Legal Real Estate Terms Defined

real estate termsMany professions have their own language and terminology. Real estate agents are no different. For many lay people it is a struggle to wade through all the verbiage and acronyms to get to the information they need. Below is a list of the most popular legal real estate terms defined to make the process of buying or selling a home clearer. The list isn’t comprehensive, but covers the more common terms you’re like to encounter in the process:

Adjustable rate mortgage (ARM)

This is a mortgage in which the interest is changed according to corresponding fluctuations in an index.

Annual percentage rate (APR)

This is a value created to reflect the true annual cost of borrowing, expressed as a percentage. For example, if you deduct the closing costs from your loan amount calculate what the interest rate would be on that resulting amount, you will come up with a number in close proximity to the APR.


A written estimate of the value of a property. It is based on comparable sales of similar homes in the area.


This is increased value of a property brought about by changes in inflation and the general state of the market.

Bill of sale

This is a written document that transfers title of property. This is often used when items are sold to produce a home’s down payment. The buyer must document the source of the funds.

Bridging loans

Those who have not yet sold their old property, but must close on a purchase of their new property take out bridge or bridging loans.


Simply defined, a “broker” is someone who acts as an agent and brings two parties together in a transaction while earning a fee for doing so. The term Broker has many meanings in different situations. Many Realtors are agents who work for a broker. Other realtors are also brokers.

Chain of title

This is simply a list the transfers of title to a piece of property over the years.

Closing costs

Closing costs are divided into what are called “pre paid items and “non-recurring closing costs.”


Delinquency is a failure to make payments when mortgage payments are due. There may not be a late fee charged but the payment is still considered to be late and the loan delinquent.


This is a sum of money given in advance of a larger amount being due in the future. This is called in real estate as an “earnest money deposit.”


This is money deposited with a third party to be delivered upon the fulfillment of certain conditions.

Fair market value

The highest price that a buyer is willing to buy and the lowest a seller, willing to sell, would accept.

Government loan

A government loan is a mortgage that is insured by the Federal Housing Administration.

Hazard Insurance

This is protection against a loss such as fire, etc. over the period that is secured by the payment of a regular premium.


This is a reverse mortgage that is used by senior homeowners age 62 and over.


Home Buyer Education Learning Program

Home Inspection

This is an inspection of the structure and mechanical systems to access a home’s quality

Home Warranty

Gives protection for internal systems like boilers and A/C  appliances against unexpected repairs not covered by owner’s insurance.


Inflation results in a decrease in the dollar’s value.

Interest Rate

This is the amount of interest charged on a  loan payment, expressed as a percentage.

Joint Tenancy (With Rights Of Survivorship)

This is where two or more owners share equal ownership and rights to the property. If a joint owner dies the property passes to the other owners.

Late Payment Charges

This is a penalty the homeowner must pay when a mortgage payment is made after the due date has expired.

Mandatory Delivery Commitment

This is an agreement that a lender will deliver loans or securities by a set date.


This is the conveyance of title to property that is given to secure an obligation.

Net Income

The balance of gross income left over after all deductions and exemptions are taken

Owner’s Policy

An insurance policy that protects the owner from title defects.

Payment Due Date

This specifying when payments are due on money borrowed.


This is a real estate agent or broker.


This is paying off one loan by obtaining another loan.

Risk Scoring

This is a means to analyze a credit report verses a manual review.

Secured Loan

A loan backed by collateral.


This is a right, benefit, or privilege not dependent on any contingency or condition.

Walk Through

This is the final inspection of a property being sold by the buyer.


This is the creation and enforcement of zones under local law.


If you are unclear about any of the terms above or worried about one not listed here, also if you have a property to buy or sell contact Villa Properties for more information.

The staff members are friendly, approachable and here to help you with your San Ramon area real estate needs. Villa Properties has years of experience in the real estate market and you can be sure of a professional service at all times.