A

A la carte real estate services
Professional real estate services that are rendered one transaction at a time instead
of the conventional full-service, commission-based brokerage relationship.

A frame design

An interior style that features a steeply peaked roofline and a ceiling that is
open to the top rafters.

Abstract of judgment
The summary of a court judgment that creates a lien against a property when filed
with the county recorder.

Abstract or title search
The process of reviewing all recorded transactions in the public record to determine
whether any title defects exist that could interfere with the clear transfer of
ownership of the property.

Accelerated cost recovery system
A tax calculation that provides greater depreciation in the early years of ownership
of real estate or personal property.

Accelerated depreciation
A bookkeeping method that depreciates property faster in the early years of ownership.

Acceleration clause
A provision that gives a lender the right to collect the balance of a loan if a
borrower misses a payment.

Acceptance

The seller’s written approval of a buyer’s offer.

Access

Any means by which a person can enter property.

Accessibility

The degree to which a building or site allows access to people with disabilities.

Accretion

The gradual addition to the shore or bank of a waterway by deposits of sand or silt.

Acknowledgment

A written declaration affirming that a person acted voluntarily.

Acre

A measurement of land equal to 43,560 square feet.

Acre-foot

The volume of material needed to cover an acre of land one foot deep.

Active solar system
A system that utilizes electric pumps or fans to transfer solar energy for storage
or direct use.

Actual age

The number of years a structure has been standing.

Ad valorem tax
Tax based on assessed property value

Add-on interest

The interest a borrower pays on the principal for the duration of the loan.

Addendum

An addition or change to a contract.

Additional principal payment
Extra money included in the monthly payment to help reduce the principal and shorten
the term of the loan.

Adjustable rate mortgage (ARM)
A loan with an interest rate that is periodically adjusted to reflect changes in
a specified financial index.

Adjusted cost basis
The cost of any improvements the seller makes to the property. Deducting the cost
from the original sales price provides the profit or loss of a home when it is sold.

Adjustment period
The amount of time between interest rate adjustments in an adjustable-rate mortgage.

Administrator

A person given authority to manage and distribute the estate of someone who died
without leaving a will.

Administrator’s deed
A legal document that an administrator of an estate uses to transfer property.

Adverse possession

The acquisition of title to property through possession without the owner’s consent
for a certain period of time.

Adverse use

The access and use of property without the owner’s consent.

Aeolian soil

Soil that is composed of materials deposited by the wind.

Affiant

A person who makes a sworn statement.

Affirmation

A substitution for an oath granted to people based on religious reasons.

Agency

The relationship of trust that exists between sellers and buyers and their agents.
The agency is formed through a written contract.

Agency closing

The process by which a lender uses a title company or other firm as an agent to
complete a loan.

Agency disclosure

Laws in most states require agents who act for buyers or sellers to disclose who
represents whom in a real estate transaction. Laws vary widely by state.

Agreed boundary

A compromise boundary to which property owners agree in order to resolve a dispute.

Agreement of sale
A document the buyer initiates and the seller approves that details the price and
terms of the transaction.

Air handler

Short for air-handling unit, the blower equipment in a furnace, heat pump, or similar
appliance designed for circulating heated or cooled air through a central heating
system.

Air lot

A designated airspace over a piece of property.

Air-handling unit
The blower equipment in a furnace, heat pump, or similar appliance designed for
circulating heated or cooled air through a central heating system.

Alcove

A recessed section of a room, such as a breakfast nook.

Alienation clause
A provision that requires the borrower to pay the balance of the loan in a lump
sum after the property is sold or transferred.

Alkali

Mineral salt found in soil

Alkaline soil

Soil that contains a higher concentration of mineral salt than natural acid.

Alley

A lane behind a row of buildings or between two rows of buildings.

Allowance

A budget offered by builders of new homes for the purchase of carpeting and fixtures.

Alternative mortgage
Any home loan that does not conform to a standard fixed-rate mortgage.

Aluminum siding

A metal covering that provides an alternative to paint for owners of wood homes.

Aluminum-clad windows
Wooden windows with aluminum covering the exterior.

Amenities

Parks, swimming pools, health-club facilities, party rooms, bike paths, community
centers, and other enticements offered by builders of planned developments.

American Society of Home Inspectors (ASHI)
Professional association of independent home inspectors whose members must meet
the group’s education and performance requirements. Call (800) 743-2744 for list
of ASHI-certified inspectors in your area.

Americans with Disabilities Act (ADA)
A law passed in 1990 that outlaws discrimination against a person with a disability
in housing, public accommodations, employment, government services, transportation
and telecommunications.

Amortization

The process of paying the principal and interest on a loan through regularly scheduled
installments. Initially, most of each payment is applied toward interest owed, and
later in the loan term increasingly applied toward principal.

Amortization tables
Mathematical tables that lenders use to calculate a borrower’s monthly payment.

Amperage

The strength of an electrical current.

Ampere

The basic unit used to measure electric current.

Anchor bolt

A large steel bolt anchored in concrete and attached to a building to prevent the
structure from moving.

Annual

Any kind of plant that must be planted every year.

Annual assessments

The process of placing a value on property for the strict purpose of taxation. May
also refer to a levy against property for a special purpose, such as a street lighting
or sewer assessment.

Annual mortgagor statement
A yearly statement to borrowers that details the remaining principal and amounts
paid for taxes and interest.

Annual percentage rate (APR)
A measure of interest rate that expresses the cost of a mortgage as a yearly rate
on the loan balance. The APR assumes the loan is held for its full term. For adjustable-rate
loans, the APR assumes the loan’s index doesn’t change from its initial value.

Annuity

The payment of a fixed sum to an investor at regular intervals.

Anticipatory breach
A communication that informs a party that the obligations of the original contract
will not be fulfilled.

Antioxidant compound
A substance applied to aluminum wiring connections to seal and promote conduction.

Appellant

A taxpayer or representative who appeals to a higher tribunal.

Application

A document that details a potential borrower’s income, debt, and other obligations
to determine credit worthiness.

Application fee
Includes any fees that are paid upon application. An application fee may include
charges for property appraisal and a credit report, if those fees are not reported
separately.

Appraisal

An opinion of the value of a property at a given point in time.

Appraisal fee

The fee that a professional real estate appraiser charges to appraise, or estimate
the market value of, a property.

Appraisal report

A detailed written report on the value of a property based on recent sales of comparable
sites in the area.

Appraised value

An opinion of the current market value of a property.

Appreciation

An increase in the value of a home or other property.

Approval

A thorough assessment made by a lender of a borrower’s ability to pay for a home,
and a confirmation of the amount the borrower may obtain.

APR (annual percentage rate)
A measure of interest that expresses the cost of a mortgage as a yearly rate on
the loan balance. The APR assumes the loan is held for its full term. For adjustable-rate
loans, the APR assumes the loan’s index doesn’t change from its initial value.

Apron

A paved area, such as the junction of a driveway with the street.

Aquastat

A thermostat submerged in water and used to control the operation of a device.

Arbitration

A method of resolving a dispute in which a third party renders a decision.

Arbor

An area shaded by trees, shrubs, or vines on a latticework structure.

Arc

A spark between two electrical points

Arpent

A French measurement of land equal to .84625 acres.

Array

A term used by tax assessors to describe a list of properties in a certain category
sold within a given period of time.

As-is condition

The purchase or sale of a property in its existing condition.

Asbestos

A fire-resistant mineral used for insulation and home products that has been found
to pose a health hazard.

ASHI (American Society of Home Inspectors)
A professional association of independent home inspectors whose members must meet
the group’s education and performance requirements. Call (800) 743-2744 for list
of ASHI-certified inspectors in your area.

Asking price

A seller’s initial price for a property

Assemblage

The combining of two or more adjoining lots into one larger tract to increase total
value.

Assessed value

A tax assessor’s determination of the value of a home in order to calculate a tax
base.

Assessment

The estimated value of a piece of real estate or a levy placed on property in addition
to taxes.

Assessment rolls
A list of taxable property compiled by the assessor.

Assessor

An official who determines the assessed value of a property.

Assets

Items of value which include cash, real estate, securities, and investments.

Assignment

The transfer of rights to pay a debt from one party to another, with the original
party remaining liable for the debt if the second party defaults.

Assignor

A person who transfers rights and interests of a property.

Assumable mortgage

A mortgage that can be transferred to another borrower.

Assumption clause
A provision that allows a buyer to take responsibility for the mortgage from a seller.

Assumption fee
A fee the lender charges to process new records for a buyer who assumes an existing
loan.

Automatic extension

A clause in a listing contract stating that the agreement will automatically continue
for a certain period of time after the expiration date. This is discouraged and
prohibited in many states.

Automatic flue damper
A device in the flue of a heating unit that closes to prevent heat loss when the
unit is not in operation.

Average price

The price of a home determined by totaling the sales prices of all houses sold in
an area and dividing that number by the number of homes.

Avigation easement

An easement over private property near an airport that limits the height of structures
and trees.

Awning windows

Single-sash windows that tilt outward and up.

B Back To Top

Back title letter
A letter that a title insurance company gives to an attorney who then examines the
title for insurance purposes.

Back-end ratio

A lender calculation that compares a borrower’s total debt (principal, interest,
property taxes, and insurance, plus other monthly debt payments) to gross monthly
income.

Back-to-back escrow
Arrangements that an owner makes to oversee the sale of one property and the purchase
of another at the same time.

Backerboard

A rigid board used beneath tile.

Backfill

Soil used to solidify the foundation of a structure

Backsplash

The area behind and above a countertop, typically covered to prevent water from
splashing onto the wallboard.

Backup offer

A secondary bid for a property that the seller will accept if the first offer fails.

Backwater valve

A valve in a sewer line that prevents sewage from flowing back into a house.

Baffle

A device used as a heat shield to deflect the byproducts of combustion.

Balance sheet

A statement that shows the assets, liabilities, and net worth of an individual.

Ball cock

One type of inlet valve assembly inside a toilet tank that, when opened automatically,
fills the tank with water.

Ballcock assembly

The toilet tank mechanism that controls flushing.

Balloon loan

A mortgage in which monthly installments are not large enough to repay the loan
by the end of the term. As a result, the final payment due is the lump sum of the
remaining principal.

Balloon payment

The final lump-sum payment due at the end of a balloon mortgage.

Balloon-frame construction
A type of framing used in two-story homes in which studs extend from the ground
to the ceiling of the second floor.

Baluster

Intermediate vertical support for a stair railing, often made from turned hardwood.

Balustrade

Railing held up by a set of posts on a porch or stairway.

Bankruptcy

A proceeding in which an insolvent debtor can obtain relief from payment of certain
obligations. Bankruptcies remain on a credit record for seven to 10 years and can
severely limit a person’s ability to borrow.

Bargain sale

The sale of a piece of property for less than market value.

Base loan amount

The amount upon which loan payments are based. If the borrower finances his or her
closing costs, those costs will be added to the base loan amount.

Baseboard

Any board or molding found at the bottom of an interior wall.

Baseboard electric heat
Heating units installed in the floor that can be controlled by a central thermostat.

Basement

The area of a home below ground level.

Basis point

A basis point is one one-hundredth of one percentage point. For example, the difference
between a loan at 8.25 percent and a mortgage at 8.37 percent is 12 basis points.

Batten

A narrow piece of material used on the outside of a house to cover joints in walls.

Bay

The opening between two columns or walls that forms a space.

Bay window

A window that projects outward in a curve.

Bearing wall

A wall that supports its own weight in addition to other parts of a structure.

Before-tax income
Total income before taxes are deducted

Beneficiary

The lender who makes a loan, also called a mortgagee. The person borrowing money
is the mortgagor.

Bequest

Personal property given to a person through a will.

Berm

A built-up lip of concrete designed to prevent runoff water from entering the garage
or driveway.

Betterment

An improvement that increases a property’s value as opposed to repairs that maintain
the value.

Betterment

An improvement that increases the property’s value.

Bi-level

A home that has two levels. Typically, a garage or storage area is situated in the
lower level and the home in the upper section. Most bi-level structures were built
after 1950.

Bi-metal coil

Part of a mechanical thermostat. Consists of two different types of metal that expand
and contract at two different rates with changes in room temperature.

Bid out

The process that contractors use to estimate the cost of a house or project before
it is completed.

Bidding war

Offers from multiple buyers for a piece of property. Agents also sometimes compete
to list a house for sale.

Bilateral contract

A contract in which the parties involved give mutual promises. Also called a reciprocal
contract.

Bill of sale

A document that transfers ownership of personal property.

Binder

A report issued by a title insurance company that details the condition of a home’s
title and provides guidelines for a title insurance policy.

Binder

A preliminary agreement between buyer and seller.

Biweekly mortgage

A mortgage that requires payments every two weeks and helps repay the loan over
a shorter term.

Blanket insurance policy
A policy that covers more than one person or piece of property.

Blanket mortgage

A mortgage that covers more than one property owned by the same borrower.

Blighted area

A neighborhood that has deteriorated.

Blind nailing

Nails driven into a wall and concealed with putty.

Blockbusting

The illegal practice of inducing homeowners to sell their properties by making representations
regarding the entry of a particular race into the neighborhood.

Blue-ribbon condition
A house maintained close to its original condition. Also called mint condition.

Blue-sky laws

Regulations on the sale of securities to prevent consumers from investing in fraudulent
or high-risk companies without being informed of the risks.

Blueprint

The plan for a home or other structure.

Board and batten

A type of siding composed of vertical boards and batten slats that cover wall joints.

Board foot

Measurement of lumber that is the equivalent of 144 cubic inches.

Board of equali4zation

A state board charged with ensuring that local property taxes are assessed in a
uniform manner.

Board-and-batten siding
Siding composed of 8- to 12-inch-wide wooden boards nailed vertically to create
a barn-like exterior.

Boilerplate

Form language used in deeds, mortgages, and other documents. Details can be added
by individual parties.

Bona fide

A legal term that refers to actions or persons that are honest and in good faith.

Bond

An agreement that insures one party against loss by acts or defaults of another
party.

Bonus room

A room with no specifically designated function, unlike a living room, bedroom,
or kitchen.

Book value

The value of a property as a capital asset based on its cost plus any additions,
minus depreciation.

Boot

A piece of sheet metal that connects a heating or cooling duct and a vent.

Boring test

An analysis of soil in which holes are bored into the ground and samples are removed.

Borough

A section of a city that has authority over local matters.

Borrow

Sand, gravel, or other material used for grading.

Borrow pit

The hole at a site that has been excavated

Boulevard

A street lined with trees or constructed with a landscaped median.

Boundary

The dividing line between two adjacent properties.

Braced framing

A construction method in two-story homes in which the frame is reinforced with posts
and braces.

Bracing

The technique used to reinforce a structure.

Branch circuit

An electrical circuit with its own circuit breaker in the service panel.

Breech of contract

The failure to perform provisions of a contract without a legal excuse.

Breech of covenant

The failure to obey a legal agreement.

Breech of warranty

A seller’s inability to pass clear title to a buyer.

Break-even point
The point in which the owner’s rental income matches expenses and debt.

Breezeway

A roofed passageway with open sides.

Brick

Building material made from clay molded into oblong blocks and fired in a kiln.

Brick veneer

A brick facade on a wall or fireplace.

Bridge loan

A short-term loan for borrowers who need more time to find permanent financing.

Broker

Anyone who acts as a go-between. A real estate broker is licensed to handle property
transactions and operate a brokerage firm. A mortgage broker is an individual or
firm that matches borrowers to lenders and loan programs for a fee.

Brokerage

The act of bringing together two or more parties in exchange for a fee or commission.
Real estate brokerages are firms or companies that are licensed to conduct real
estate transactions.

Broom clean

The ideal condition of a building when it is turned over to an owner or tenant.

Brownstone

A vintage row house constructed of red sandstone.

Buffer strip

A parcel of land that separates two or more properties.

Buildability

The feasibility of constructing a home or other structure on a piece of land. Parcels
for which a building permit cannot be obtained may be considered “unbuildable.”

Builder upgrades

Extra features or better finishing materials offered by a builder.

Building and loan association
An organization that raises money to helps its members purchase real estate or construct
a building.

Building code

A comprehensive set of laws that controls the construction or remodeling of a home
or other structure.

Building inspector

A city or county employee who enforces the building code and ensures that work is
correctly performed.

Building line or setback
Guidelines that limit how close an owner can build to the street or an adjacent
property.

Building moratorium

A halt on home construction to slow the rate of development.

Building paper

A thick, water-resistant paper that serves as insulation.

Building permit

A permit issued by a local government agency that allows the construction or renovation
of a house.

Building restrictions

Regulations that limit the manner in which property can be used.

Built-ins

Appliances or other items that are framed into a home or permanently attached.

Bulkhead

A retaining wall designed to hold back water from the ocean or other body of water.

Bundle of rights

The various interests or rights an owner has in a property.

Bungalow

A small one-story house or cottage.

Butt

The way in which two boards meet so that the ends touch in a continuous line.

Butterfly roof

A roof formed by two gables that dip in the middle to resemble a butterfly’s wings.

Buydown mortgage

A home loan in which the lender receives a premium as an inducement to reduce the
interest rate during the early years of the mortgage.

Buyer’s agent

An agent representing a buyer in a home purchase, either as a single agent or as
an exclusive buyer’s broker.

Buyer’s broker

A real estate broker who exclusively represents the buyer’s interests in a transaction
and whose commission is paid either by the buyer or through the seller or listing
broker at closing.

Buyer’s market

A slow real estate market in which buyers have the advantage.

Buyer’s remorse

An emotion felt by first-time homebuyers after signing a sales contract or closing
the purchase of a house.

Buyers Resource Real Estate
National buyer’s brokerage company with offices in 13 states. Call (800) 359-4092
for information and referrals.

Buyers’ Home Finding Network
National referral service for buyer’s brokers only. Call (800) 500-3569 for information
and referrals.

Bylaws

The rules and regulations that a homeowners association or corporation adopts to
govern activities.

 C Back To Top

California Real Estate Inspection Association
Also known as CREIA. A trade organization of home inspectors whose members must
meet the group’s education and performance requirements. Call (800) 388-8443 for
list of CREIA-certified inspectors in your area.

Call option

A clause in a loan agreement that allows a lender to ask for the balance at any
time.

Can light

An incandescent light inside a metal can that is mounted flush with the surface.

Can lights

Cylindrical chambers with bulbs recessed into the ceiling.

Cancellation clause
A clause that details the conditions under which each party may terminate the agreement. 

Cantilever

A projecting structure supported on one end, such as a balcony.

Cap

A limit on the amount the interest rate or monthly payment can increase in an adjustable
rate mortgage.

Cape Cod style

A wood-frame or shingled house with a steep roof and several windows projecting
from the second floor.

Capital

Money used to create income, such as funds invested in rental property.

Capital

The decorative top of a column or pilaster.

Capital expenditure

The cost of making improvements on a property.

Capital gain

Profit an investor makes from the sale of real estate or investments.

Capital gains tax
A tax placed on profits from the sale of real estate or investments.

Capital improvement

Any improvement that extends the life or increases the value of a piece of property.

Capitalization

A mathematical formula that investors use to compute the value of a property based
on net income.

Capitalization rate
The percentage rate of return estimated from the net income of a piece of property.

Caravan

A group of real estate agents who tour a house that has been recently listed for
sale.

Carport

A roof that covers a driveway or other parking area.

Carryback financing

Financing in which a seller agrees to take back a note for a set amount of the sale
of the home.

Casement window

A window hinged on its sides to allow it to swing open vertically.

Cash flow

The amount of cash a rental property investor receives after deducting operating
expenses and loan payments from gross income.

Cash-out refinance

The refinancing of a mortgage in which the money received from the new loan is greater
than the amount due on the old loan. The borrower can use the extra funds in any
manner.

Cashier’s check

A check the bank draws on itself rather than on a depositor’s account.

Casing

The trim that encircles a window or door opening, hiding the gap between the door
or window jamb and the wall’s surface.

Cathedral ceiling

A high, open ceiling formed by finishing exposed roof rafters.

Caulk

An acrylic or silicon sealant used to fill cracks, crevices, and holes in a home.

Caveat
A formal notice asking a court to suspend action until the party that filed the
challenge can be heard.

Caveat emptor

A legal principle stating that a buyer is responsible for ensuring the quality of
goods purchased. From Latin, “let the buyer beware.”

Cavedium

A courtyard or atrium.

CD (certificate of deposit)
A document showing that the bearer has a specified amount of money on deposit with
a bank, stock-brokerage firm, or other financial institution.

Ceiling fan

A large, ceiling-mounted paddle fan. Also known as a Casablanca fan.

Ceiling height

The standard height of a ceiling is eight feet.

Center mullion

A cabinetry term referring to the vertical piece of wood on the front that divides
the opening into two parts.

Central air conditioning
A device that generates cold air through an outside unit connected to ductwork inside
the house.

Central business district
The area of a city where most large businesses are located.

Certificate of deposit (CD)
A document showing that the bearer has a specified amount of money on deposit with
a bank, stock-brokerage firm, or other financial institution.

Certificate of deposit index
An index based on the interest rates on six-month CDs. It used to determine the
interest rate for some adjustable rate mortgages.

Certificate of eligibility
A document issued by the Veterans Administration that verifies the eligibility of
a veteran for a loan program.

Certificate of occupancy
A document stating that a home or other building has met all building codes and
is suitable for habitation.

Certificate of sale
A document issued at a judicial sale that entitles the buyer to receive a deed after
court confirmation of the purchase of the property.

Certified International Property Specialist (CIPS)
An advanced designation issued by the National Association of Realtors (NAR) to
members who meet specific performance and education requirements for handling international
real estate transactions

Certified Real Estate Brokerage Manager (CRB)
An advanced designation issued by the National Association of Realtors (NAR) to
members who meet specific performance and education requirements for real estate
office management.

Certified Residential Specialist (CRS)
An advanced designation issued by the National Association of Realtors (NAR) to
members who meet specific performance and education requirements for handling residential
real estate transactions.

Chain of title

The official record that details the ownership history of a piece of property.

Chair railing

Decorative trim installed on a wall about 32 inches above the floor to protect against
scuffs from furniture.

Change frequency

The adjustment schedule on an adjustable rate mortgage.

Change order

A modification of a construction contract to authorize a change in the work, an
adjustment in the amount of the contract, or a change in the contract time. The
owner, architect, and contractor must sign the change.

Chase

A shielded vertical shaft that houses various pipes, drains, ducts, and flues.

Chattel

Personal property such as furniture, clothing, or a car.

Chattel mortgage

A lien on personal property used as collateral for a loan.

Chimney back

The back wall or lining of a fireplace or furnace chimney.

Chimney cap

A concrete cap that surrounds the top of the chimney brick. The cap protects the
masonry from rain and other elements.

Chimney flue

The passage inside a chimney that channels smoke and heat to the outside.

Chimney pot

A short pipe at the top of a chimney that increases ventilation to the fireplace
and reduces smoke.

Chipboard

A board made of wood chips glued together under pressure.

Cinder block

A block made of ash and cement, used in construction.

Cinder fill

Cinders used below a basement or around a foundation to promote drainage

Circuit

Short for electrical circuit, a complete circuit requires two electrical conductors
(wires), an electrical source, and an electrical device such as a light. Electricity
travels through one “hot” wire from the source to the device where it is converted
into light, heat, or energy, then it returns along the other “neutral” wire to the
source.

Circuit breaker

A switch-like device in an electrical circuit that is designed to shut down the
circuit in the event of an electrical overload or short circuit. Circuit breakers
are normally installed in main electrical panels or subpane

Circuit breaker

A switch-like device in an electrical circuit that is designed to shut down the
circuit in the event of an electrical overload or short circuit. Circuit breakers
are normally installed in main electrical panels or subpanels.

Cistern

A tank used to store rainwater.

Clapboard

A type of siding, typically cedar, composed of overlapping horizontal boards.

Classified property tax
A tax that varies in rate depending on the use of the property.

Cleanout

An opening in the drainage system for the removal of obstructions. It also refers
to the part of a fireplace from which ashes can be removed.

Cleanout

A Y-shaped fitting with a cap or plug on one of the arms of the Y that can be removed
in the event of a drain clog to snake out the drain line. C
Clear title

A title to property that does not have liens, defects, or other legal encumbrances.

Clevis

Part of the assembly needed to raise and lower a sink or tub pop-up. The clevis
is a pin that connects to a pivot rod.

Closing

The final procedure in which documents are signed and recorded and the property
is transferred.

Closing costs

Expenses incidental to the sale of real estate, including loan, title, and appraisal
fees. These costs exist in addition to the price of the property and are paid at
closing. Some are one-time expenses and some are recurring.

Closing statement

A document which details the final financial settlement between a buyer and seller
and the costs paid by each party.

Cloud on title

An invalid encumbrance on real property.

Cluster development
A method of squeezing more homes into less space.

Co-housing

Individual housing units that are clustered around a common building where residents
share cooking and other activities.

Co-insurance

Coverage that involves the use of two or more insurers.

Co-maker

A person who signs a promissory note with the borrower and assumes responsibility
for the loan.

Co-signer

A second party who signs a promissory note and takes responsibility for the debt.

CO/ALR

A designation on special light switches and outlets intended to be installed with
aluminium wiring.

Codicil

A change to a will that adds or subtracts provisions or clarifies portions of the
document.

Collar beam

The structural element that connects roof rafters.

Collateral security
Additional security that a borrower supplies to obtain a loan.

Collection

The series of steps a lender takes to bring a delinquent mortgage up to date.

Collusion

The action of two or more people to break the law.

Colonia

Unincorporated communities along the border between the United States and Mexico.
C

Column
A slender upright structure that consists of a base, a round or square shaft, and
a capital.

Column footing

The support base for a load-bearing column. The footing is usually made of reinforced
concrete.

Combination door
An outer door with interchangeable screen and glass panels.

Combination window
A window with interchangeable screen and glass panels.

Combustion gases
The fumes or exhaust from a gas- or oil-burning appliance such as a water heater
or furnace. Combustion gases are usually vented through a flue.

Commercial bank
A financial institution that provides a broad range of services, from checking and
savings accounts to business loans and credit cards.

Commercial property
An area that is zoned for businesses.

Commingling

The mixing of money held in trust with other funds.

Commission

A negotiable percentage of the sales price of a home, paid to the agents of the
buyer and seller.

Commitment

A promise by a lender to make a loan with specific terms for a specified period.

Commitment fee
A fee charged by the lender to guarantee a specific set of loan terms to be honored
at some future date.

Common area

An area inside a housing development that is owned by all residents. C

Common law
A body of laws based on custom, usage, and rulings by courts in various jurisdictions.

Common-area assessments
Fees paid by the owners of a condominium project or planned-unit development to
maintain, repair, improve, or operate common areas.

Common-interest development
A project composed of individually owned units that share usage and financial responsibility
for common areas.

Community property

Property accumulated through the joint efforts of husband and wife. It is a classification
of property peculiar to certain states.

Community Reinvestment Act
A federal law that encourages financial institutions to loan money in the neighborhoods
where minority depositors live.

Commute

The distance and time it takes a person to reach his or her workplace.

Comparables
Properties used as comparisons to determine the value of a certain property.

Comparative market analysis
An estimate of the value of a property based on an analysis of sales of properties
with similar characteristics.

Competent

A term for a buyer who is legally fit to enter into a sales contract.

Compound interest

The interest paid on the principal balance of a mortgage plus accrued interest.

Compressor

Motorized equipment in a refrigeration (or air conditioning) system that circulates
coolant through the system.

Concrete tilt-up

The process of pouring concrete into forms on the ground, allowing the forms to
harden, and then raising the material to a vertical position to form walls.



Condemnation

The process the government uses to take private property for public use without
the consent of the owner.

Condensate drain
A drain required by a dehumidifier, high-efficiency furnace, or similar appliance
to carry away condensation.

Condensate pump
A small pump used with high-efficiency furnaces or other appliances that create
significant condensation. It activates when water collects to a certain level and
pumps it out to a drain.

Condenser

Part of a refrigeration (or air conditioning) system that pressurizes refrigerant
to cool it by changing it from a vapor to a liquid. On a refrigerator, the condenser
is the coil on the outside of the unit; an air conditioner’s condenser is usually
outside the house.

Conditional commitment
A promise by a lender to make a loan if the borrower meets certain conditions.

Conditional sale
A contract for the sale of property stating that the title will remain invested
in the seller until the conditions of the contract have been fulfilled.

Condominium

Individual units in a building or development in which owners hold title to the
interior space while common areas such as parking lots, community rooms, and recreational
areas are owned by all the residents.

Condominium conversion
The change in title from a single owner of an entire project or building to multiple
owners of individual units.

Conduit

A metal pipe that houses electrical wiring.

Conforming loan
Any loan that meets the qualifications to be purchased by Fannie Mae or Freddie
Mac. The current conforming loan limit is $252,700.

Consent judgment

A binding written agreement between two parties to have a judgment entered and recorded.

Conservator

A court-appointed guardian.

Consideration

Anything that is legal, has value, and induces a person to enter into a contract.

Construction budget
Funding arranged by an owner for the construction of a project.

Construction documents
Drawings and specifications from an architect that provide detailed requirements
for the construction of a project.

Construction loan
A short-term loan for home or building construction. The lender disburses the funds
in stages.

Construction-to-permanent loan
A construction loan that is converted to a longer-term traditional mortgage after
construction has been completed.

Consumer Credit Counseling Service (CCCS)
A nationwide, nonprofit organization that helps consumers get out of debt and improve
their credit profile. National headquarters: 8701 Georgia Avenue., Suite 507, Silver
Springs, MD 20910. Phone: (800) 388-2227.

Contemporary style
A design that features streamlined shapes, large unadorned windows, and industrial
materials.

Contiguous lots
Pieces of property that are adjoined. contingency
A condition specified in a purchase contract, such as a satisfactory home inspection.

Contingency listing
A property listing with a special condition attached.

Contingent fee
A fee that must be paid if a certain event occurs.

Continuity tester
A simple, battery-powered tool that indicates whether an electrical circuit is complete
or incomplete by lighting or buzzing when you touch its two probes to the wires.

Contract
An agreement between two or more parties that creates or modifies an existing relationship.

Contract for deed
A contract in which the seller agrees to defer all or part of the purchase price
for a specified period of time.

Contract to purchase
A contract the buyer initiates which details the purchase price and conditions of
the transaction and is accepted by the seller. Also known as an agreement of sale.

Contractor

The individual who contracts for the construction of a home or project.

Contractual lien
A voluntary obligation such as a mortgage or trust deed.

Controlled growth
Any restrictions imposed on the amount or type of new development in an area.

Conventional loan
A long-term loan a lender makes for the purchase of a home

Conversion

The exchange of personal or real property of one character for another.

Convertible adjustable-rate mortgage
A mortgage which starts as an adjustable rate loan, but allows the borrower to convert
the loan to a fixed-rate mortgage during a specified period of time.

Conveyance

The transfer of title of property.

Conveyance tax
A tax imposed on the transfer of real property.

Cooperating broker
A real estate broker who finds a buyer for a property listed by another broker.
Cooperative corporation

A business trust that holds the title to a cooperative residential building and
grants occupancy rights to shareholders in the corporation.

Cooperative mortgage
Any loan related to a cooperative residential project.

Cooperative project
A project in which a corporation holds title and sells shares representing individual
units to buyers who then receive a proprietary lease as their title.

Corbel

A short block or bracket projecting from a wall and providing support for a horizontal
member.

Corner bead

A reinforcement placed in the corner where two walls intersect.

Corner influence

The effect on the value of a property because it is situated on a corner or near
a corner.

Cornice

A horizontal molding that projects from the top of a structure or wall.

Corporate relocation

An arrangement by which employers pay to transfer and move employees.

Corrective work
Necessary or desired repairs to remedy problems uncovered by a home or specialized
inspection.

Cost-plus contract

A construction contract that determines the builder’s profit based on a percentage
of the cost of labor and materials.

Cottage

A small, one-story house.

Counterbore

A hole drilled to recess the head of a screw.

Counteroffer
A response to an offer.

Courier fee

Fee charged at closing to cover the delivery of documents between lenders, escrow
companies, and other parties during a real estate transaction.

Covenant

A legal assurance or promise in a deed or other document, or implied by law.

Covenants, conditions, and restrictions (CC&Rs)
Rules and regulations for a development, such as those pertaining to acceptable
landscaping or improvements that can be made to individual units.

Craftsman style

An architectural style that evolved as part of the Arts and Crafts movement near
the turn of the century.

Crawl space

The space between the ground and the first floor of a home, usually no higher than
four feet.

Creative financing

Innovative home-financing arrangements that help sell a property.

Credit

The money a lender extends to a buyer for a commitment to repay the loan within
a certain time frame.

Credit history

A record of an individual’s current and past debt payments.

Credit life insurance
Insurance that pays off a mortgage in the event of the borrower’s death.

Credit rating

The degree of creditworthiness assigned to a person based on credit history and
financial status.

Credit report

A detailed account of an individual’s credit, employment, and residence history.
A lender uses this report to determine a loan applicant’s creditworthiness.The three
largest credit bureaus are Trans Union Corp., Equifax, and Experian (formerly TRW).

Credit repository
Large companies that gather financial and credit information from various sources
about individuals who have applied for credit.

Credit union

A nonprofit cooperative organization that provides banking and financial services
such as mortgages, home improvement loans, and home equity loans to its members.

Creditor

An individual or institution to whom a debt is owed.

CREIA

Abbreviation of California Real Estate Inspection Association, a trade organization
of home inspectors whose members must meet the group’s education and performance
requirements. Call (800) 388-8443 for list of CREIA-certified inspectors in your
area.

Cross-bridging

The strengthening of a structure by bracing cross members between beams.

Crown

A piece of molding around the top of a room

CU/AL

A designation on standard light switches and outlets that intended to be installed
with copper wiring.

Cul-de-sac

A street or alley that is closed at one end.

Cupola

A dome-like structure that sits on top of a roof.

Curable defect

A deficiency in a property that is easy or inexpensive to fix, such as chipping
paint.

Curb appeal

The first impression of a house as seen from the street.

Current value

The value of a home at the time of appraisal.



Curtain wall

An exterior wall that encloses a yard or other area but does not provide any structural
support to a home.

Custom builder

A builder who constructs a home or building based on plans created by the owner.

Custom home

A structure designed by an architect hired by the owner.

Cylindrical lockset
The familiar type of doorknob mechanism found on most interior (and some exterior)
doors, designed to fit into a large hole bored through the face of a door’s stile.

D Back To Top

Damper

A movable plate in a fireplace that allows smoke and fumes to travel up the chimney’s
flue.

Days on the market
The period of time a property is listed for sale prior to being sold or taken off
the market.

Deadbolt lock

A lock that requires a key to open from the outside and a turn button from the inside.

Debt

Any amount one person owes to another.

Debt assumption letter
The formal transfer of debt from one party to another, backed by a contract of assumption
signed by both parties. Also known as assignment of debt.

Deck
A roofless, floored area that adjoins a house.

Decorating allowance
An amount of money supplied by the seller and held in escrow for the buyer, to be
applied toward negotiated decorating changes.

Deed

The legal document that transfers ownership of a piece of property.

Deed of trust

A document that gives a lender the right to foreclose on a piece of property if
the borrower defaults on the loan.

Deep-seal floor drain
A drain used to dispose of water from the basement floor to a sewer line.

Default

The failure to fulfill a duty or discharge an obligation, such as making monthly
mortgage payments.

Deferred maintenance

Any repair or maintenance of a piece of property that has been postponed, resulting
in a decline in property value.

Delinquent mortgage
A mortgage that involves a borrower who is behind on payments. If the borrower cannot
bring the payments up to date within a specified number of days, the lender may
begin foreclosure proceedings.

Density test

An analysis of soil to determine if the surface can support the foundation of a
house.

Dentils

Small rectangular blocks that project from a building, usually under cornices or
along rooflines.

Deposit

Money given by the buyer with an offer to purchase property. Also called earnest
money.

Depreciation

The decline in value of a piece of property.

Design/build
A project in which the owner contracts directly with an individual or company to
perform design and construction.

Designer

Unlike architects, designers are limited to drawing blueprints.

Digital images

Images that are incorporated into house listings to give potential buyers a view
of the property.

Dimension plans

Plans which show the layout of a house but are less detailed than full blueprints.

Dimensional lumber
Single pieces of lumber sawed to standard dimensions.

Dimmer

A light switch that controls the brightness of one or more lights. Most allow a
full range of control from full off to full on.

Dimple
To create a slight dent with a light blow of a hammer when driving a nail. This
technique is typically used when hanging drywall to provide a tiny pocket for receiving
drywall compound.

Dip tube

An extension of the water supply line into a storage tank. This delivers water close
to the heat source on the bottom of a water heater.

Disability insurance
An insurance policy that covers an individual’s ability to produce income.

Disclosure

A statement to a potential buyer listing information relevant to a piece of property,
such as the presence of radon or lead paint.

Discount points

Fees that a borrower pays when the lender makes the loan, to get a lower interest
rate. Lenders offer various rate/point combinations, and borrowers pay points to
adjust the interest rate to the market rate. One point equals one percent of the
loan amount.

Distressed property
Property that is in poor physical or financial condition.

Document needs list
A list of documents a lender requires from a potential borrower submitting a loan
application. The required documents range from paycheck stubs to credit card statements.

Documentation preparation
A fee charged by the settlement agent (escrow company or attorney) to ready the
necessary paperwork for closing.

Domed ceiling

A hemispherical ceiling that projects upward without support.

Domicile

A person’s primary or permanent home.

Dormer

A window set upright in a sloping roof.

Double-hung window
A window that consists of two sashes that slide up and down.

Dovetail joints
Joints that lock two pieces of wood together with meshed teeth.

Dowel

A length of wood that is round in profile and made of hardwood (round lengths of
softwood are called rounds).

Dowel plug

A short piece of a wooden dowel typically fitted into a counterbored hole to hide
the head of a screw.

Down payment

The difference between purchase price and the portion of the purchase price financed
by a lender. Most lenders require that the down payment come from the buyer’s own
funds, but may also allow gifts from relatives.

Downspout

A vertical gutter that empties water from the roof to the ground.

Drain auger

Also called a snake. A long, coiled-wire tool that you can unwind and push into
a drain line to free a clog.

Drain flange

The round metal trim that fits into the hole at the bottom of a sink or bathtub.
The stopper or pop-up fits into this flange to retain water in the sink or tub.

Drain valve

A valve used to drain a water storage tank in order to perform maintenance or replacement.

Drainage

A system of gutters and drainpipes that carry water away from the foundation of
a house.

Drainpipe

Part of a home’s plumbing system that carries waste to the sewer or septic system.
Most residential drainpipes are from 1½ to 4 inches in diameter.

Draw

A payment made to subcontractors or suppliers from a construction loan.

Drip caps

Angled strips of metal flashing that are designed to protect the eaves from water
damage. With an L-shaped profile, they tuck under the first course of shingles and
extend down over the fascia.

Drip loop
A loop in the service conductor that minimizes the chance of water penetration.

Dropped ceiling

A flat ceiling built lower than the original ceiling.

Dry rot

A fungal decay that causes wood to become brittle and crumble.

Drywall

A construction material composed of gypsum or plaster wrapped in paper and produced
in large sheets that can be nailed to wall studs.

Dual agency

A relationship in which a real estate agent or broker represents both parties in
a transaction.

Dual agent

An agent who represents both the buyer and the seller in a transaction. Some states
require strict disclosure of this arrangement to consumers.

Duct

A rigid metal or flexible insulated tube, designed to deliver air to and from a
furnace or other air-handling unit.

Duct

Any kind of pipe or channel that carries water, wiring, or conditioned air through
a house.

Ductwork

A system of large tubes, pipes, or channels (ducts) designed to deliver air to and
from a furnace or other air-handling unit.

Due-on-sale clause
Standard language in a mortgage which states that the loan must be paid when a house
is sold.

Duplex

A structure that consists of two separate family units.

Duplex receptacle

An electrical outlet that accepts two lighting or appliance plugs.

Dutch colonial style
A design that features a barn-like gambrel roof, a ground-level front porch, and
dormers.

E Back To Top

Early occupancy

The condition in which buyers can occupy the property before the sale is completed.

Earnest money

Money a buyer gives with an offer to purchase a property. Also called a deposit.

Earthquake insurance
A policy that provides coverage against damage to a home from an earthquake.

Easement

A right given to a third party to use a portion of the property for certain purposes,
such as power lines or water mains.

Eaves

The projecting overhang at the lower edge of a roof

Effective age
The age of a structure estimated by its condition rather than its actual age.

Effective gross income
Additional income that a lender considers when assessing the loan application of
a potential borrower.

Efflorescence

White, powdery substance on concrete, stucco, or other masonry caused by water-soluble
salts leaching to the surface.

Electric service panel
A panel that transfers power from the utility line into a house to be distributed
through fuses or circuit breakers.

Electronic transfer
The process of having a mortgage payment automatically deducted from a borrower’s
checking or savings account. Many lenders offer this service.

Elevations

The exterior view of a home design that shows the position of the house relative
to the grade of the land.

Ell
An extension or wing of a house that is at right angles to the main structure.

Eminent domain

The government’s right to condemn private land for public use, such as the routing
of a public highway.

Employer-assisted housing
Programs which help employees purchase homes through special plans developed with
lenders.

Empty nesters

Potential buyers who have raised their families and want to move into a smaller
home.

Ecroachment

Fences or other structures that extend into the property of another owner.

Ecumbrance

A claim or lien on a property which complicates the title process.

Ecumbrance
Any right or interest in property interfering with its use or transfer.

Ed loan

The conversion from a construction loan to permanent financing a condominium buyer
secures after all units in a project have been completed.

Edorser

A person who signs over ownership of property to another party.

English Tudor style
An architectural design that features stone or brick exterior walls and exposed
beams.

Evironmental impact statement
A government-mandated evaluation of all aspects and effects a development will have
on the environment of a proposed site.

Evironmentally friendly home construction
A method of construction that utilizes recycled materials.

Equal Credit Opportunity Act (ECOA)
Federal law that prohibits a lender or other creditor from refusing to grant credit
based on the applicant’s sex, marital status, race, religion, national origin, or
age, or because the applicant receives public assistance.

Eualization

A mass appraisal or reappraisal of all property within a jurisdiction for the purpose
of equalizing values to assure that each taxpayer is bearing a fair share of the
tax load.

Elufax

Equifax Credit Information Services, Inc., is one of the “Big Three” credit-reporting
bureaus that operate nationwide. Address: P.O. Box 740249, Atlanta, GA 30374. URL:
http://www.equifax.com. Phone: (800) 685-1111.

Equity

A determination of the value of a property after existing liens are deducted.

Errors and omissions insurance
A policy that pays for mistakes made by a builder or architect.

Escheat

A situation in which the ownership of property reverts to the state when the owner
dies without leaving a will.

Escrow
A neutral third party holds documents and money for a real estate transaction and
ensures that all conditions of a sale are met. Also refers to a special account
that a lender uses to hold a borrower’s monthly payments on property taxes and insurance.

Escrow account

An account that a lender or mortgage servicer establishes to hold funds for the
payment of expenses such as homeowners insurance and property taxes. Also known
as an impound account.

Escrow agent

A neutral third party who ensures that all conditions of a real estate transaction
are met.

Escrow analysis

A lender’s periodic examination of an escrow account to determine if the lender
is withholding enough funds from a borrower’s monthly mortgage payment to pay for
expenses such as property taxes and insurance.

Escrow closing

Escrow closes when all conditions of a real estate transaction are met and the title
of the property is transferred to the buyer.

Escrow company

A firm that acts as a neutral third party to ensure that all conditions established
by the buyer, seller, and lender in a real estate transaction are met. E

Escrow payment
Funds that a mortgage servicer withdraws from a borrower’s escrow account to pay
property taxes and insurance.

Estate

The total assets of a person, including real property, at the time of death.

Estimated closing costs
An estimate of expenses incidental to the sale of real estate, including loan, title,
and appraisal fees. These costs are in addition to the price of the property, and
are prepaid at closing. Some are one-time expenses and some are recurring.

Estimated hazard insurance
An estimate of hazard insurance, also known as homeowner’s insurance or fire insurance,
to cover physical risks such as fire and wind damage. Lenders usually require coverage
at least equal to the replacement value of the home.

Estimated property taxes
An estimate of property taxes to be paid semiannually, or monthly if the lender
requires. The amount is based on local tax rates and assessed property value, which
is based on the most recent sale price plus assessment updates (subject to local
policies).

Estimated taxes and insurance
A calculation of monthly estimated taxes and insurance, used by a lender to evaluate
a borrower’s effective monthly housing expense.

Estoppel

Agency situation in which one party incorrectly states that another person is the
agent, and a third person relies on that representation.

European style

A cabinetry term referring to a style of cabinet without a face frame. Also known
as box cabinets.

Evaporator

A system of coils in a refrigeration (or air conditioning) system that, when filled
with cold refrigerant, cools the air around it. On a refrigerator, the evaporator
is the coil inside the unit; an air conditioner’s evaporator is inside the plenum
on the furnace or air-handler.

Eviction

A legal procedure to remove a tenant for reasons including failure to pay rent.

Examination of title
An inspection by a title company of public records and other documents to determine
the chain of ownership of a property.

Excavation

The process of clearing trees, removing topsoil and grading land before a foundation
is laid.

Exceptional depreciation
A term used to describe damages to a building that are not the result of normal
wear and tear.

Exclusive agency

An agreement to employ a particular broker. If another broker makes the sale, both
are entitled to commissions.

Exclusive buyer’s agent (EBA)
An agent, company, or franchise working exclusively for buyers as a fiduciary agent.
EBAs do not represent sellers or list properties.

Exclusive listing

A contract that gives an agent the exclusive right to market a property for a specific
period of time.

Executed contract

A contract in which all parties have fulfilled their promises.

Executor

A person appointed to carry out the instructions in a will. If no executor is named
in the will, a probate court will appoint an executor. E

Exemption
The removal of property from the tax base. An exemption may be partial or complete.

Exfiltration

Air leakage from a building’s interior to the environment.

Exhaust fan

Ventilating devices that remove water vapor, undesired smells, or smoke.