Terms To Know

Terms to Know

Amendments: A change –either to alter, add to, or correct

part of an agreement without changing the principle idea or


Appraisal: An estimate of value of property resulting from

analysis of facts about the property- an opinion of value.

Assumption: Taking over another person’s financial obligation;

taking title to a parcel of real property with the buyer

assuming liability for paying an existing note, secured

by a deed of trust against the real property.

Beneficiary: The recipients of benefits, often from a

deed of trust, usually the lender.

Close of Escrow: Generally the date the documents are recorded

and title passes from Seller to Buyer. On this date, the

buyer becomes the legal owner and title insurance becomes


Comparable Sales: Sales that have similar characteristics as

The subject real property, used for analysis in the appraisal.

Commonly called “comps”.

Deed of Trust: An instrument used in many states in place of a


Deed Restrictions: Limitations in the deed to a parcel of real

property that dictate certain uses that may or may not be made

of real property.

Earnest Money Deposit: Down payment made by a purchaser

of real property as evidence of good faith; a deposit or partial


Easement: A right, privilege or interest limited to a specific

purpose that one party has in the land of another.

Hazard Insurance: Real estate insurance protecting against

fire, some natural causes, vandalism, etc., depending upon the

policy. Buyer often adds liability insurance and extended

coverage for personal property

Impounds: A trust type account established by lenders for the

accumulation of borrower’s funds to meet periodic payments

of taxes, mortgage insurance premiums and/or future

insurance policy premiums, required to protect their security

Legal Description: A description of land recognized by law,

based on government surveys, spelling out the exact

boundaries of the entire parcel of land. It should so thoroughly

identify a parcel of land that it cannot be confused with any


Lien: A form of encumbrance that usually makes a specific

parcel of real property the security for the payment of a debt

or discharge of an obligation. For example, judgments, taxes,

mortgages, deeds of trust.

PITI: A payment that combines Principal, Interest, Taxes and


Power of Attorney: A written instrument whereby a principal

gives authority to an agent. The agent acting under such a

grant is sometimes called an “Attorney-in-Fact.”

Purchase Agreement: The purchase contract between the

Buyer and Seller. It is usually completed by the real estate

agent and signed by the Buyer and Seller.

Quitclaim Deed: A deed operating as a release, intending to

pass any title, interest or claim which the grantor may have in

the property, but not containing any warranty of a valid

interest or title by the grantor.

Recording: Filing documents affecting real property with the

County Recorder as a matter of public record.

Warranty Deed: A written instrument by which a party

transfers ownership of real property to another