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

    Earnest Money:

    Synonym: deposit, binder, and good faith money
  • The deposit money accompanying a prospective buyer’s offer to purchase real estate. The earnest money is usually applied to the purchase price on the close of escrow. It serves as an indication of the prospective buyer's ability to obtain a mortgage loan, the sincerity of the offeror, and the amount of risk the prospective buyer is willing to balance against the risk the seller assumes in tying up the property by accepting the offer. Because it should represent something of value exposed to risk of loss, a personal check (especially if it is to be held uncashed), or promissory note customarily is accepted only in extraordinary situations. Cash, a cashier's check or a money order is usually used as earnest money. The earnest money is usually made forfeitable should the prospective buyer wrongfully fail to complete the purchase. The earnest money usually is held in trust pending the close of escrow. Buyers may use contingencies, to avoid loss of their earnest money in the event the transaction fails to close.
    • Easement:

    • A property right to use the real property of another. There are two categories of easement:
      1. easements appurtenant
      2. easements in gross.
      The former "belong" to dominant tenements (contiguous parcels of real property that are "benefitted by the easement") and "run with the land" (regardless of new owners who may acquire the benefitted property). On the other hand, easements in gross "belong" to a person when created, and do not run with the land because no land is "benefitted." For example, utility companies obtain easements to maintain their pipelines and wires. The benefit of the easement in gross resides upon a person (the entity) and therefore does not run with the land of any benefitted parcel. The parcel burdened by either an easement appurtenant or in gross remains burdened until the easement is extinguished.
      • Easement by Implication:

      • An easement established by court judgment based upon circumstances in which necessity and public policy commands such a result, as when a parcel otherwise would be landlocked.
        • Easement by Prescription:

        • An easement formally established by court judgment based upon a long-continued non-permissive use of a landowner’s property by a third person.
          • Economic Cloud on Title:

          • Any law that regulated the transfer of title to property. For example, home equity laws protect sellers of owner-occupied homes that are in default. There is a right of rescission for pre-foreclosure sales. The right of rescission by the seller creates an economic "cloud" that makes title insurance or marketable title difficult to obtain for such purchasers. The right of redemption following judicial foreclosure also is an example of an economic cloud on title.
            • Economic Rent:

            • In appraisal, the rent that theoretically could be produced by the subject property in the subject market. It does not mean the actual rent produced. Actual rent is called contract rent; it may be less than economic rent where, for example, management is ineffective. Appraisers are more concerned with what the rent ought to be rather than what it actually is under existing management.
              • Effective Gross Rent:

              • In appraisal, gross possible rent less an allowance for vacancy and bad debts.
                • Effective and Procuring Cause:

                • The framework used to determine if an agent is entitled to a commission under a non-exclusive listing. The agent is required to be the procuring cause of the completed transaction and the services he performed must have been the effective cause for bringing the transaction about. Conflicts arise when, for example, one agent "finds" a prospect yet another agent claims to have persuaded the prospect to make the deal.
                  • Emblement:

                  • A growing crop as distinguished from wild vegetation. A crop is produced through labor. Emblements are personal property, even prior to harvest, unless otherwise agreed. Therefore, they are subject to the rules of the Uniform Commercial Code as adopted by the respective states.
                    • Eminent Domain:

                    • The power of government to take private property for public use, welfare, and necessity. The acquisition is accomplished through condemnation, a judicial proceeding. The U.S. Constitution provides that no private property can be taken for a public purpose without the payment of "Just Compensation," that is, market value. However, government can regulate the use of private property without the payment of market value through the exercise of its police power. Zoning laws are an example of such police power. Furthermore, government can require developers to dedicate private property as a condition of the development. These "exactions" are not a "taking" within the Constitutional protection that requires payment of Just Compensation. In a nutshell, zoning that permits some use of real property is not a "taking". Zoning that prohibits all reasonable uses of property is a taking.
                      • Encroachment:

                      • The nonconsensual extension of an improvement, such as a building or fence, onto the land of another owner. It is a variety of trespass characterized by a permanent and physical act.
                        • Encumber:

                        • To commit an ownership interest in real property as security for the performance of some act, usually the payment of a mortgage loan.
                          • Encumbrance:

                          • A broad term describing virtually any recorded claim to the ownership or possession of a specific parcel of real property. Examples include a deed of trust, mechanic’s lien, judgment lien, and lis pendens. Covenants, conditions, and restrictions, as well as easements and encroachments are also often referred to as encumbrances.
                            • Equity:

                            • The difference between the market value of a property and the unpaid balance of all debts secured by liens on it.
                              • Equity Sharing:

                              • An arrangement in which a lender, in addition to interest, also receives a percentage of the appreciation in exchange for making the loan. That is, the lender shares in the long-term appreciation of the project. Equity sharing is also called ownership by co-purchasers. The investor puts up all or part of a downpayment, pays all or part of monthly carrying costs on a residence occupied by the co-purchaser, who is often a related first-time home buyer. The resident pays monthly rent to the equity investor based on the relative shares of ownership. The equity investor obtains the tax benefits as well as a share of the equity buildup and appreciation.
                                • Escalator Clause:

                                • A clause typically found in a long-term lease that increases the rent over time. The rent may escalate as property taxes and insurance increase. Even residential rent increases may be tied to price indexes, and thereby escalate. In adjustable-rate mortgages, the interest rate escalates. Leases with rent tied to expenses are called expense-participating leases.
                                  • Escrow:

                                  • A process whereby a disinterested third party, for example, a title or escrow company, accepts written instructions from parties to a transaction and delivers held funds and documents in strict compliance with these instructions on close of escrow.
                                    Escrow closes when the appropriate documents are recorded and delivered and the funds are disbursed. Before the close of escrow, the escrow or title company may perform such ancillary services as computation of prorations and preparation of deeds, notes, and the like. For example, in a typical real estate sales transaction, the seller expects to receive some cash, a note for the balance of the price secured by a deed of trust, as well as a deed of reconveyance and cancellation of the note to his lender (who is being paid off with the proceeds of this sale). The buyer expects to receive a grant deed to the property from seller and money from his lender with which to pay the price. The buyer's lender demands a note in the amount of the loan secured by a deed of trust with first priority. And so on. Clearly, if all interested persons sat around a table and attempted to consummate even such a simple sale, confusion might well be rampant, especially since each participant expects simultaneous giving and receiving. The escrow process makes it possible for all the transactions to be executed simultaneously.
                                    An escrow or title company has a duty to comply with its instructions. It has no duty to reveal to any participant that he or she is in the process of making a bad deal. The rationale is that the escrow company isn't paid for advice. However, most escrow and title company personnel have superior knowledge and expertise and become aware of peculiar transactions while in progress.
                                    Title companies frequently blend escrow service with the service of selling title insurance. The fee of one and the premium of the other also may become blended and constitute a major portion of the closing costs.
                                    • Escrow Agent:

                                    • A disinterested third party person or entity who acts as a special agent to perform specified services for principals to a transaction.
                                      • Ethics:

                                      • Principles of human interaction governed by the general agreement of a particular group of participants. What is ethical or "accepted" practice may differ from what is morally right or wrong. Ethics are moral principles that ought to bind the other guy, or so it may seem in the wheeler-dealer world of real estate. Unfortunately, many activities in real estate require minimal educational requirements, minimal capital requirements, and the potential of large profits. These features put a strain on ethical constraints. Professional organizations connected with real estate establish and enforce codes of ethics that are binding on their memberships.
                                        • Estimate of Value:

                                        • An estimate of value is less formal and precise than an appraisal. It usually is made by sales agents who preview a home that has been listed for sale by a brokerage firm. The EOVs of the visiting agents are shown to the homeowner who often then is persuaded to reduce his or her asking price.
                                          • Exclusive Agency Listing Agreement:

                                          • An employment contract between an owner of real estate and a real estate broker. The owner agrees to pay a specified commission to the agent, if he or any other agent finds a buyer. The agent agrees to use diligence in hunting for a buyer. If the owner personally locates a buyer, however, no commission need be paid.
                                            • Exclusive Listing Agreement:

                                              Synonym: Exclusive Right To Sell Listing Agreement
                                            • An employment contract between an owner of real estate and a real estate broker. The owner agrees to pay a specified commission to the agent if a buyer is located by anybody, even the owner.
                                              • Exculpatory Clause:

                                                Synonym: Disclaimer and Hold Harmless Clause
                                              • A contract provision intended to relieve one party from liability for certain specified acts or omissions. Exculpatory clauses can be enforceable although courts do not favor broad attempts to escape liability, especially by the party in a superior negotiating position. One party to a contract sometimes accepts exposure to liability by agreeing to hold the other party harmless, that is, free from any losses. Disclaimers and hold harmless clauses are an important topic at most negotiating tables.
                                                • Expense Participating Lease:

                                                • A commercial lease with an escalator clause that calls for increased rent to offset increases in taxes and/or operating expenses. In multi-tenant properties, this clause provides for a proportional allocation of the increased costs to all tenants. See also escalator clause. In all but net leases, commercial tenants pay pro-rata shares of operating expenses as well as common area maintenance expenses.

                                                • 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.