WHAT DOES THIS MEAN?
REAL ESTATE GLOSSARY
Abandon/abandonment:
Vacatingor giving up use of or rights in real property. This also refers to a tenantvacating the premises before a lease expires without consent of the landlord.
Adjustable Rate Mortgage Loans (ARM):
Loans with interest rates that are adjusted periodically based on changes in apre-selected index. As a result, the interest rate on your loan and the monthlypayment will rise and fall with increases and decreases in overall interestrates. These mortgage loans must specify how their interest rate changes,usually in terms of a relation to a national index such as (but not always)Treasury bill rates. If interest rates rise, your monthly payments will rise.An interest rate cap limits the amount by which the interest rate can change;look for this feature when you consider an ARM loan.
Annual Percentage Rate (APR):
How much a loan costs annually. The APR includes the interest rate, points,broker fees and certain other credit charges a borrower is required to pay.
Application Fee:
The fee that a mortgage lender charges to apply for a mortgage to coverprocessing costs.
Appraisal:
A professional analysis used to estimate the value of the property. Thisincludes examples of sales of similar properties.
Appreciation:
An increase in the market value of a home due to changing market conditionsand/or home improvements.
Asbestos:
A toxic material that was once used in housing insulation and fireproofing.Because some forms of asbestos have been linked to certain lung diseases, it isno longer used in new homes. However, some older homes may still have asbestosin these materials.
Assessed Value:
Typically the value placed on property for the purpose of taxation.
Assessor:
A public official who establishes the value of a property for taxationpurposes.
Assignment of Mortgage:
A document evidencing the transfer of ownership of a mortgage from one personto another.
Assumable Mortgage:
A mortgage loan that can be taken over (assumed) by the buyer when a home issold. An assumption of a mortgage is a transaction in which the buyer of realproperty takes over the seller's existing mortgage; the seller remains liableunless released by the lender from the obligation. If the mortgage contains adue-on-sale clause, the loan may not be assumed without the lender's consent.
Assumption:
A homebuyer's agreement to take on the primary responsibility for paying anexisting mortgage from a home seller. There is also typically an assumption feecharged to the buyer by the lender.
Automated Underwriting:
An automated process performed by a technology application that streamlines theprocessing of loan applications and provides a recommendation to the lender toapprove the loan or refer it for manual underwriting.
Balloon Mortgage:
A mortgage with monthly payments based on a 30-year amortization schedule, withthe unpaid balance due in a lump sum payment at the end of a specific period oftime (usually 5 or 7 years). The mortgage contains an option to "reset"the interest rate to the current market rate and to extend the due date ifcertain conditions are met. The final lump sum payment that is made at thematurity date of a balloon mortgage is known as a balloon payment.
Bridge Loan/Swing Loan:
A short-term loan secured by the borrower's current home (which is usually forsale) that allows the proceeds to be used for building or closing on a newhouse before the current home is sold.
Broker:
An individual or firm that acts as an agent between providers and users ofproducts or services, such as a mortgage broker or real estate broker.
Building Code:
Local regulations that set forth the standards and requirements for theconstruction, maintenance and occupancy of buildings. The codes are designed toprovide for the safety, health and welfare of the public.
Buydown:
An arrangement whereby the property developer or another third party providesan interest subsidy to reduce the borrower's monthly payments typically in theearly years of the loan. These funds are usually put into a buydown account sothat they can be applied as part of the monthly mortgage payment as eachpayment comes due during the period that an interest rate buydown plan is ineffect.
Cap:
For an adjustable-rate mortgage (ARM), a limitation on the amount the interestrate or mortgage payments may increase or decrease.
Cash-out Refinance:
A refinance transaction in which the borrower receives additional funds overand above the amount needed to repay the existing mortgage, closing costs,points, and any subordinate liens.
Chain of Title:
The history of all of the documents that have transferred title to a parcel ofreal property, starting with the earliest existing document and ending with themost recent.
Clear Title:
Ownership that is free of liens, defects, or other legal encumbrances.
Closing:
The process of completing a financial transaction. For mortgage loans, theprocess of signing mortgage documents, disbursing funds, and, if applicable,transferring ownership of the property. In some jurisdictions, closing isreferred to as "escrow," a process by which a buyer and sellerdeliver legal documents to a third party who completes the transaction inaccordance with their instructions.
Closing Costs:
The fees charged in connection with a mortgage loan transaction. Money paid bya buyer (and/or seller or other third party, if applicable) to effect theclosing of a mortgage loan, generally including, but not limited to a loanorigination fee, title examination and insurance, survey, attorney's fee, andprepaid items, such as escrow deposits for taxes and insurance. To read moreabout closing costs, see "closing costs" under the Buyer or Sellertabs on my website.
Closing Date:
The date on which the sale of a property is to be finalized and a loantransaction completed.
Closing Statement:
See"HUD-1 Settlement Statement"
Co-borrower:
Any borrower other than the first borrower whose name appears on theapplication and mortgage note, even when that person owns the property jointlywith the first borrower and shares liability for the note.
Collateral:
An asset that is pledged as security for a loan. The borrower risks losing theasset if the loan is not repaid according to the terms of the loan agreement.In the case of a mortgage, the collateral would be the house and property.
Commission:
The fee charged for services performed, usually based on a percentage of theprice of the items sold (such as the fee a real estate agent earns on the saleof a house).
Commitment Letter:
A binding offer from your lender stating the amount of the mortgage, the numberof years to repay the mortgage (the term), the interest rate, the loanorigination fee, the annual percentage rate and the monthly charges.
Common Areas:
Those portions of a building, land, or improvements and amenities owned by aplanned unit development (PUD) or condominium project's homeowners' association(or a cooperative project's cooperative corporation) that are used by all ofthe unit owners, who share in the common expenses of their operation andmaintenance. Common areas include swimming pools, tennis courts, and otherrecreational facilities, as well as common corridors of buildings, parkingareas, means of ingress and egress, etc.
Condominium:
A unit in a multiunit building. The owner of a condominium unit owns the unititself and has the right, along with other owners, to use the common areas butdoes not own the common elements such as the exterior walls, floors andceilings or the structural systems outside of the unit; these are owned by thecondominium association. There are usually condominium association fees forbuilding maintenance, property upkeep, taxes and insurance on the common areasand reserves for improvements.
Construction Loan:
A loan for financing the cost of construction or improvements to a property;the lender disburses payments to the builder at periodic intervals duringconstruction.
Contingency:
A condition that must be met before a contract is legally binding. For example,home purchasers often include a home inspection contingency; the sales contractis not binding unless and until the purchaser has the home inspected.
Conventional Mortgage:
A mortgage loan that is not insured or guaranteed by the federal government orone of its agencies, such as FHA, VA or RHS. Contrast with "GovernmentMortgage."
Conversion Option:
A provision of some adjustable-rate mortgage (ARM) loans that allows theborrower to change the ARM to a fixed-rate mortgage at specified times afterloan origination.
Convertible ARM:
An adjustable-rate mortgage (ARM) that allows the borrower to convert the loanto a fixed-rate mortgage under specified conditions.
Cooperative (Co-op):
A project in which a corporation holds title to a residential property andsells shares to individual buyers, who then receive a proprietary lease astheir title.
Counter-offer:
An offer made in response to a previous offer. For example, after the buyerpresents their first offer, the seller may make a counter-offer with a slightlyhigher sale price.
Debt-to-Income Ratio:
The percentage of gross monthly income that goes toward paying for your monthlyhousing expense, alimony, child support, car payments and other installmentdebts, and payments on revolving or open-ended accounts such as credit cards.
Deed:
The legal document transferring ownership or title to a property
Deed-in-Lieu ofForeclosure/Voluntary Conveyance:
The transfer of title from a borrower to the lender to satisfy the mortgagedebt and avoid foreclosure.
Deed of Trust:
A legal document in which the borrower transfers the title to a 3rd party(trustee) to hold as security for the lender. When the loan is paid in full thetrustee transfers title back to the borrower. If the borrower defaults on theloan the trustee will sell the property and pay the lender the mortgage debt.
Default:
Failure to fulfill a legal obligation. A default includes failure to pay on afinancial obligation, but may also be a failure to perform some action orservice that is non-monetary. For example, a tenant not properly maintainingthe property may be in default of the lease.
Delinquency:
Failure to make a payment when it is due. The condition of a loan when ascheduled payment has not been received by the due date, but generally used torefer to a loan for which payment is 30 or more days past due.
Depreciation:
A decline in the value of a house due to changing market conditions or lack ofupkeep on a home.
Discount Point:
A fee paid by the borrower at closing to reduce the interest rate. A pointequals 1 percent of the loan amount.
Discrimination (inrenting):
Denying a person housing, telling a person that housing is not available (whenthe housing is actually available at that time), providing housing underinferior terms, harassing a person in connection with housing accommodations,or providing segregated housing because of a person's race, color, religion,sex, sexual orientation, national origin, ancestry, source of income, age,disability, whether the person is married, or whether there are children underthe age of 18 in the person's household. Discrimination also can be refusal tomake reasonable accommodation for a person with a disability.
Down Payment:
A portion of the price of a home, usually between 3-20%, not borrowed and paidup front in cash.
Due-on-sale Clause:
A provision in a mortgage that allows the lender to demand repayment in full ofthe outstanding balance if the property securing the mortgage is sold.
Earnest Money Deposit:
The deposit to show that you're committed to buying the home. The deposit willnot be refunded to you after the seller accepts your offer, unless one of thesales contract contingencies is not fulfilled.
Easement:
A right to the use of, or access to, land owned by another.
Encroachment:
The intrusion onto another's property without right or permission.
Encumbrance:
Any claim on a property, such as a lien, mortgage or easement.
Equity:
The value in your home above the total amount of the liens against your home.If you owe $100,000 on your house but it is worth $130,000, you have $30,000 ofequity.
Escrow:
An item of value, money, or documents deposited with a third party to bedelivered upon the fulfillment of a condition. For example, the deposit by aborrower with the lender of funds to pay taxes and insurance premiums when theybecome due, or the deposit of funds or documents with an attorney or escrowagent to be disbursed upon the closing of a sale of real estate.
Escrow Account:
An account that a mortgage servicer establishes on behalf of a borrower to paytaxes, insurance premiums, or other charges when they are due. Sometimesreferred to as an "impound" or "reserve" account.
Escrow Analysis:
The accounting that a mortgage servicer performs to determine the appropriatebalances for the escrow account, compute the borrower's monthly escrowpayments, and determine whether any shortages, surpluses or deficiencies existin the account.
Eviction:
The legal act of removing someone from real property.
Fair Market Value:
The price at which property would be transferred between a willing buyer andwilling seller, each of whom has a reasonable knowledge of all pertinent factsand is not under any compulsion to buy or sell.
Fannie Mae:
A New York stock exchange company. It is a public company that operates under afederal charter and is the nation's largest source of financing for homemortgages. Fannie Mae does not lend money directly to consumers, but insteadworks to ensure that mortgage funds are available and affordable, by purchasingmortgage loans from institutions that lend directly to consumers. A FannieMae-Seller/Servicer is a lender that Fannie Mae has approved to sell loans toit and to service loans on Fannie Mae's behalf.
Federal HousingAdministration (FHA):
An agency within the U.S. Department of Housing and Urban Development (HUD)that insures mortgages and loans made by private lenders.
Fee Simple:
Absoluteownership of real property.
FHA-Insured Loan:
A loan that is insured by the Federal Housing Administration (FHA) of the U.S.Department of Housing and Urban Development (HUD).
First Mortgage:
A mortgage that is the primary lien against a property.
First Time Home Buyer:
A person with no ownership interest in a principal residence during thethree-year period preceding the purchase of the security property.
Five-Day Notice:
Anotice that is used when a tenant is behind on their rent. It is the first stepin the eviction process.
Fixed-PeriodAdjustable-Rate Mortgage:
An adjustable-rate mortgage (ARM) that offers a fixed rate for an initialperiod, typically three to ten years, and then adjusts every six months,annually, or at another specified period, for the remainder of the term.
Fixed-Rate Mortgage:
A mortgage with an interest rate that does not change during the entire term ofthe loan.
Flood Certification Fee:
A fee charged by independent mapping firms to identify properties located inareas designated as flood zones.
Flood Insurance:
Insurance that compensates for physical property damage resulting fromflooding. It is required for properties located in federally designated floodhazard zones.
Foreclosure:
A legal action that ends all ownership rights in a home when the homebuyerfails to make the mortgage payments or is otherwise in default under the termsof the mortgage.
Forfeiture:
The loss of money, property, rights, or privileges due to a breach of a legalobligation.
Fully Amortized Mortgage:
A mortgage in which the monthly payments are designed to retire the obligationat the end of the mortgage term.
Good-Faith Estimate:
A form required by the Real Estate Settlement and Procedures Act (RESPA) thatdiscloses an estimate of the amount or range of charges, for specificsettlement services the borrower is likely to incur in connection with themortgage transaction.
Government Mortgage:
A mortgage loan that is insured or guaranteed by a federal government entitysuch as the Federal Housing Administration (FHA) or guaranteed by the U. S.Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).
Government NationalMortgage Association (Ginnie Mae):
A government-owned corporation within the U.S. Department of Housing and UrbanDevelopment (HUD) that guarantees securities backed by mortgages that areinsured or guaranteed by other government agencies. Popularly known as GinnieMae.
Gross Monthly Income:
The income you earn in a month before taxes and other deductions. It may alsoinclude rental income, self-employed income, income from alimony, childsupport, public assistance payments, and retirement benefits.
Ground Rent:
Payment for the use of land when title to a property is held as a leaseholdestate (that is, the borrower does not actually own the property, but has along-term lease on it).
Growing-Equity Mortgage(GEM):
A fixed-rate mortgage in which the monthly payments increase according to an agreed-uponschedule, with the extra funds applied to reduce the loan balance and loanterm.
Guest:
Aperson who does not have the rights of a tenant, such as a person who stayingfor a short time in a hotel.
Habitable:
Arental unit that is fit for human beings to live in. A rental unit thatsubstantially complies with building and safety code standards that materiallyaffect tenants' health and safety is said to be "habitable."
Hazard Insurance:
Insurance coverage that compensates for physical damage to a property fromfire, wind, vandalism, or other covered hazards or natural disasters.
Home Equity ConversionMortgage (HECM):
A special type of mortgage-developed and insured by the Federal HousingAdministration (FHA) that enables older home owners to convert the equity theyhave in their homes into cash, using a variety of payment options to addresstheir specific financial needs. Sometimes called a reverse mortgage.
Home Equity Line of Credit:
A type of revolving loan, that enables a home owner to obtain multiple advancesof the loan proceeds at his or her own discretion, up to an amount thatrepresents a specified percentage of the borrower's equity in the property.
Home Inspection:
A professional inspection of a home to determine the condition of the property.The inspection should include an evaluation of the plumbing, heating andcooling systems, roof, wiring, foundation and pest infestation.
Homeowner's Insurance:
A policy that protects you and the lender from fire or flood, which damages thestructure of the house; a liability, such as an injury to a visitor to yourhome; or damage to your personal property, such as your furniture, clothes orappliances
Homeowner's Warranty (HOW):
Insurance offered by a seller that covers certain home repairs and fixtures fora specified period of time.
Homeowners' Association:
An organization of homeowners residing within a particular area whose principalpurpose is to ensure the provision and maintenance of community facilities andservices for the common benefit of the residents.
Housing Expense Ratio:
The percentage of your gross monthly income that goes toward paying for yourhousing expenses.
HUD:
Housingand Urban Development. A U.S. government agency established to implementfederal housing, community development programs and oversee the Federal HousingAdministration.
HUD-1 Settlement Statement:
A final listing of the costs of the mortgage transaction. It provides the salesprice and down payment, as well as the total settlement costs required from thebuyer and seller.
Implied warranty ofhabitability:
Requireslandlords to maintain their rental units in a condition fit for human beings tolive in. A rental unit must substantially comply with building and housing codestandards that materially affect tenants' health and safety.
Income Property:
Real estate developed or purchased to produce income, such as a rental unit.
Installment:
The regular periodic payment that a borrower agrees to make to a lender.
Installment Debt:
A loan that is repaid in accordance with a schedule of payments for a specifiedterm (such as an automobile loan).
Interest:
The cost you pay to borrow money. It is the payment you make to a lender forthe money it has loaned to you. Interest is usually expressed as a percentageof the amount borrowed.
Interest Accrual Rate:
The percentage rate at which interest accumulates or increases on a mortgageloan.
Interest Rate Cap:
For an adjustable-rate mortgage, a limitation on the amount the interest ratecan change per adjustment or over the lifetime of the loan, as stated in thenote.
Interest Rate Ceiling:
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specifiedin the mortgage note.
Interest Rate Floor:
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specifiedin the mortgage note.
Investment Property:
A property purchased to generate rental income, tax benefits, or profitableresale rather than to serve as the borrower's primary residence. Contrast with"second home."
Joint Tenancy:
Aform of ownership of property giving each person equal interest in theproperty, including rights of survivorship.
Judgment Lien:
A lien on the property of a debtor resulting from the decree of a court.
Jumbo Loan/Non-ConformingLoan:
A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae orFreddie Mac.
Junior Mortgage:
A loan that is subordinate to the primary loan or first-lien mortgage loan,such as a second or third mortgage.
Landlord:
Abusiness or person who owns a rental unit, and who rents or leases the rentalunit to another person, called a tenant.
Lease:
Arental agreement, usually in writing, that establishes all the terms of theagreement and that lasts for a predetermined length of time (for example, sixmonths or one year).
Lease-Purchase Option:
An option sometimes used by sellers to rent a property to a consumer, who hasthe option to buy the home within a specified period of time. Typically, partof each rental payment is put aside for the purpose of accumulating funds topay the down payment and closing costs.
Liability Insurance:
Insurance coverage that protects property owners against claims of negligence,personal injury or property damage to another party.
Lien:
A claim or charge on property for payment of a debt. With a mortgage, thelender has the right to take the title to your property if you don't make themortgage payments.
Lifetime Cap:
For an adjustable-rate mortgage (ARM), a limit on the amount that the interestrate or monthly payment can increase or decrease over the life of the loan.
Loan Origination:
The process by which a lender makes a loan which may include taking a loanapplication, processing and underwriting the application, and closing the loan.
Loan Origination Fees:
Fees paid to your mortgage lender for processing the mortgage application. Thisfee is usually in the form of points. One point equals 1% of the mortgageamount.
Loan-To-Value (LTV) Ratio:
The relationship between the loan amount and the value of the property (thelower of appraised value or sales price), expressed as a percentage of theproperty's value. For example, a $100,000 home with an $80,000 mortgage has anLTV of 80%.
Lock-In Rate:
A written agreement guaranteeing a specific mortgage interest rate for acertain amount of time.
Market Value:
The current value of your home based on what a purchaser would pay. Anappraisal is sometimes used to determine market value.
Maturity Date:
The date on which a mortgage loan is scheduled to be paid in full, as stated inthe note.
Modification/LoanModification:
Any change to the terms of a mortgage loan, including changes to the interestrate, loan balance, or loan term.
Mortgage:
A loan using your home as collateral. The term can also be used to describe thedocument you sign in order to grant the lender a lien on your home. It may alsobe used to indicate the amount of money you borrow, with interest, to purchaseyour house. The amount of your mortgage is usually the purchase price of thehome minus your down payment.
Mortgage Broker:
An individual or firm that brings borrowers and lenders together for thepurpose of loan origination. A mortgage broker typically takes loanapplications and may process loans, but generally does not use its own funds toclose the loan. Mortgage brokers often act as independent contractors and notas an agent of the borrower or lender.
Mortgage Insurance Premium(MIP):
The amount paid by a borrower for mortgage insurance, either to a governmentagency such as the Federal Housing Administration (FHA) or to a privatemortgage insurance (PMI) company.
Mortgage Lender:
The lender providing funds for a mortgage. Lenders also manage the credit andfinancial information review, the property and the loan application processthrough closing.
Mortgage Rate:
The cost or the interest rate you pay to borrow the money to buy your house.
Mortgagee:
The institution or individual to whom a mortgage is given; the lender.
Mortgagor:
The owner of real estate who pledges property as security for the repayment ofa debt; the borrower.
Multiple Listing Service(MLS):
An online system through which member real estate brokerage firms regularly andsystematically exchange information on listings of real estate properties andshare commissions with members who locate purchasers.
Negative Amortization:
An increase in the balance of a loan caused by adding unpaid interest to theloan balance; this occurs when the payment does not cover the interest due.
Note:
A written promise to pay a specified amount under the agreed upon conditions.
Note Rate:
The interest rate stated on a mortgage note, or other loan agreement.
Order of Possession:
Thisis given to the landlord once the eviction process is over. In Cook County,this must be placed with the Sheriff who will then evict the tenant.
Offer:
A formal bid from the homebuyer to the home seller to purchase a home. Theoffer should be in writing.
Original Principal Balance:
The total amount of principal owed on a mortgage before any payments are made.
Origination Fee:
A fee paid to a lender to cover the administrative costs of processing a loanapplication. The origination fee typically is stated in the form of points. Onepoint is 1% of the mortgage amount.
Owner Financing:
A transaction in which the property seller provides all or part of thefinancing for the buyer's purchase of the property.
Owner Occupied Property:
A property that serves as the borrower's primary residence.
Payment Cap:
For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit onthe amount that payments can increase or decrease during any one adjustmentperiod.
Personal Property:
Any property that is not real property. Example: A couch.
PITI:
An acronym for the four primary components of a monthly mortgage payment:principle, interest, taxes, and insurance (PITI).
PITI Reserves:
A cash amount that a borrower has available after making a down payment andpaying closing costs for the purchase of a home. The principal, interest,taxes, and insurance (PITI) reserves must equal the amount that the borrowerwould have to pay for PITI for a predefined number of months.
Planned Unit Development(PUD):
A real estate project in which individuals hold title to a residential lot andhome while the common facilities are owned and maintained by a homeowners' associationfor the benefit and use of the individual PUD unit owners.
Points:
1% of the amount of the mortgage loan. For example, if a loan is made for$100,000, one point equals $1000.
Pre-Approval:
A process by which a lender provides a prospective borrower with an indicationof how much money he or she will be eligible to borrow when applying for amortgage loan. This process typically includes a review of the applicant'scredit history and may involve the review and verification of income and assetsto close.
Pre-Approval Letter:
A letter from a mortgage lender indicating that you qualify for a mortgage of aspecific amount. It also shows a home seller that you're a serious buyer.
Pre-Qualification:
A preliminary assessment by a lender of the amount it will lend to a potentialhomebuyer. The process of determining how much money a prospective home buyermay be eligible to borrow before he or she applies for a loan.
Pre-Qualification Letter:
A letter from a mortgage lender that states that you're pre-qualified to buy ahome, but does not commit the lender to a particular mortgage amount.
Predatory Lending:
Abusive lending practices that include making mortgage loans to people who donot have the income to repay them or repeatedly refinancing loans, charginghigh points and fees each time and "packing" credit insurance onto aloan.
Prepayment Penalty:
A fee that a borrower may be required to pay to the lender, in the early yearsof a mortgage loan, for repaying the loan in full or prepaying a substantialamount to reduce the unpaid principle balance.
Principal:
The amount of money borrowed to buy your house or the amount of the loan thathas not yet been repaid to the lender. This does not include the interest youwill pay to borrow that money. The principal balance (sometimes called theoutstanding or unpaid principal balance) is the amount owed on the loan minusthe amount you've repaid.
Private Mortgage Insurance- "PMI":
Insurance for conventional mortgage loans that protects the lender from loss inthe event of default by the borrower. PMI is often needed when a borrower has adown payment less than 20% of the purchase price.
Promissory Note:
A written promise to repay a specified amount over a specified period of time.
Purchase and SaleAgreement:
A document that details the price and conditions for a transaction. Inconnection with the sale of a residential property, the agreement typicallywould include: information about the property to be sold, sale price, downpayment, earnest money deposit, financing, closing date, occupancy date, lengthof time the offer is valid, and any special contingencies.
Purchase Money Mortgage:
A mortgage loan that enables a borrower to acquire a property.
Radon:
A toxic gas found in the soil beneath a house that can contribute to cancer andother illnesses.
Rate Cap:
The limit on the amount an interest rate on an ARM can increase or decreaseduring an adjustment period.
Rate Lock:
An agreement in which a lender "locks in" or guarantees an interestrate for a specified period of time prior to closing.
Ratified Sales Contract:
A contract that shows both you and the seller of the house have agreed to youroffer. This offer may include sales contingencies, such as obtaining a mortgageof a certain type and rate, getting an acceptable inspection, making repairs,closing by a certain date, etc.
Real Estate SettlementProcedures Act (RESPA):
A federal law that requires lenders to provide home mortgage borrowers withinformation about transaction-related costs prior to settlement, as well asinformation during the life of the loan regarding servicing and escrowaccounts. RESPA also, prohibits kickbacks and unearned fees in the mortgageloan business.
Real Property:
Land and anything permanently affixed thereto - including buildings, fences,trees, and minerals.
Recorder:
The public official who keeps records of transactions that affect real propertyin the area.
Recording:
The filing of a lien or other legal documents in the appropriate public record.
Refinance:
Getting a new mortgage with all or some portion of the proceeds used to pay offthe original mortgage.
Rehabilitation Mortgage:
A mortgage loan made to cover the costs of repairing, improving, and sometimesacquiring an existing property.
Remaining Term:
The original number of payments due on the loan minus the number of paymentsthat have been applied.
Repair and deduct remedy:
Thetenant's remedy of deducting from future rent the amount necessary to repairdefects covered by the implied warranty of habitability. The amount deductedcannot be more than one month's rent.
Replacement Cost:
The cost to replace damaged personal property without a deduction fordepreciation.
Rescission:
The cancellation or annulment of a transaction or contract by operation of lawor by mutual consent. Borrowers may have a right to cancel certain mortgagerefinance transactions within three business days after closing, or for up tothree years in certain instances.
Retaliatory eviction oraction:
Anact by a landlord, such as raising a tenant's rent, seeking to evict a tenant,or otherwise punishing a tenant because the tenant has exercised their legalrights in some way.
Right of First Refusal:
A provision in an agreement that requires the owner of a property to giveanother party the first opportunity to purchase or lease the property before heor she offers it for sale or lease to others.
Sale-Leaseback:
A transaction in which the buyer leases the property back to the seller for aspecified period of time.
Second Mortgage:
A mortgage that has a lien position subordinate to the first mortgage.
Secondary Mortgage Market:
The market in which mortgage loan and mortgage-backed securities are bought andsold.
Secured Loan:
A loan that is backed by property such as a house or car.
Security:
The property that will be given or pledged as collateral for a loan.Securities: Financial forms that shows the holder owns a share or shares of acompany (stocks) or has loaned money to a company or government organization(bonds).
Security deposit:
Adeposit that the landlord requires the tenant to pay at the beginning of thetenancy. The landlord can then use the security deposit, to repair damage afterthe tenant moves out. Note: There are many rules regarding security deposits.Be sure to check your local ordinance. In Chicago, please read the ChicagoResidential Landlord Tenant Ordinance.
Seller Take-Back:
An agreement in which the seller of a property provides financing to the buyerfor the home purchase.
Servicer:
A firm that performs servicing functions, including collecting mortgagepayments, paying the borrower's taxes and insurance and generally managingborrower escrow accounts.
Settlement:
The process of completing a loan transaction at which time the mortgagedocuments are signed and then recorded, funds are disbursed, and the propertyis transferred to the buyer (if applicable).
Settlement Statement:
A document that lists all closing costs on a real estate purchase or refinancetransaction.
Soft Second Loan:
A second mortgage whose payment is forgiven or is deferred until resale of theproperty.
Sublease:
Aseparate rental agreement between the original tenant and a new tenant to whomthe original tenant rents all or part of the rental unit. The new tenant iscalled a "subtenant." The agreement between the original tenant andthe landlord remains in force, and the original tenant continues to beresponsible for paying the rent to the landlord and for other tenantobligations.
Subordinate Financing:
Any mortgage or other lien with lower priority than the first mortgage.
Survey:
A precise measurement of a property by a licensed surveyor, showing legalboundaries of a property and the dimensions and location of improvements.
Tenancy:
Thetenant's exclusive right, created by a rental agreement between the landlordand the tenant, to use and possess the landlord's rental unit.
Tenant:
Aperson who rents or leases a rental unit from a landlord. The tenant obtainsthe right to the exclusive use and possession of the rental unit during thelease or rental period.
Third-Party Origination:
A process by which a lender uses another party to completely or partiallyoriginate, process, underwrite, close, fund, or package a mortgage loan.
Title:
The right to, and the ownership of, property. A title or deed is sometimes usedas proof of ownership of land.
Title Insurance:
Insurance that protects lenders and homeowners against legal problems with thetitle.
Title Search:
A check of the public records to ensure that the seller is the legal owner ofthe property and to identify any liens or claims against the property.
Transfer Tax:
State, County or local tax payable when title to property passes from one ownerto another.
Truth-In-Lending Act(TILA):
Federal law that requires disclosure of a truth-in-lending statement forconsumer loans. The statement includes a summary of the total cost of credit,such as the APR and other specifics of the loan.
Underwriting:
The process a lender uses to determine loan approval. It involves evaluatingthe property and the borrower's credit and ability to pay the mortgage.
Uniform Residential LoanApplication:
A standard mortgage application your lender will ask you to complete. The formrequests your income, assets, liabilities, and a description of the propertyyou plan to buy, among other things.
Unsecured Loan:
A loan that is not backed by collateral.
VA Guaranteed Loan:
A mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs(VA).
Walk-through/Finalwalk-through:
A common clause in a sales contract that allows the buyer to examine theproperty being purchased at a specified time immediately before the closing,for example, within the 24 hours before closing.
Warranties:
Written guarantees of the quality of a product and the promise to repair orreplace defective parts free of charge.
WHAT ARE WE SIGNING?
| 1099-S Real Estate Transfer Statement | The 1099 form is used to report non-employment income to the Internal Revenue Service (IRS). Businesses are required to issue a 1099 form to a taxpayer (other than a corporation) who has received at least $600 or more in non-employment income during the tax year. The Title Company will collect this to report proceeds as required by the IRS to report any and all proceeds in excess of $600 to the IRS on Form 1099-S, Proceeds from Real Estate Transaction. |
| 22.1 disclosure | Typically, a summary disclosure statement from the condo association provided to Lenders showing the overall financial health of the condo association, as required by Section 22.1 of the Illinois Condominium Property Act, pursuant to the pending sale of a unit. |
| ADDENDUM | An additional agreement to a contract that modifies or adds additional terms and conditions of the original contract |
| affidavit of heirship | A sworn statement To Assert Legal Rights On Property Of The Deceased |
| affidavit of no new improvements | A sworn statement that the seller has not made or caused to be made any structural improvements or additions to the property since the date of possession, and that the existing survey is correct and complete representation of all improvement now located on the premises. It is a way to avoid paying a new survey fee if nothing has changed from the original survey. It is up to the title company and/or lender to approve use of the older survey for issuing extending coverage on the owner's policy over questions of survey and encroachment not shown of record. |
| Affidavit of Title | A notarized statement of the seller showing the status of the property, including ownership and legal issues, usually attesting to the authority of the owner to convey the property and that the title is clear of encumbrances. Affidavits of Title are notarized statements. |
| ALTA Loan and Extended Coverage Policy Statement | This document signed by both buyer and seller to insure the Buyer’s lender that they are receiving a lien which will take priority over various interest and claims to the subject property. It offers insurance against matters which cannot be determined by an examination of public records. |
| APLD/Anti-Predatory Lender Database Certificate | This is a program brought into existence through Public Act and pertains to residential real estate mortgage applications in Cook, Will, Kane and Peoria counties. Its purpose is to reduce predatory lending practices by assisting borrowers to understand the terms and conditions of the loan for which he or she has applied. No loan proceeds may be disbursed by title companies and no mortgage can be recorded in these counties without either a Certificate of Compliance or a Certificate of Exemption. |
| Appraisal | a valuation of property by the estimate of an authorized licensed real estate appraiser |
| ARL - ATTORNEY REVIEW LETTER | The real estate contract will typically provide that each party's attorney will have 5 business days to (1) approve the contract, (2) reject the contract, or (3) negotiate modifications to the contract. These modifications are typically exchanged, discussed, and adopted/rejected through letters on the firm's letterhead and further email communications. During this 5 day period, the contract is contingent upon attorney approval. |
| Arms-Length Affidavit | Signed and usually notarized by all parties to the short sale that transaction is an “arm’s length transaction”. That is, it assures third parties that there is no collusion between the buyer and seller side. |
| Association Reserves | The reserve fund is essentially a savings account. It is where the HOA saves money for more costly repairs and replacements. |
| BCV | building code violations |
| BIFURCATION OF TITLE | Also called a Split Closing, bifurcation refers to when both the seller and the buyer choose their own separate title companies to provide the owner's policy and lender's policy respectively. In Illinois, buyer’s have a statutory right since they are paying for the lender's policy. |
| Bill of Sale | A formal notarized document detailing in writing for the buyer that the personal property left in the real property by the Seller becomes property of the buyer upon conveyance. |
| BPO | Broker Price Opinion – lender ordered valuation by a real estate broker, vs a licensed appraiser. BPO's usually cost under $100 vs a professional appraisal can be $500 or more. |
| BROKERAGE | A real estate office run by a managing broker overseeing other brokers. |
| BUYER'S BROKER | In Illinois, all real estate agents are now referred to as "brokers". A buyer's broker is the buyer's real estate agent, showing the buyer properties, also known as “Showing Agent or Selling Agent.” |
| CBA | Controlled Business Arrangement Disclosure – all parties attest that business arrangements may exist between Seller’s Attorney Agent and Title Company. |
| CD | Closing Disclosure – there are CD’s for both buyer and seller. In addition to the Settlement Statement, the CD statements provide final details about closing costs. |
| Chain of title | Data about changes to the owner of record on the property over a specified length of time. Gaps in the chain of title need to be remedied or addressed prior to closing. |
| CLOSING STATEMENT | When buying a business, refers to a document that sums up the details of a transaction |
| CMA | Competitive Market Analysis - a valuation compiled by a real estate broker using comparable properties "comps" to set the price of a new listing. |
| commission statement | a letter of direction to the title company prepared by the listing agent as to how the commission funds are to be split |
| Condo declarations & bylaws | The declaration establishes the rights and obligations of unit owners and sets forth any restrictions on the use of the property. The bylaws establish how the condominium association is to be managed. |
| CORPORATE RESOLUTION | a signed Record of Significant Business Taken by the Board of Directors or Managers |
| CPL | Closing Protection Letter The Illinois Title Insurance Act requires that all parties of residential transactions and non-residential transactions under $2 million to receive CPLs. This letter forms a contract between a title insurance underwriter and a lender, in which the underwriter agrees to indemnify the lender for actual losses caused by certain kinds of misconduct by the closing agent. |
| CTC | CLEAR TO CLOSE-buyers met the requirements and conditions to close on their mortgage |
| Date down fee | Applies only to buyers with bank financing and lender's policies. Similar to the title update fee charged to the seller, the fee is charged to the buyer for making sure nothing damaging a title has occurred between the date the original title commitment was issued and the date of the closing--a period that could be days, weeks, or months. |
| Deed | The legal document that transfers a title to a new holder of a property granting them the privilege of ownership. Different kinds of deeds exist: warranty deed (most common), quit claim deed, special warranty deed, executor’s deed, trustee’s deed, etc. Deeds must be notarized and are recorded by the County to identify owners of record. |
| DEED IN LIEU Of Foreclosure | Homeowner gives mortgage lender the deed to the home to avoid foreclosure. The benefit being owner is no longer responsible for the mortgage and avoids a foreclosure on their credit report. Lenders can take control of the property faster without going through the whole foreclosure process. Many lenders offer “cash for keys” agreements to help homeowners move out without damaging the home. |
| DEED IN TRUST | Type of deed required when The transfer of real property goes into or out of a trust |
| DEED RESTRICTION - RESTRICTIVE LANGUAGE | Clauses on your home's deed that limit how you can use or convey your property. |
| DEED VESTING | Language on the deed that describes how new owners are taking ownership and the official rights of the title on a property. It is necessary when more than one individual appears as the property owner on the title. |
| DFI Policy fee | The state of Illinois collects a $3 statutory fee for each title policy written. Fees go to paying annual registration fees for title insurance agents subject to the Title Insurance Act. |
| DODD-FRANK CERTIFICATION | Is a real estate fraud certification required from the Borrower to be eligible for the Home Affordable Modification Program (HAMP) |
| Dry Closing | All closing documents are signed, but the closing. |
| EMD EARNEST MONEY DEPOSIT | Earnest money is a deposit that represents a buyer's good faith to buy a home. The buyer should receive a receipt that indicates how much EMD was received and when, in what form (cash, check, Zelle) and who is holding it and for which transaction it is for. |
| Endorsement | An addition or limitation of coverage that is attached to a lender's policy. Some endorsements apply across all residential transactions (Location Endorsement - which states that the property is located on said land, described in the legal description, the the building is known as a Single Family Residence etc,) and some are specific to the situation (Condo Endorsement- applies only to sales of Condos and townhomes). There is a separate fee for each required endorsement which are in addition to the lender's policy fee. |
| Escrow Disbursement Agreement | Seller and Buyer direct Title Company to make disbursements for the transaction, pursuant to the Closing Disclosure Form, ALTA or HUD-1 Settlement Statement, Letters of Direction, and related disbursement documents utilized in the transaction. |
| Escrow Number | The Title Company's file number on the title commitment and owner's policy |
| Escrow/Settlement/Closing fee | Fee paid to the title company for professional services for holding escrows and accurate proceeds disbursements at closing. With cash deal this fee is split 50/50 between buyer and seller. For financed deals, the buyer pays 100% of this fee. The fee is based on selling price. |
| ESTOPPEL LETTER | A party’s delivery of this statement estops that party from later claiming a different facts. Signed statement tenants certifying for another’s benefit that certain facts are correct, ie: that a lease exists, that there are no defaults, and that rent is paid to a certain date. |
| FEIN | Federal Employer Identification Number; issued by the Internal Revenue Service for business |
| FEMA flood district | flood hazard zones as identified by the Federal Emergency Management Agency. Homes built in FEMA flood zones are required to also carry flood insurance |
| FHA | Federal Housing Administration |
| FIRPTA | Foreign Investment in Real Property Tax Act - a tax law that imposes U.S. income tax on foreign persons selling U.S. real estate. |
| First Mortgage | A first mortgage is the primary or initial loan obtained for a property. When you get a first mortgage to buy a home, the mortgage lender who funded it places a primary lien on the property. This lien gives the lender the first right or claim to the home if you were to default on the loan. |
| flipping | House flipping typically refers to buyers who purchase distressed properties, fix them up, and then resell them for a profit. |
| forcible detainer/eviction | If the tenant will not voluntarily turn over possession and vacate the rental premises due to nonpayment of rent or other violation of the lease, the landlord may be forced to evict the tenant by bringing a “forcible entry and detainer” lawsuit. |
| HOA | Homeowners Association |
| HOA Assessments | Monthly assessments due the Homeowners Association |
| Homeowner's exemption | Exemptions are savings that contribute to lowering a homeowner’s property tax bill. Most homeowners are eligible for this exemption if they own and occupy the property as their principal place of residence. |
| inspection contingency | An inspection contingency, also called a “due diligence contingency,” gives the buyer the right to have the home inspected in a specified time period. Depending on the findings of the home inspection, the potential home buyer can negotiate repairs or they can cancel the contract. |
| Intent to Proceed | Demonstrated by buyer's applying for a loan. Failure to apply for a loan within 21 days of seller accepting buyer's offer is grounds for seller's right to cancel the contract and relist the property due to buyer's inability or unwillingness to proceed towards closing as per the contract. |
| Legal Description | A legal description is the geographical description of real estate that identifies its precise location, boundaries and any easements for the purpose of a legal transaction, such as a transfer of ownership. A legal description is kept with the deed and filed with the county clerk or county tax assessor. |
| Lender's Policy | Lender's title insurance protects your lender against problems with the title to your property-such as someone with a legal claim against the home. Lender's title insurance only protects the lender against problems with the title |
| Lien | A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. A creditor or a legal judgment could establish a lien. A lien serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. |
| Lis Pendens | an official notice to the public that a lawsuit involving a claim on a property has been filed. |
| LISZING AGENT | Seller's broker, the one who lists the property on the MLS |
| LLC Operating agreement or Corporate BYLAWS | An operating agreement or the Corporate Bylaws is a key document used by business entities because it outlines the business' financial and functional decisions including rules, regulations and provisions. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners. it also defines the powers of the officers related to ability to act on behalf of the entity. |
| LOAN MODIFICATION | A loan modification is a change to the original terms of your mortgage loan. Unlike a refinance, a loan modification doesn't pay off your current mortgage and replace it with a new one. Instead, it directly changes the conditions of your loan |
| LOD | Letter of Direction are instructions to the Title company on where to send closing proceeds. |
| LOSS MITIGATION | Loss mitigation refers to the steps mortgage servicers take to work with a mortgage borrower to avoid foreclosure . Loss mitigation refers to a servicer's responsibility to reduce or “mitigate” the loss to the investor that can come from a foreclosure. |
| MANAGING BROKER | The one in charge of the real estate office with certain fiduciary responsibilities such as providing Errors and Omission insurance, and ability to hold Earnest Money. Must be licensed as managing broker with Illinois Dept of Professional and Financial Regulation |
| mechanics lien | A mechanics lien provides security, or collateral , for a debt. The lien makes the property that was worked on collateral for the debt. If the owner doesn't pay for work or materials, the contractor could go after the property. |
| MEMBERS INTEREST AGREEMENT | agreement for the purchase and sale of all of the outstanding membership interests of a private US limited liability company, |
| MORTGAGE BROKER | an intermediary between a financial institution that offers loans that are secured with real estate and individuals interested in buying real estate who need to borrow money in the form of a loan to do so. The mortgage broker will work with both parties to get the individual approved for the loan. They also collect and verify all of the necessary paperwork that the lender needs from the individual in order to complete the home purchase. A mortgage broker typically works with many different lenders and can offer a variety of loan options to the borrower they work with. |
| mortgage contingency | a clause in real estate transactions that gives home buyers a timeframe to secure a mortgage loan for a home. If the loan cannot be secured, the buyer can walk away without legal repercussions and have their earnest money deposit returned |
| MYDEC/PTAX | The Illinois Department of Revenue has developed a free online program for public use, called MyDec, which will allow real estate professionals to process real property transfer tax declarations, including authorizing and printing electronic stamps. |
| NON-REPRESENTATION LETTER | used to advise the attorney’s client and other parties to a transaction or litigation that the attorney represents only the attorney’s client and does not represent, and will not provide legal services for, other parties. |
| OC | OPPOSING COUNSEL |
| OOR | Owner of Record, recorded owner on title |
| Owner's Policy | Also Called Owner's Title insurance is meant to protect the insured (the homeowner and bank that owns your mortgage) from a financial loss associated with the property. Price is based on the selling price of the property, is purchased by the seller on behalf of the new owner for a one-time fee. Under the Illinois Title Insurance Act all residential real estate transactions must include an Owner's Policy |
| PAL | paid assessment letter - is a final tabulation issued by the condo association or property management company stating the amount of the monthly assessment for the Seller's unit or home, that this assessment is paid and up to date, when the last payment was made, and any amounts due at closing |
| Payoff Letter Indemnification | Seller signs this to personally cover any shortage of funds due to his/her mortgage company. The document releases the title company from any liability in covering a possible shortage. A correct payoff letter is vitally important to minimize risk of potential shortages. |
| Personal Information Affidavit or Judgment Affidavit | A notarized document requested by the title company that provides details about name changes, judgments that may belong to other persons with the same name, and any other matters pertaining to the identity of the parties. |
| PIN | Property Index Number, also known as a permanent real estate index number) is a numerical code for the legal description of a piece of land as it has been defined for the purposes of real estate taxation. The formatted code points to the parcel's location on the county's tax maps. |
| POC | Paid outside of closing |
| POF | buyer PROOF OF FUNDS. A letter from a bank showing that the buyer has been pre-approved for a specified loan amount. |
| Power of Attorney | A notarized, witnessed written authorization to represent or act on another's behalf in private affairs, business, or some other legal matter. The person authorizing the other to act is the principal, grantor, or donor. |
| private easement | grants land-use rights to certain people, whereas a public easement grants those rights to the general public. Private easement agreements are negotiated between two private property owners to mitigate personal property concerns, such as running sewer lines under their neighbor’s property or installing solar panels that may obstruct another person’s view. |
| Proof of good standing | a document issued by the Secretary of State that says your company is legally registered with your state. The document is proof that you're authorized to do business there and that you follow all state requirements, like submitting required documents and paying taxes and other fees. |
| PRORATION - tax proration, rent proration, HOA fee proration | Property tax proration is how property taxes are split, to ensure that the seller and buyer are only paying for the specific time that they own the property. High tax proration (over 100%) benefits the buyer, and hurts seller, as it increases what the seller actually paid last year and increases by 10%. If taxes don't go up, or decrease, the buyer gets a larger credit than they are entitled to. A lower tax proration (100%) hurts buyer and helps seller. It hurts buyer because the taxes may be more than the amount prorated, and the buyer will be shorted. Rent Proration: For example in a month that has 30 days, a seller of a multi-unit property has collected $10,000 in rents on the 1st of the month and the closing is the 15th of the month. The seller doesn't get to keep the entire $10,000. The new owner is entitled to the remaining 15 days' rent or in this case $5,000. This usually shows up as a credit to the buyer on the settlement statement HOA fee proration: For example in a month that has 30 days, a seller of a condo has paid $100 in HOA assessments on the 1st of the month and the closing is the 15th of the month. The seller should not pay for days they no longer occupy the condo. The new owner reimburses the seller for the 15 days' assessments or in this case $50. This usually shows up as a buyer credit back to the seller on the settlement statement |
| QCD | QUIT CLAIM DEED The Illinois quit claim deed form gives the new owner whatever interest the current owner has in the property when the deed is signed and delivered. It makes no promises about whether the current owner has clear title to the property. |
| recording a document | Recording – the act of putting a document into official county records – is an important process that provides a traceable chain of title to a property. There are more than 100 types of documents that can be recorded, depending on the type of property and type of real estate transaction. |
| RELEASE | A recorded document that shows your debt has been paid in full and the lien against the property has been removed. A Satisfaction of Mortgage is an example of a release |
| Relocation Assistance | An amount granted to the Seller by a short sale lender for help with moving costs. Usually limited to $3000 |
| RENT ROLL | a register of rents including the names of tenants and the amounts due also : the total income indicated by such a register. All rental revenue represented on the rent roll must tie to a date and amount as denoted on in-place lease contracts. |
| REO | Real Estate Owned - An REO is a foreclosed property that is now bank owned. Most properties sold on auction sites are REOs and therefore do not come with any seller representations or warranties as to the condition of the property. |
| Rules & regulations | Every condo building or complex is governed by a set of rules and regulations. They usually record these in a document titled 'Covenants, Conditions and Restrictions' or CC&R's for short. It may also be referred to as a 'declaration'. These rules are enforced by the condo association or a homeowner's association |
| Second (or Junior) Mortgage | loans secured by a property in addition to the primary mortgage. |
| SELLER DISCLOSURES | document or set of documents that requires sellers to reveal details about the property's condition and its defects. The State of Illinois Requires the Residential Disclosure form, Lead Based Paint and Radon Disclosure. Other disclosures exist but are not required by law. |
| SELLER'S BROKER | The real estate sales professional representing the Seller aka the Listing Agent |
| SELLING AGENT | The real estate agent responsible for bringing the buyer to the table and making the sale. The buyer's real estate agent. |
| Senior Exemption | Exemptions are savings that contribute to lowering a homeowner’s property tax bill. Most senior homeowners are eligible for this exemption if they are 65 years of age or older and own and occupy their property as their principal place of residence. |
| Senior Freeze | An exemption that contributes to lowering a homeowner's property tax bill. For those who meet the requirements of the Senior Exemption, this exemption provides significant savings by "freezing" the equalized assessed value of an eligible property for Seniors who also meet specific income thresholds. |
| Settlement Statement | AKA “the HUD” – Signed by both buyer and seller and title company, the document summarizes all of the fees and charges that the seller, buyer and lender face during the settlement process of a real estate transaction. |
| SHORT SALE | A bank loss mitigation option that allows a homeowner to sell their home for less than they owe on the mortgage. The lender of the original mortgage gets all of the proceeds of the sale, and either forgives the difference or gets a deficiency judgment, which requires the original borrower to pay what’s left over. Due to the bank review and negotiation procedures and documentation requirements, a short sale process takes a minimum of 90 days and sometimes a year or more to close. |
| Short Sale Approval Letter | Signed by the seller that Seller will comply with the short sale lender’s terms of the sale. |
| SIGNATORY | The person with the authority to sign documents on behalf of the Corporation. It is typically the President, the Manager, or some other official assigned this role by Corporate Resolution |
| special assessment | A special assessment tax in real estate is an additional property tax assessed by the local government to pay for their property and neighborhood projects. The tax goes toward a specific geographic region known as a special assessment district, and the property owners in that area are the only ones who must pay. HOAs may also levy a special assessment for specific capital improvement projects, such as redoing the facade. |
| SPECIAL WARRANTY DEED | This instrument transfers title to real estate from a grantor to a grantee. In Illinois, a special warranty deed transfers title in fee simple to the grantee with limited warranties and covenants that span only the time the grantee has owned the property. Typically used when current grantor has acquired the property through auction, owned property for a very short period of time, and never lived in the property and therefore cannot attest to having knowledge of any title defects. |
| STAMPED FILED ARTICLES | Articles of organization (LLC) or articles of incorporation (Companies, corporations) are the formal organizing document used to establish business entities at the state level. They become official when stamped as "filed" by the Secretary of State |
| Statement of the Grantor and Grantee | A notarized document usually attached to Quit Claim Deeds where both parties or their agents affirm and verify that the name of the GRANTEE or GRANTOR respectively shown on the deed or assignment of beneficial interest (ABI) in a land trust is either a natural person, an Illinois corporation or foreign corporation duly authorized to conduct business or acquire and hold title to real estate in Illinois. |
| STOCK CERTIFICATE | A stock certificate is a physical piece of paper that represents a shareholder's ownership in a company. Stock certificates include information such as the number of shares owned, the date of purchase, an identification number, usually a corporate seal, and signatures. |
| survey | A drawing that establishes or reestablishes corners, lines, boundaries, and monuments of real property (land) based upon recorded documents, historical evidence, and present standards of practice. Not needed for condo or short sales. |
| THE HUD | previously, a HUD-1 form was the customary settlement statement for real estate transactions. While HUD-1 forms are rarely used today by title companies, settlement statements are still referred to as "the HUD". |
| Title Commitment | The document by which a title insurer discloses to all parties connected with a particular real estate transaction all the liens, defects, and burdens and obligations that affect the subject property. It lists all requirements that must be met before a title company can insure a title as “marketable” or a loan as having a certain priority, free from reasonable doubt or defect, which can be readily sold or mortgaged. |
| Title Search | Title companies research the history of a title on a piece of real estate, revealing all issues that encumber delivery of clear title |
| TRID | "TRID" is an acronym that some people use to refer to the TILA RESPA Integrated Disclosure rule. This rule is also known as the Know Before You Owe mortgage disclosure rule and helps ensure buyers are given ample time and opportunity to review all costs involved with securing their loan |
| TRUSTEE'S DEED | the instrument used to convey the property out of a trust to the new owner. Executed by the Trustee. |
| UBAF UNIFORM BORROWER ASSISTANCE FORM 710 | Standardized form for requesting loss mitigation assistance from lenders developed by FannieMae and FreddieMac, where borrowers provide Written explanation describing the details of the hardship and outlines any relevant documentation needed to support their request. |
| UNDERWRITER | Underwriters assess the degree of risk of insurers' business. Underwriting helps to set fair borrowing rates for loans, establish appropriate premiums, and create a market for securities by accurately pricing investment risk. |
| Update Fee | Fees assessed to the Seller for Updates to the Title commitment from the date acceptance thru closing. |
| Waive Title | Pertains to the seller's attorney final review of the title commitment at closing, particularly Schedule B.II Special Exceptions. these include the major problems encumbering the title. If issues have been resolved, they can be "waived" as exceptions. Any remaining items are prefaced with language such as "Any loan policy issued pursuant to this Commitment will be subject to the following exceptions (a) and (b), in the absence of the production of the data and other matters contained in the ALTA Statement form or an equivalent form:" |
| WARRANTY DEED | The most common type of deed used in residential real estate transactions. This instrument transfers title to real estate from a grantor to a grantee. In Illinois, a warranty deed transfers title in fee simple to the grantee with broad warranties and covenants that span back in time to the very first deed on the property. |
| Water Cert | A Water Certification / Full Payment Certificate (FPC) is an application for a final water bill. Once paid it is a certificate stating all water / sewer charges for a property's water account are paid. This certificate is required for all transfers of real property (deeds) in the City of Chicago. |
| wholesaling | The goal in real estate wholesaling is to sell the home to an interested party before the contract with the original homeowner closes. This means no money exchanges hands between the wholesaler and the seller, not at least until a buyer is found by the wholesaler. Wholesalers make a profit by finding a buyer willing to purchase the home at price higher than the amount agreed upon by the buyer. The difference in price—paid for by the buyer—is the profit, retained by the wholesaler. In Illinois, only licensed real estate brokers are allowed to wholesale property. |
| Wire fee | A pass-through fee the title charges for wiring funds from its escrow account to the seller's mortgage company or seller's bank accounts. |
| Zoning Cert | A Certificate of Zoning Compliance certifies the number of dwelling units at a property that are legal under the Chicago Zoning Ordinance (Title 17 of the Municipal Code of Chicago). This form is for use with buildings containing one to five dwelling units that are not condominiums or co-ops. |