Glossary

A deposit made by a purchaser of real estate to evidence good faith. Earnest money should accompany an offer to buy property. Generally a broker, attorney or title company deposits the money in a separate account beyond the control of the principals until the contract is completed.

The term used in Texas for an agreement of sale contract. The Texas Real Estate Commission makes preprinted forms available for several types of transactions.

The right, privilege or interest that one party has in the land of another, such as the right of public utility companies to lay their lines across another’s property. Easements allow utility service without requiring the public utility to buy the land. However, a potential real estate purchaser should determine exact locations of all easements to be sure they will not interfere with planned land uses.

Loss of value from all causes outside the property itself. For example, a private home’s value may drop when a sanitary landfill is placed nearby.

That remaining period for which real estate improvements are expected to generate income greater than operation expenses cost. As land improvements age, they tend to command less rent (in real terms) while maintenance costs rise. The economic life is the expected life of positive contributions to value by buildings or other land improvements.

See economic depreciation.

The rate of interest on a loan, considering its face rate and discount points. See annual percentage rate.

The ability to reach a road from a parcel of land.

Action to regain possession of real property and for damages for unlawful possession. Allows a rightful owner to remove a squatter or trespasser.

The right of the government or a public utility to acquire property for necessary public use by condemnation; the owner must be fairly compensated. Governments or those with governmental authority can acquire property they need under the Fifth Amendment and state constitutions. The amount of compensation is negotiable.

A building, a part of a building, or any improvement that physically intrudes upon, overlaps or trespasses upon the property of another. A survey often is required as part of a real estate contract to determine whether there are any encroachments on the property.

Any right to or interest in land that diminishes its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions, mechanics’ liens and leases.

The act of signing one’s name on the back of a check or note, with or without further qualification; also, the signature itself.

The difference between the value of a property and outstanding mortgage debt. When a property is purchased, equity is equal to the down payment, assuming the buyer paid market value. Over time, equity increases as the property’s value increases and mortgage debt is repaid. If value falls, however, equity can diminish and even become negative.

The right of a real estate owner to reclaim property after default, before foreclosure proceedings, by the payment of the debt, interest and costs. See redemptive rights.

The gradual wearing away of land through processes of nature, as by water (oceans, lakes and streams) and winds.

The reversion of property to the state in the event that the owner dies without leaving a will or legal heirs. The assets of a person who has no legal heirs will escheat to the state unless a will is prepared that leaves property to another party.

An agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of some act or condition. It is prudent to place money or property in escrow, rather than giving it to the other principal in a pending transaction.

See trust account.

Any person or organization engaged in the business of receiving escrows for deposit or delivery, such as a lawyer, title company or broker.

Money deposited with and held by a third person to be dispersed for a specific purpose in the future. Usually, earnest money is held in escrow until closing when it is credited to the buyer’s account. Lenders collect funds monthly for an escrow account that pays insurance premiums and property tax assessments as they become due.

The degree, quantity, nature and extent of interest a person has in real or personal property.

The wrongful occupancy of property by a tenant after the lease has expired.

The occupation of real estate by a tenant for an indefinite period, terminable by one or both parties at will.

An interest in property that terminates upon the death of a specified person. See life estate.

An interest in land allowing possession for a definite and limited time.

An estate left by the grantor for himself or herself, to begin after the termination of some particular estate that he or she grants. For example, a landlord’s estate in reversion becomes his or hers to possess when the lease expires.

A document by which the mortgagor (borrower) certifies that the mortgage debt is a lien for the amount stated. The mortgagor is thereafter prevented from claiming that the balance due differed from the amount stated. Also applies to leases. The buyer of property on which there is a mortgage or lease should get estoppels to be sure the terms of those agreements are as expected. The right to get estoppel certificates is in the lease or mortgage.

Latin; abbreviation of et alii, "and others."

Latin; abbreviation of et uxor, "and wife."

A legal proceeding by a lessor (landlord) to recover possession of property. Allows landlord to regain property when tenant does not uphold lease. A legal process must be followed.

Exists where the possessor of the property is deprived of a portion thereof.

Contract giving only one broker the right to sell the property for a specified time and also allowing the owner to sell the property himself or herself without paying a commission. This is sometimes arranged when an owner wants to continue personal selling efforts while employing a broker. Acceptable to some brokers for some properties.

Contract giving the broker the right to collect a commission if the property is sold by anyone, including the owner, during the term of the agreement, and often beyond the term to someone the broker introduced. See exclusive agency listing and open listing.

Free from blame. An exculpatory clause in a mortgage allows the borrower to default without having personal liability.

To make out a contract; to perform a contract fully. Unsigned contracts in real estate are generally meaningless.

A contract, all terms and conditions of which have been fulfilled. When executed, a contract is enforceable.

A man designated in a will to carry out its provisions concerning the disposition of the estate. See executrix. The person making a will should name an executor or co-executor who is trustworthy and capable of carrying out its terms. If there is no will and no executor, the court appoints an administrator.

A woman designated in a will to carry out its provisions concerning the disposition of the estate. See executor.

Situations not bound by the general rules.

Terms used to mean transaction costs. See transfer fees. On a typical settlement statement, several charges are listed for minor services required during the transaction. These charges may include legal fees, survey expenses and document preparation costs.