Utah Real Estate: Guide to Real Estate in Utah terminoligy.

Utah Real Estate

Real Estate Glossary

Note:
This list is only intended as a brief guide to terms, and that the explanations do not include all the legal ramifications of a real estate transaction. It is an opportunity to mention that they should consult a professional -- a member of the Salt Lake Board of REALTORS -- for a comprehensive explanation.

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Acceptance

The person who received an offer (proposal) agrees, thus turning the offer into a contract.

Agent

Someone who agrees to represents someone else for a fee. A real estate agent is an example.

Appraisal

An estimate of value, as determined by an independent appraiser familiar with local real estate values.

"As-is" agreement

States that a buyer accepts whatever physical condition a property is in at the time the contract is signed. May be modified by state or local regulations, or other contractual agreements.

Assumption of Loan

When a buyer assumes the loan payments and obligations of the seller. If the purchaser defaults, however, both the buyer and seller are responsible for the debt unless the seller has been released from obligation by the lender.

Broker

A licensed real estate professional who represents either the seller or buyer of a property, depending on contractual agreements. It is the agent's responsibility to act in the best interest of his or her client to obtain the best price and terms in a real estate transaction.

Clear title

A title to a property that is free of all liens and encumbrances or other legal challenges to ownership.

Closing costs

Costs associated with the purchase of a home that must be paid at the sale closing. These could include mortgage fees, title insurance, appraisal and inspection fees and discount points.

Comparative market analysis (CMA)

A report prepared by a real estate agent that gives important information for determining a price for property. It reveals the price and features of recently sold property that are comparable to the property in question.

Condominium

A form of ownership wherein one owns an individual unit. The individual owns his or her portion of the common areas, such as hallways, swimming pool, lawn, parking, etc., of the complex with all the other owners. Condominiums are often residential, resembling apartment buildings; but can also be an office or industrial complex, or even individual homes in a condominium development.

Co-op

Abbreviation for "cooperative," a portion of a large property whose owner has purchased exclusive rights to its use by buying a share of the corporation that owns the large property. Such ownership is not deeded, but is considered personal property in the form of stock certificates.

Co-signer

A person who assumes joint liability for a loan or other contractual obligation. The co-signer of a loan agreement is not necessarily, however, a co-owner.

Contingency

A contractual provision (sometimes called a "subject to" clause) that renders an agreement incomplete until a designated event (such as an inspection or an escrow payment) occurs.

Credit

A measurement of a person's ability to pay bills on time. Several companies track individuals' credit histories by detailing late or missed payments on loans, credit cards and other debts.

Credit report

Used by lenders to determine a potential borrower's creditworthiness. Independent sources or companies compile the report, which lists the borrower's debts, liabilities and assets.

Deed

A document that transfers real estate from one party to another. In most cases it is wise to have the deed recorded in government (county)records.

Easement

A right to use land belonging to someone else. Examples would include utility easements or a right of way. Easements can be deeded or be agreements between parties.

Encroachment

Real property belonging to one landowner that extends onto an adjacent landowner's property is considered an encroachment. A fence, shed, or garage that is a few inches over the property line are examples.

Encumbrance

Something that clouds the title to real property. Judgements, liens, easements, and many other things create these. If a property is sold, the encumbrances must be disclosed and then transfer will be made subject to the lien (meaning the buyer knows they are there and agrees to leave them), or they must be removed. Paying off an existing mortgage is one way of doing this.

Equity

The actual cash value of property after all claims against the property have been paid.

Fair Credit Reporting Act

A federal law that gives consumers the right to see their credit records and correct any mistakes.

Front ratio

The proportion of a purchaser's income that lenders will allow for principal, interest, taxes and insurance on a property. Used in the evaluation of a loan application.

Full disclosure

A requirement that sellers and their agents fully disclose all known defects in a property when selling it.

Ginnie Mae (GNMA)

Government National Mortgage Association. A federal association working with the FHA that offers special assistance in obtaining mortgages and purchases mortgages in the secondary market.

Grant

To bestow or confer, with or without compensation, a gift such as land or money by one having control or authority over the gift.

Grantee

One to whom a grant is made.

Granto

One who makes a grant.

Hereditaments

Any and all kinds of estates, interest and rights in real estate that can be inherited.

Homeowners Insurance

Real estate insurance protecting against loss caused by fire, some natural causes, vandalism, etc., depending on the terms of the policy. Also includes coverage such as personal liability and theft away from home.

HUD (Department of Housing and Urban Development)

The federal department responsible for the major housing programs in the United States.

Index

(1) An alphabetical listing in the public records of the names of parties to recorded real estate instruments together with the book and page number of the record. (2) The listing in abstract and title plants of recorded real estate instruments in groups according to land descriptions, known as a geographic index. (3) The alphabetical listing in abstract and title plants, by names of the parties, of all recorded instruments that affect but do not describe particular real estate, such as judgments, powers of attorney, wills and probate proceedings. Such indexes are known by various names, such as "general index," "judgment index" and "name index."

Instrumen

Any written document having a legal effect.

Judgment

The decision of the court at the conclusion of a suit. The judgment may be for money (damages), liquidated damages (that which is prescribed in the contract), or specific performance (an individual is ordered to actually do something).

Lien

Any claim against a property, including mortgages, unpaid taxes or repair bills or other unpaid charges. Prospective property buyers should conduct a title search to determine whether any liens against the property exist. A lien must be filed or recorded with the local county government to be attachedto a property title. A lien gives the holder of the lien a way of forcing the owner to sell the property and pay the debt (foreclosure).

Mechanic's lien

Any payment owned to a contractor, sub-contractor, material supplier, architect, or anyone else whose effort has been made for the benefit of the property.

Mortgage lien

An encumbrance that would allow whoever legally placed the lien to foreclose on the property in the event payments were not made on the loan.

Multiple listing service

The multiple listing service, or MLS, is a local or regional database that lists homes for sale and gives a great deal of information about them. Member real estate agents can access the MLS and identify appropriate homes to show potential buyers.

Note

Also called "promissory note." A written promise to pay a sum of money, usually at a specified interest rate, at a stated time to a named payee

Offer

A written contract, signed by the offeror (the one giving the contract) and given to the offeree (the one receiving the contract). It is not binding until it is signed by the offeree.

Option

A contract conveying the right to the optionee (usually a potential buyer) to purchase the property for contractually stated terms and price within a given time period. The optionee is required to pay for the option, not the property, which the optionor can keep, regardless of whether the option is exrcised or not.

Plat

A map that shows all boundaries of the lots in a subdivision.

Pre-approval for a Loan

A process whereby a potential home buyer secures a guaranteed mortgage approval from a lender before making an offer on a house. A lending institution guarantees in writing to grant a loan for up to a specified amount. (Not to be confused with pre-qualification.) The lender will make a careful and complete study of the borrower's financial history and current state before granting this approval.

Pre-qualification

Some lenders "pre-qualify" mortgage applicants in less than an hour by performing cursory checks. The lender relies on the information given by the applicant. Seldom can a lender fully check an applicant's credit, asset and debt status this quickly, so final approval typically takes at least a day or more. Though such preliminary pre-qualifications may soon lead to a full pre-approval, there is no guarantee until the applicant receives a letter, certificate or wallet-size card bearing the mortgage-holder's name and maximum loan amount.

Quit Claim Deed

A deed that does not imply that the grantor holds title, but that surrenders and gives to the grantee any possible interest or rights that the grantor may have in the property.

Recording fee

Fee charged by a government for entering into the public record any contracts or legal documents, i.e., the documents involved in a real estate purchase or sale.

Right of first refusal

When a seller doesn't want to sell or give an option, they will sometimes give this privilege to a buyer, thus contractually conveying to the anxious buyer the right to purchase the property when and if the seller decides to sell at a later date. If the seller obtains a purchaser, the holder of the Right of First Refusal must be given the opportunity to match the offer.

Self-amortization

The term is not often used. If used, it would probably occur in the context of "Fully Amortized Loan." It occurs when monthly payments allow a loan to be repaid, including principal and interest, over its terms without any balloon payment.

Settlement (Closing)

At the time of settlement, or closing, all debts are paid, adjustments made and money disbursed, and a deed is prepared in the new owner's name. This is the time when all signatures are obtained, all money exchanged, and appropriate documents, disclosures, etc are taken care of officially. In simple terms, this is when the property is legally transferred from seller to buyer.

Survey

A professional examination of the physical facts of a property. A survey will reveal the size of a property, its boundary distances, and if asked for, ground contours and where improvements or alterations have been made.

T ax Lien

A type of lien placed on a title when the owner has not paid property or assessment taxes or other state and federal taxes.

Take-back Loan

A loan made directly from the seller to the buyer. Sometimes referred to as "Seller financing" or a "seller carry-back".

Tax basis

The value of your home for tax purposes.

Title

The reality of the right of property ownership; can be held solely, jointly, in common or in corporate or partnership form. Title is the actual ownership, the deed is the evidence of that ownership.

Title company

A company that performs and insures title searches. Usually selected by the seller, title companies sometimes work as a lender's agent. Depending on the preferences of the seller, buyer and others involved in the sale, the closing might take place at the title company's offices.

Title defect

Anything that is wrong with a title -- including an easement, encroachment or lien -- that may or may not have been recorded with the city building department or the county recorder's office. Often a title company will refuse to take liability for unrecorded liens, such as existing but unrecorded leases or mechanics liens.

Title insurance

Insurance, typically issued by a title insurance company that protects a property owner against the existence of defects to or claims against a property. Typically the seller is required to purchase a policy to protect the buyer; and if the buyer is obtaining a loan, the lender will require the buyer to obtain such a policy to protect the lender.

Townhouse

A residence, often including two or three stories, that is connected by a common wall to another residence.

Underwriter
An insurance company that issues insurance policies to the public or to another insurer.

Variable Interest Rate

Also called "flexible interest rate." An interest rate that fluctuates as the prevailing rate moves up or down. In mortgages, there are usually maximums as to the frequency and amount of fluctuation.

Veterans Administration (VA) Loans

Housing loans to veterans by banks, savings and loans, or other lenders that are guaranteed by the Veterans Administration, enabling veterans to buy a residence with little or no down payment.

Walk-through

A final tour of a home before the closing of the sale wherein the buyer visually approves the property as being in the same condition it was in at the time the purchase contract was signed and that all contractual contingencies, if any, have been met.

Warranty

A protection plan, generally paid for by the seller, that protects against major repair expenses and breakdowns. Warranties are assigned to specific items, usually major appliances or systems on the property. The seller is usually covered during the period prior to the sale and the buyer for a stated period after the sale.

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