Glossary Of Terms
Below are some practical terms and definitions you might come across when looking for an apartment in New York City. Some of these may be used differently in other parts of the country so please make sure you familiarize yourself with them and avoid any unnecessary confusions.
Agency:
A legal relationship between a principal and his agent arising from a contract in which the principal engages the agent to perform certain acts on the principal behalf.
Amortization:
A gradual paying off of a debt by periodic installments.
Appraisal:
An opinion or estimate of the value of a property.
Assessment:
The amount of tax or special payment due to a municipality or association. This is applicable in condo buildings and co-ops where assessments can often amount to significant monthly expenses.
Building Codes:
Regulations established by local governments describing the minimum structural requirements for buildings. Codes include foundation, roofing, plumbing, electrical, and other specifications for safety and sanitation.
Covenants:
Promises written into deeds and other instruments agreeing to performance or nonperformance of certain acts and/or requiring or preventing certain uses of the property.
Counter Offer:
A rejection of an offer to buy or sell, with a simultaneous substitute offer.
Deed:
A written document, property signed and delivered, that conveys title to real property. It is usually signed and handed over during closing.
Trust Deed:
A conveyance of real estate to a third party to be held for the benefit of another. Trust deeds are commonly used in some states in place of mortgages that conditionally convey title to the lender.
Unrecorded Deed:
An instrument that transfers title from one party (grantor) to another party (grantee) without providing public notice of change in ownership. Recording is essential to protect one's interest in real estate.
Warranty Deed:
A deed that contains a covenant that the grantor will protect the grantee against any and all claims. It usually contains covenants assuring good title, freedom from encumbrances, and quiet enjoyment.
Discount Points:
Amounts paid to the lender (usually by the seller) at the time of origination of a loan, to account for the difference between the market interest rate and the lower face rate of the note. (They are often required when VA loans are used.)
Encumbrance:
Any right to or interest in land that affects its value. This includes outstanding mortgage loans, unpaid taxes, easements, and deed restrictions.
Equity:
Interest or value that the owner has in real estate over and above the liens against it.
Escrow Account:
A separate bank account segregated from a broker's own funds, in which the broker is required by state law to deposit all monies collected for clients.
Grantee:
The party to whom the title to real property is conveyed is the grantee or the buyer.
Grantor:
Anyone who gives a deed is the grantor.
Inspection:
A physical scrutinizing review of property or of documents.
Lien:
A charge against property making it security for the payment of a debt, judgment, mortgage, or taxes. A lien is a type of encumbrance. A specific lien is against certain property only, while a general lien is against all of the property owned by the debtor.
Market Value:
The theoretical highest price a buyer, willing but not compelled to buy, would pay and the lowest price a seller, willing but not compelled to sell, would accept.
Personal Property (personalty):
All property that is not realty. Property that is movable, not fixed to land; also called chattel.
Points:
Fees paid to lenders to induce them to make a mortgage loan. Each point equals 1% of the loan principal. Points have the effect of reducing the amount of money advanced by the lender.
Power-of-Attorney:
An instrument authorizing a person to act as the agent of the person granting it.
Purchase and Sale Agreement:
A written agreement between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon terms of the agreement. Also called offer and acceptance, contract of sale, and earnest money contract.
Real Property:
The rights to use real estate. Sometimes also defined as real estate.
Tenancy in Common:
On ownership of realty by 2 or more persons, each of whom has an undivided interest, without the right of share of the decedent is inherited by the party or parties designated in the decedent's will.
Title:
Evidence that the owner of land is in lawful possession. Evidence of ownership.
Clear Title:
A title free of any clouds, liens, or other possible interests against it.
Color of Title:
A fake title that appears to be good but is not in reality. Cloud on the title–An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title.
Chain of Title:
A history of conveyances and encumbrances affecting a title from the time that the original patent was granted, or as far back as records are available.
Abstract of Title:
A historical summary of all of the recorded instruments and proceedings that affect the title to property. Title insurance–insurance policy that protects the holder from loss sustained by defects in the title.
Title Report:
A document indicating the current state of the title, such as easements, covenants, liens, and any defects. The title report does not describe the chain of title.
Title Search:
An examination of the public records to determine the ownership and encumbrances affecting real property.
Transfer Tax:
A tax paid upon the passing of title to property or to a valuable interest.
Zoning:
A legal mechanism for local governments to regulate the use of privately owned real property by specific application of police power to prevent conflicting land uses and promote orderly development. All privately owned land within the jurisdiction is placed within designated zones that limit the type and intensity of development permitted.
