Glossary

The "to have and to hold" clause that defines or limits the quantity of the estate granted in the deed. For example, the clause "to have and to hold for one’s lifetime" creates a life estate.

Protection for a homeowner against property damage, loss and legal liability caused by fire, storm, theft and other common hazards. Mortgage lenders usually require a borrower to carry hazard insurance on the mortgaged property for the term of the loan. Special policies cover landlords, renters and condominium owners. Some hazards are not covered by standard policies. Special flood insurance is available from the federal government in participating communities.

Terminology used in deeds and wills to provide that the recipient receive a fee simple estate in lands rather than a lesser interest. These words give the recipient complete ownership, not just an estate for a limited time.

Any property that may be inherited, whether real or personal, tangible or intangible.

An appraisal term meaning the legally and physically possible use that, at the time of appraisal, is most likely to produce the greatest net return to the land or buildings or both over a given time period. To realize the full value of land, the improvements built on it must fulfill its highest and best use.

One who has taken a note, check or similar asset (1) before it was overdue, (2) in good faith and for value, and (3) without knowledge that it had been previously dishonored and without notice of any defect at the time it was negotiated. A holder in due course is an innocent buyer of paper (a debt).

The time that an investor holds an asset, generally from acquisition until it is sold or exchanged.

A tenant who remains in possession of leased property after the lease term expires. A holdover tenant has a tenancy at sufferance. The landlord may dictate the terms of the lease.

A loan secured by a second mortgage on a home. Homeowners often use the money borrowed for nonhousing expenses, such as an automobile or college tuition. Alternatively, homeowners may raise cash by refinancing the first mortgage for a larger amount of principal.

A professional examination of a house to check for defects. The buyer usually has the option to have a house inspected before the closing. The sales contract may obligate the seller to repair, up to a dollar cost limit, any defects discovered by the inspection.

A licensed professional who performs home inspections for a fee.

A residential structure. Home implies an occupied structure. House is the physical structure alone. Housing usually means an inventory of houses.

Someone in the process of shopping for or purchasing a home.

An individual or household who own the home they occupy.

A periodic charge required of all homeowners within the association’s jurisdiction. The fee pays to maintain common areas and support the efforts of the association. See condominium fee and maintenance fee. Homeowners’ associations often are organized by a condominium or subdivision developer to be turned over to the homeowners when all the units or homes are sold. In a subdivision, the association may maintain common recreational facilities, or the association may serve merely to enforce deed restrictions. Each homeowner who buys in the subdivision agrees to abide by the strictures and to pay fees to the association when accepting the deed to the property.

Hazard insurance covering the interest of a homeowner. See insurance.

A guarantee against defects provided by a seller or developer to a buyer. Most often associated with newly constructed homes, a warranty is intended to protect the buyer from problems that may occur during the first few years of ownership.

Status provided to a homeowner’s principal residence by some state statutes; protects home against judgments up to specified amounts. In states that honor homesteads, the owner can continue possession and enjoyment of a home against the wishes of creditors.

In some jurisdictions, a reduction in the assessed value allowed for one’s principal residence. In Texas, the homestead exemption reduces assessed values for owners; additional exemptions may be claimed by those past age 65.

Uniform settlement statement required by federal law to be used for residential closings. Both buyer and seller should receive the form prior to closing. The form details all transaction expenses and identifies the persons obligated to pay them. If a net amount is due from anyone, that person should take a certified or cashier’s check for the specified amount to the closing.

To pledge a thing as security without having to give up possession of it. The word hypothecate comes from the French language and has the same meaning as mortgage in English.