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Glossary of Real Estate Terms - San Diego, California

Real Estate Terms You Will Want To Know
The following terms and phrases are used in Real Estate transactions. A basic understanding of these will help make the process of buying or selling your home a bit easier.

Abstract of Judgment - This type of lien is issued pursuant to a court order for the payment of a debt.

Abstract of Title - A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record, which may affect the marketability of the title.

Adjustable Rate Mortgage (ARM) - A mortgage that has an interest rate that changes over time in line with movements in the index. ARMs are also referred to as AMLs (adjustable mortgage loans) or VRMs (variable rate mortgages).

Adjustment Period - The length of time between interest rate changes on an ARM. For example, a loan with an adjustment period of one year is called a one year ARM, which means that the interest rate can change once a year.

Adverse Possession - A method of acquiring property based on open and notorious possession, under a claim of right, color of title, continuous use for five years, and the payment of taxes. A method of acquiring property through continuous use of that property while paying taxes on it.

Agency Relationship - A special relationship of trust by which one person (agent) is authorized to conduct business, sign papers, or otherwise act?on behalf of another person (principal). This relatoinship may be created by expressed agreement, ratification, or estoppel.

Agent - One who represents another called a principal and has authority to act for the principal in dealing with third parties. The relationship is referred to as an agency. Someone authorized to act for another (called the principal) in business matters.

Affidavit - A statement or declaration reduced to writing, sworn to or affirmed before some officer who has authority to administer an oath or affirmation, such as a notary public or a commanding officer in the service.

Alluvion (Alluvium) - Soil that has been deposited by accretion on the shore of a river or body of water and that increases the real property.

Amortization - 1. Repayment of a loan in equal installments of principal and interest, rather than interest only payments. 2 Recovery of cost or value over a period of time. The method or plan for the payment of a debt, bond, deed of trust, etc., by installments or sinking fund.

Amortized Loan - A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan.

Annual Percentage Rate (APR) - The total finance charges (interest, loan fees, points) expressed as a percentage of the loan amount. Defined as "The cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.."

Appreciation - An increase in the value of real estate.

Assumption of Mortgage - A buyer’s agreement to assume the liability under an existing note that is secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability.

Balloon Payment - A lump sum principal payment due at the end of some mortgages or other long term loans.

Binder - Sometimes known as an offer to purchase or an earnest money request. An agreement to consider a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser. Also, a notation of coverage on an insurance policy, issued by an agent, and given to the insured prior to issuing of the policy.

Cap - The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.

Caveat Emptor - Let the buyer beware. The buyer must examine the goods
or property and buy at his or her own risk, absent misrepresentation.

CC&RS — Covenenants, Conditions and Restrictions - A document that controls the use, requirements and restrictions of a property.

Certificate Of Reasonable Value (CRV) - A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.

Closing Statement - The financial disclosure statement that accounts for all of the funds received and accepted at the closing including deposits for taxes, hazard insurance, and mortgage insurance.

Cloud on Title - A claim, encumbrance or condition which impairs the title to real property until disproved or eliminated as for example through a quitclaim deed or a quiet title legal action.

Condominium - A form of real estate ownership. The owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors, and ceilings) serve as its boundaries.

Contingency - A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing.

Contract For Deed - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer.

Conventional Mortgage - A mortgage securing a loan made by investors without governmental underwriting, i.e., that which is not FHA insured or VA guaranteed.

Conversion Clause - A provision in some ARMs that enables you to change an ARM to a fixed rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed rate mortgages. This conversion feature may cost extra.

Cooperative - A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements.

Counter Offer - A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing form the original offer.

CRB—Certified Residential Broker - To be certified, a broker must be a member of the National Association of Realtors, have five years experience as a licensed broker and have completed five required Residential Division courses.



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San Diego, California - Last Revision - 04 December 2006 - jat