civil law; (2) system of judge-made
law ("case law") as opposed to codified or statutory law.
Community Property -
Any property acquired in certain states by purchase, or as compensation
by either spouse during the period of marriage, is considered to be
owned in an undivided half interest by each.
Comparable
- Comparable property recently sold which is used in the market data
approach.
Comparative Market Analysis -
A method of appraising property in which the selling prices of similar
properties are used as the basis for estimating the value of the subject
property.
Competent Parties -
Those who are legally capable of entering into contracts.
Condemnation
- The process of exercising eminent domain through court action.
Consideration
- Anything of value offered to induce someone to enter into a contractual
agreement. For example, sale price, earnest money, a promise for a
promise.
Constructive Eviction -
Occurs when the tenant's use of the premises is substantially disturbed
or interfered with by the landlord's actions or failure to act where
there is a duty to act. The tenant is effectively forced to move out and
terminate the lease without further liability for further rent.
Constructive Notice -
The knowledge that the law presumes a person has about a particular fact
irrespective of whether the person knows about the fact or not.
(Recording).
Contract
- An agreement resulting from the objective expression of mutual assent by
competent parties, which the law recognizes in some way as a duty, and
the breach of which the law gives a remedy.
Contract for a Deed -
A means by which the seller passes possession but retains title to the
property until the total or a substantial portion of the purchase price
is paid. Installment contract. The two parties here are the vendor
(owner) and the vendee (buyer.
Conveyance
- The transfer of title to land from one party to another.
Cooperative
- A form of property ownership in which a corporation is established to
hold title in property and to lease the property to shareholders in the
corporation. Own stock.
Corporation
- A legal entity organized to have perpetual legal existence and to have
legal power to carry on certain activities such as owning real estate.
Cost Approach -
A method of estimating value based on the economic principle of
substitution; the value of a building cannot be greater than the cost of
purchasing a similar site and constructing a building of equal utility.
Counteroffer
- An implied rejection of the original offer by proposing a new offer or by
making conditional acceptance.
Covenant
- Included in a deed; a guarantee.
Covenant Against Encumbrances -
The assurance that no encumbrances other
than those specified in the deed exist.
Covenant of Further Assurance -
A promise that the grantor will perform
further acts reasonably necessary to correct any defects in the title or
in the deed instrument.
Covenant of Quiet Enjoyment -
A promise that no one has superior or
paramount title to that of the grantor; assures the grantee of peaceful
possession without fear of being ousted by a person with a superior
claim to the property.
Covenant of Seisin -
Gives the assurance that the grantor has the exact estate in the
quantity and quality which is being conveyed. "I own and I have the
right to sell it."
Curable Depreciation -
Depreciation is considered curable if the cost of the repair is less
than what the repair adds to the value of property.
| 
Member, National Association of Realtors
®
