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      The Real-Estate Glossary

             This glossary is for informational purposes only and should not be used without
             legal counsel for the purpose of reading and understanding a contract.

                A    B    C    D-E    F-K    L-M    N-R    S-Z

             - D -

Deed
       A formal written instrument by which title to real property is transferred from one 
       owner to another. The deed should contain an accurate description of the property 
       being conveyed, should be signed and witnessed according to the laws of the State 
       where the property is located, and should be delivered to the purchaser at closing day. 
       There are two parties to a deed: the grantor and the grantee. (See also deed of trust, 
       general warranty deed, quitclaim deed, and special warranty deed.) 

Default 
       Failure to make mortgage payments as agreed to in a commitment based on the 
       terms and at the designated time set forth in the mortgage or deed of trust. It is 
       the mortgagor's responsibility to remember the due date and send the payment 
       prior to the due date, not after. Generally, thirty days after the due date if payment 
       is not received, the mortgage is in default. In the event of default, the mortgage 
       may give the lender the right to accelerate payments, take possession and receive 
       rents, and start foreclosure. Defaults may also come about by the failure to observe 
       other conditions in the mortgage or deed of trust. 

Depreciation 
       Decline in value of a house due to wear and tear, adverse changes in the neighborhood, 
       or any other reason. 

Documentary Stamps
       A State tax, in the forms of stamps, required on deeds and mortgages when 
       real estate title passes from one owner to another. The amount of stamps 
       required varies with each State. 

Down Payment 
       The amount of money to be paid by the purchaser to the seller upon the signing 
       of the agreement of sale. 

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            - E -

Earnest Money 
       The deposit money given to the seller or his agent by the potential buyer upon 
       the signing of the agreement of sale to show that he is serious about buying the 
       house. If the sale goes through, the earnest money is applied against the downpayment. 
       If the sale does not go through, the earnest money will be forfeited or lost unless the 
       binder or offer to purchase expressly provides that it is refundable. 

Easement Rights 
       A right- of- way granted to a person or company authorizing access to or over the 
       owner's land. An electric company obtaining a right- of- way across private property 
       is a common example. 

Economic Obsolescence 
       Loss of useful life and desirability of a property through economic forces, such 
       as change in zoning, changes in traffic flow, etc., rather than deterioration. 

Encroachment 
       An obstruction, building, or part of a building that intrudes beyond a legal boundary 
       onto neighboring private or public land, or a building extending beyond the building line. 

Encumbrance 
       A legal right or interest in land that affects a good or clear title, and diminishes the 
       land's value. It can take numerous forms, such as zoning ordinances, easement rights, 
       claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive 
       covenants. An encumbrance does not legally prevent transfer of the property to another. 
       A title search is all that is usually done to reveal the existence of such encumbrances, 
       and it is up to the buyer to determine whether he wants to purchase with the encumbrance, 
       or what can be done to remove it. 

Equity 
       The value of a homeowner's unencumbered interest in real estate. Equity is computed 
       by subtracting from the property's fair market value the total of the unpaid mortgage 
       balance and any outstanding liens or other debts against the property. A homeowner's 
       equity increases as he pays off his mortgage or as the property appreciates in value. 
       When the mortgage and all other debts against the property are paid in full the homeowner 
       has 100% equity in his property. 

Escalation Clause 
       A clause in a lease providing for an increased rent at a future time due to increased 
       costs to lessor, as in cost of living index, tax increases, etc. 

Escheat 
       The reverting of property to the state in the absence of heirs. 

Escrow 
       Funds paid by one party to another (the escrow agent) to hold until the occurrence of a 
       specified event, after which the funds are released to a designated individual. In FHA 
       mortgage transactions an escrow account usually refers to the funds a mortgagor pays 
       the lender at the time of the periodic mortgage payments. The money is held in a trust 
       fund, provided by the lender for the buyer. Such funds should be adequate to cover yearly 
       anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, 
       and special assessments. 

Estate 
       The ownership interest of a person in real property. Is also used to refer to a deceased 
       person's property. And often used to describe a large home with spacious grounds 

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