United Country Guardian Real Estate - Dillon, Beaverhead Madison County Southwest Montana Real Estate for sale

Dictionary / Glossary / Directory
of Real Estate Terminology
Definitions & Commonly Used
Real Estate Terms

Confused & overwhelmed by the overwhelming number of real estate terms and words? Every person working in real estate or planning to buy or sell real estate can benefit by using this dictionary directory glossary of real estate terminology, definitions and commonly used terms.

Real Estate Terminology Definitions & Commonly Used Terms
In Alphabetical Order

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

    Callable Loan:

  • Any real estate loan that can be accelerated at the option of the creditor at some time prior to the end of the original term. For example, a thirty-year loan may contain a call provision permitting the lender to accelerate the due date to fifteen years, at which time a balloon payment would be due. This provision is in contrast with other varieties of acceleration that are the result of some act, such as default, by the debtor.
    • Callable Loan:

    • Any real estate loan that can be accelerated at the option of the creditor at some time prior to the end of the original term. For example, a thirty-year loan may contain a call provision permitting the lender to accelerate the due date to fifteen years, at which time a balloon payment would be due. This provision is in contrast with other varieties of acceleration that are the result of some act, such as default, by the debtor.
      • Capital Gain:

      • The profit realized from the sale or exchange of a capital asset (i.e., generally a thing of value owned). In other words, the gain is the difference between (a) what was originally paid for the property (to buy or build) minus accumulated depreciation (in the case of investment property), plus accumulated costs of major improvements, and (b) its net sales price.
        • Capitalization:

        • The process of converting an income stream into a capital value figure. It is accomplished by dividing net income by a selected capitalization rate (the rate of interest considered a reasonable return on the investment). The higher the cap rate, the lower the value of the investment. For example, if the annual net operating income of an apartment complex is $300,000, and if the cap rate is ten percent, the market value is $3 million. If the cap rate is fifteen percent, the market value is $2 million. Appraisers use capitalization rates in estimating the value of income properties, as do investors when evaluating potential purchases.
          • Capitalization Rate:

            Synonym: cap rate
          • A measure of a property's overall return to an investor calculated by dividing the net operating income (the income after deducting for potential vacancies and collection losses as well as operating expenses) by the purchase price. The resulting figure is expressed as a percentage and provides a figure to compare similar properties situated in different locations.
            • Carryback Mortgage:

            • A mortgage that is accepted, or "carried back," by a seller of real estate as part of the purchase price. It is a soft dollar loan by the seller because he has not loaned cash to the buyer. Usually a seller will accept a carryback second deed of trust to reduce the amount of cash that would otherwise be required as a down payment. Sometimes the entire price, except for the down payment, is carried back as a first priority deed of trust. A carryback mortgage is an example of so-called creative financing. Like any other mortgage, the loan actually is composed of a promissory note signed by the buyer secured by a deed of trust on the subject real property.
              • Cash Sale:

              • When terms of sale are all cash to seller. The cash credited to seller is ordinarily used in large part to pay off all existing indebtedness. In a cash sale, the buyer ordinarily obtains new purchase money financing.
                • Casualty Insurance:

                  Synonym: Hazard Insurance
                • Insurance against loss from casualty, such as fire, lightening, or explosion. Real estate lenders require borrowers to carry casualty insurance to protect the collateral for the loans. Examples of perils, or sources of damage, that are covered by casualty insurance are fire, theft, smoke, storm and vandalism. Coverage is not identical in all policies. All-risk policies cover more than others, but none cover flood, earthquake, or nuclear accident damage without a special endorsement to the policy.
                  • Caveat Emptor:

                  • Let the buyer beware. An outdated concept in today's real estate dealings, where sellers have specific responsibilities in their dealings with buyers, such as the statutory duty to disclose a wide variety of pertinent information.
                    • Chain of Title:

                    • The chronological history of title to a parcel of real estate as revealed by examination of the official records of the county. The relevant portions of the chain of title will be referred to in an abstract of title prepared by an attorney or title company.
                      • Close ( Closing ):

                        Synonym: Close of Escrow, (COE), Settlement, and Passing Complete.
                      • Close often refers to close of escrow, but it also may mean the completion of a pending series of negotiations or transactions.
                        • Closed End Mortgage:

                        • A mortgage or deed of trust that secures only the original amount advanced, and specifically does not secure any further advances on the loan.
                          • Close of Escrow ( COE ):

                          • The final settlement between a buyer and seller of real estate. The title passes to the buyer on recordation of the deed, which is a part of closing. Closing is the execution of the sales agreement. Close of escrow also occurs in a loan escrow when funds are disbursed and the financing documents are recorded.
                            • Closing Costs:

                            • The fees and costs that must be paid by the parties to an escrow prior to close. In typical real estate sale, closing costs include recording fees, loan origination fees, credit report changes, title insurance, taxes, etc. The Real Estate Settlement Procedures Act ( RESPA ) requires that information regarding closing costs by provided to the parties to the escrow before they become legally obligated consumer transactions.
                              • Closing Statement:

                              • A financial statement (document) given to & acknowledged by the buyer and the seller at close of escrow. It accounts for economic values but does not reveal the actual receipt or disbursement of funds.
                                • Cloud on Title:

                                • Any document of record that shows another person's potential claim to some interest in the owner's property. Unless otherwise agreed, the seller of real property is obligated to deliver a marketable title to the buyer. The preliminary title report may turn up documents that constitute a cloud on the owner's title. The owner then has the obligations to clear the cloud on the title, which is typically done by obtaining a quitclaim deed from the person whose claim of interest appears on the record. Prospective sellers are well advised to investigate their title before committing to a sale.
                                  • Collateral:

                                  • Property pledged as security for a debt. In real estate loans, the real estate is collateral, that is, the real estate is pledged as security for repayment of the debt. The document that establishes such a pledge is the deed of trust, or mortgage.
                                    • Commission:

                                    • A form of compensation for performing services. In real estate practice it customarily represents a percentage of the selling price of real estate, or a percentage of the rental income in the case of a lease. The rate of commission is negotiable and is customarily paid on close of escrow.
                                      • Compliance Agreement:

                                      • An agreement by a borrower of a home mortgage to sign whatever is necessary in the future to correct clerical errors in the loan documentation that otherwise might impede the sale of the mortgage in the secondary mortgage market.
                                        • Concurrent Escrow Instructions:

                                        • Instructions by all principals to an escrow authorizing the release or return of funds on deposit. When a real estate sale “falls through the cracks” a question may arise as to which principal (buyer, seller, or even agent) is entitled to deposits held by the escrow. Most escrow officers will not release the funds without concurrent instructions to do so. If such instructions are not forthcoming, the escrow has the option to interplead the parties and deposit the monies into court.
                                          • Condemnation:

                                          • The exercise of the power of eminent domain; that is, the taking of personal or real property for a public purpose. Payment of "Just Compensation" is required by the U.S. Constitution. Condemnation is a judicial process; and the owner whose real estate is taken has the right to have market value set by a jury. Condemnation is not the process of condemning unsafe properties. See also special benefits; severance damage; partial taking; and inverse condemnation.
                                            • Conforming Mortgage:

                                            • A mortgage loan that conforms with standards published by agencies in the secondary mortgage market. A conforming loan is readily marketable on the secondary mortgage market.
                                              • Constructive Knowledge:

                                              • Information one is charged by law with knowing, whether or not one actually knows it. For example, recordation of a document affecting a specific parcel of real property gives constructive notice to the world of its contents. No one can legally assert ignorance of the contents of that document. Actual knowledge, on the other hand, is information actually known by a person.
                                                • Contingency:

                                                  Synonym: contingency clause, escape clause, subject-to clause,
                                                • Expressions that describe conditions obligation to purchase real property. They typically are part of the buyer’s offer. Subject to clauses that are too broad and afford too many escape routes to the buyer amount to a disguised option, and permit an unscrupulous buyer to tie up a seller’s property for extended periods without cost or penalty to the buyer.
                                                  • Contingency Period:

                                                  • The period of time, detailed in a purchase agreement, during which the buyer obtains financing, inspects and approves the premises, or fulfills other agreed upon contingencies.
                                                    • Contingent Liability:

                                                    • An obligation that occurs after a contingency. For example, a buyer may assume a mortgage, but the seller may not be able to obtain a release from liability from the lender. If the new buyer defaults, the lender will seek repayment from the seller, who was the original borrower. The seller in such a transaction retains a contingent liability following the sale.
                                                      • Contract:

                                                      • An oral or written agreement between two or more parties that is enforceable in court. For example, an oral finder’s fee agreement is enforceable, but an agreement to sell real property must be in writing to be enforceable.
                                                        • Contract for Deed:

                                                          Synonym: Land Contract, and Installment Land Contract
                                                        • A sales contract under which the seller retains ownership of the property for a number of years during which time the buyer makes scheduled payments. Buyer has a cloud placed on the title of the land via a "Notice of Purchaser's Interest" or similar document - which will prevent the Seller from conveying the property to any other person. The Deed and other transfer documents are held by a disinterested third party, insuring that upon full payment of the contract - transfer of ownership is completed.
                                                          Sellers sometimes believe such a method will result in a simplified foreclosure should the buyer default in the monthly payments. Buyers often prefer this method to avoid having to qualify for credit from a lending institution, and perhaps even to avoid making a down payment.
                                                          • Contract for Sale:

                                                            Synonym: Purchase Contract, Agreement of Sale, Deposit Receipt, "Offer"
                                                          • A contract between a buyer and seller of real estate that provides for close of escrow and conveyance of title within a period of time. The contract contains all the essential terms of the purachasing & selling parties.
                                                            • Corporate By-Laws:

                                                            • The administrative guidelines for running a corporation. They specify corporate officers and their duties, voting requirements, the place of business, and other fundamental business matters. Homeowners’ associations are governed by by-laws, as well as their articles of incorporation.
                                                              • Corporation:

                                                              • The administrative guidelines for running a corporation. They specify corporate officers and their duties, voting requirements, the place of business, and other fundamental business matters. Homeowners’ associations are governed by by-laws, as well as their articles of incorporation.
                                                                • Cost Approach:

                                                                • In appraisal, one way to determine an estimate of the market value of improved property. The market data approach is used to determine the market value of the land. The cost of reproducing the improvements is then determined by referring to prices existing at the valuation date. This cost is then reduced by accrued depreciation to take into consideration the age of the property. The adjusted cost of reproduction is then added to the market value of the land to arrive at the estimated market value.
                                                                  • Covenant Not To Compete:

                                                                  • A contractual promise not to compete with another in the performance of some business activity withing a specified area for a specified time. Sometimes buyers demand such clauses primarily to create tax deductions, and reduce the threat of competition, when a part of the purchase price is allocated to the value of the promise.
                                                                    • Covenants Conditions and Restrictions CC&Rs:

                                                                    • The limitations on the future use of real estate ordinarily established by a subdivider in order to guarantee uniformity of size of homes, placement, densities, and other important factors that tend to affect the value of the homes. CC&Rs are delineated in a document that is recorded and becomes part of the official records of the county where the real estate is located. CC&Rs are said to "run with the land" because they bind future purchasers of the land.
                                                                      • Creative Financing:

                                                                      • Seller’s Financing, All-Inclusive Note and Deed of Trust, Wraparound Mortgage or other non-conventional methods of structuring a sale between seller and buyer. Creative Financing may include exhange of personal property or other real property as a portion of the purchase price or down payment. Other methods of Creative Financing may include deferred payment of additional down payment or additional principal payments scheduled in future increments.
                                                                        • Curable Depreciation:

                                                                        • Decline in value that can be corrected at a cost that is less than the value that will be added to an improvement on a property.
                                                                          • Cure a Default:

                                                                          • To bring current any past due payments of rent or of monthly payments on a home-purchase mortgage, or to correct any other default, such as by removing a dog from rented premises where they are prohibited.

                                                                          • Real Estate Terminology Definitions & Commonly Used Terms
                                                                            In Alphabetical Order

                                                                            A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z


                                                                            While great care has been undertaken to provide accurate explanations and definitions for real estate terms and words in our real estate terms dictionary glossary dirctory, no real estate vocabulary dictionary cannot be completely accurate in all jurisdictions. Any / all definitions are for general purposes only and should not be used for any legal purpose. By use of this dictionary glossary directory of real estate terms, you agree to hold United Country - Guardian Real Estate harmless for any responsibility for any liability, loss or risk that may be claimed or incurred as a consequence of using this information.