Glossary

The amount recoverable by a person who has been injured in any manner, including physical harm, property damage or violated rights, through the act or default of another. Damages may be awarded for compensation and as punitive measures, in the case of outrageous behavior.

To negotiate a contract. An agreement on a contract. See negotiation. A buyer and seller deal for the right price and conditions of sale. Once the sales contract is signed, they have made a deal.

Money acquired by borrowing. Secured debt is money borrowed through loans using property as collateral. Mortgage debt is money borrowed through a loan secured by real property. Investments can be financed through the use of debt or equity or a mixture of the two. The cost of debt is interest paid to creditors, while equity requires sharing profits with investors through dividends.

An order issued by one in authority; a court order or decision. A decree may be final or interlocutory (preliminary).

The gift of land by its owner for a public use and the acceptance of it by a unit of government. Examples include streets in a subdivision, land for a park or a site for a school.

A written document, properly signed and delivered, that conveys title to real property. See bargain and sale deed, general warranty deed, quitclaim deed, special warranty deed.

A borrower who is in default may surrender property ownership to the creditor instead of requiring the creditor to foreclose through court action.

A security instrument used for mortgage loans. When a mortgage loan is secured by a deed of trust, a trustee is designated. If the borrower defaults, the trustee may sell the property to satisfy the debt, unpaid interest and lender’s expenses.

A clause in a deed that limits the use of land. For example, a deed might stipulate that alcoholic beverages are not to be sold on the land for 20 years. A prospective buyer should check that deed restrictions would not inhibit an intended use of property; a prospective seller should consider whether he or she wants to restrict the use of land.

Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any acts. Upon default, the defaulting party may be liable to the other party(ies).

A clause in a mortgage that gives the borrower the right to redeem the property after default, usually by paying the full indebtedness and fees incurred. For example, late payment on a mortgage or other default does not necessarily cause the borrower to lose the property. Defeasance may allow redemption, though the loan and fees may have to be paid.

The party sued in an action at law. See plaintiff.

Money payments to be made at some future date.

A court order stating that the borrower still owes money when the security for a loan does not entirely satisfy a defaulted debt. When property is foreclosed, the amount or value of the collateral might not satisfy the debt. The lender may be able to get a deficiency judgment to recover the balance owed.

Failure to make a payment when it is due. Technically, a payment is delinquent as soon as its due date passes. Most lenders do not consider late payment a cause for alarm until the delinquency is at least 30 days old.

A payment that is past due. A late payment, beyond any grace period offered by the lender, is a default of the loan contract and could lead to foreclosure. A borrower who is having trouble making loan payments on time should talk to the lender about possible courses of action.

Transfer of the possession of a thing from one person to another. In a real estate transaction there should be delivery of a deed. If an owner dies without giving a deed to a relative while alive, a verbal promise to give the property is inadequate.

See earnest money.

In appraisal, a loss of value in real property resulting from age, physical deterioration or functional or economic obsolescence. Also, in accounting, the allocation of the cost of an asset over its economic useful life. The value of real estate may decline; one can reduce income taxes by claiming depreciation as a tax expense.

One who converts raw land into improved real estate. Developers create subdivisions by platting land and putting in utilities, roads and landscaping. Some construct and market homes on the sites; others sell lots to builders.

A gift of real estate by will or last testament.

One who inherits real estate through a will.

The location or area in which a city is growing. An investor often can make a profit by purchasing land in the path of a city’s growth.

The release of a bankrupt party from the obligation to repay debts that were, or might have been, proved in bankruptcy proceedings.

Providing adequate factual information, such as about a property, to a potential buyer.

Amounts paid to the lender at the time of a loan origination, to account for the difference between the market interest rate and the lower face rate of the note. They are often required when Federal Housing Administration or Veterans Administration financing is used. Each point is 1 percent of the loan principal. Discount points must be paid in cash at closing. Buyer and seller should agree, at the time they prepare an earnest money contract, who is to pay them.

The legal process by a landlord to remove a tenant and regain possession of property. If a lease is breached, the landlord may want to regain possession of the property.

Property undergoing foreclosure, bankruptcy or on the verge of doing so. Generally caused by insufficient income or loss in value.

A person receiving or entitled to receive land as the representative of the former owner; an heir.

Evidence that is in written or printed form. Documentary evidence often carries more weight than oral evidence.

A person’s legal residence.

Under common law, the legal right of a wife or child to part of a deceased husband’s or father’s property. Generally abolished or severely altered in most states. Community property applies in Texas.

Cash payment needed to make up the difference between the amount borrowed and the price of a property. Few mortgage loans cover the complete cost of a property, even when supplemented with junior mortgages. The borrower most likely will have to contribute cash, partly to pay for transaction costs and partly to make the down payment. Down payments often are substantial, equaling thousands or tens of thousands of dollars.

The last day on which a payment must be made before it is delinquent. Mortgage loans often are due on the first of the month, but often they are not considered late until after the fifteenth (a grace period). Some lenders then add on a late charge for payments made after the grace period.

Found in a mortgage contract, this provision causes the entire principal owned to be due upon a sale of the property.

A structure with two dwelling units. Each unit has a separate entrance and full kitchen and bath facilities. Duplexes are popular with small investors who live in one unit and rent out the other, often receiving enough rent to pay the entire mortgage payment.

Unlawful constraint exercised upon a person whereby he or she is forced to do some act against his or her will. A person who signs a contract or performs another act under duress is not legally bound to go through with the agreement.