Ad valorem: Latin meaning "according to value." Real property is taxed on an ad valorem basis.

Agency: A fiduciary relationship where one person acts (with authority) on behalf of another.

Alienation: Transfer of title to real property.

Amortization: The gradual payoff of a debt through regular and scheduled payments of principal and interest over astated period of time until paid off.

Amortization Schedule: Schedule showing principal and interest payments throughout the life of the loan.

Annual Percentage Rate (APR): The actual effective rate of interest charged on a loan expressed on an annual basis;not the same as the simple interest rate.

Appraisal: An opinion of statement (written or oral) of the value of property.

Assessed Value: The value to which a local tax rate is applied to calculate the amount of real property tax.

Assumption of Loan, Mortgage or Deed of Trust: An agreement wherein the Buyer assumes or takes responsibility (becomes liable) for payment of an existing note secured by a mortgage or deed of trust.

Attorney Document Preparation Fee: Charged by attorney for preparing legal documents for the transaction.

Balloon Payment: One in which the scheduled payment will not fully amortize the loan over the term. Therefore, it requires a final payment called a balloon payment, larger than the uniform payments.

Bill of Sale: An instrument transferring ownership of personal property.

Breach of Contract: Failure without legal excuse to perform any promise that forms the whole or part of a contract.

Broker: A person who brings parties together and assists in negotiating contracts between them for a commission or fee.

Buyers Agency Agreement: A contract in which a buyer engages an agent to act on the buyer's behalf in purchasing a property.

Certificate of eligibility: A statement provided to veterans of military service setting forth the amount of loan guarantee to which they are entitled at that time.

Chain of Title: The chronological list of recorded documents affecting title to a specific parcel of real property.

Clear Title: A title that is free from any encumbrances, obstruction or limitation that would "cloud the title."

Closing: The consummation of a real estate contract. Also called settlement.

Closing Costs: The expenses incurred in a real estate transaction including costs of title examination, title insurance, attorney fees, document fees etc., paid at the time of closing.

Cloud on a Title: An outstanding claim against a title to real property.

Code of Ethics: A standard of conduct required by license laws and by the National Association of REALTORS.

Comparative Market Analysis (CMA): Presentation and analysis of the competition in the marketplace for a particular property for the purpose of arriving at a market price or listing price.

Contingency: A condition in a contract dependent upon a specific condition for its fulfillment.

Contract: An agreement between competent parties upon legal consideration to do or abstain from doing some legal act.

Counter-Offer: A new offer as to price, terms and/or conditions made in reply to and supersedes a prior offer.

Deed: A written document that transfers the interest in real property from one person to another.

Deed of Trust: A form of mortgage wherein there is a third party, who is called a trustee.

Deed Restrictions: Limitations on land written into a deed.

Department of Housing and Urban Development (HUD): A federal agency involved with housing.

Discount Points: Points a lender charges to reduce interest rate, may be paid by either Buyer or seller on conventional loans; one point is equal to 1 percent of the loan value.

Down Payment: The portion of the purchase price that the buyer pays in cash and does not finance.

Dual Agency: Representing two parties at the same time or in the same transaction.

Earnest Money: A deposit of money made by a buyer at the time of making an offer to demonstrate the earnest intent to purchase. Also called good faith deposit or escrow deposit.

Easement: A nonpossessory right of use in the land of another.

Eminent Domain: The legal right and procedures for a municipality to take title and possession of private property for public use.

Equity: The difference between the value of the property and the amount owed on the property.

Escrow Account: An account maintained by a real estate broker in an insured bank for the deposit of other people's money; also called trust account.

Federal Housing Administration (FHA): The federal agency that insures mortgage loans to protect lending institutions.

Fee Simple: Absolute ownership without limitations, conditions or restrictions burdening particular heirs.

Fiduciary: One who holds a position of trust and confidence to act primarily for the benefit of another in matters of responsibility.

Fixed-Rate-Mortgage: A mortgage in which the interest rate does not change during the course of the loan.

Funding Fee: May be charged by a lender to initiate a loan.

Inspections: Examinations of property for various reasons such as termite inspections, mechanical systems inspections, etc.

Interest: The premium paid for the use of money (based on an annual rate).

Joint Tenancy: A form of co-ownership that includes the right of survivorship.

Lien: A charge, hold or claim of another for the purpose of securing a debt or obligation.

Listing Contract Agreement: A written contract between an owner and an agent authorizing the agent to sell, lease or rent the owner's property in exchange for compensation.

Loan to Value (LTV): The ratio of the amount borrowed to the property's appraised value or selling price.

Market Value: The price for a property that a willing buyer and a willing seller would agree upon when neither is under abnormal pressure

Mechanic's Lien: A statutory lien to secure payment for persons contributing labor and/or materials towards improvements upon real property when the compensation was not paid in a timely manner.

Mortgage: A written instrument used to pledge of a promissory note.

Mortgage Insurance Premium (MIP): Charged on an FHA loan, insurance that is paid for by the borrower, for the life of the loan, to insure lender against default by borrower.

National Association of Realtors: The largest and most prominent trade organization of real estate licensees.

Offer: A promise made to another conditional upon acceptance by a promise or an act made in return.

Option: A contract giving one (optionee) the exclusive right to buy a property at a specified price for a specified period of time.

P.I.T.I.: Abbreviation for principal, interest, taxes and insurance in regard to a loan.

Principal: One who has permitted or directed another to act for his or her benefit and subject to his or her direction or control. Also; the amount of a loan to be repaid exclusive of interest.

Private mortgage Insurance (PMI): Charged on a conventional loan, insurance that is paid by the borrower to insure the lender against default.

Quitclaim Deed: A deed that contains no warranty of title. It is used to remove a cloud on a title.

Recording: The registration of a document on the public record.

Real Estate Settlement Procedures Act (RESPA): A federal law that requires lenders to give borrowers advance notice of closing costs.

Realtor: A real estate licensee who is a member of the National Association of REALTORS and who has agreed to abide by the ethics and standards of the organization.

Sales Contract: An agreement between buyer and seller on the price and other terms and conditions of the sale of property.

Special Assessment: A levy by a local government against real property for part of the cost of making an improvement to the property, such as paving streets, installing water lines, and making sidewalks.

Specific Performance: An instruction of a court requiring a defaulting party to a contract to buy and sell real property to specifically perform his or her obligations under the contract.

Survey: The measurement of land and the establishment of its' areas and boundaries.

Tax Lien: A statutory lien, in favor of the state or municipality, upon the land of a person charged with unpaid personal or real property taxes.

Time is of the Essence: A standard clause in real property contracts that indicates that punctual compliance is required.

Title: The basic rights of enjoyment and possession or interest in property; also used to describe a document that furnishes proof of ownership.

Title Insurance: An insurance policy protecting the insured from a financial loss caused by a defect in a title to real property.

Warranty Deed: A deed in which express covenants of good title and the right of possession are detailed and guaranteed.