THE LANGUAGE OF REAL ESTATE
A formal declaration made before a duly authorized officer (usually a notary public) by a person who has executed an instrument that such execution is his or her act and deed.
Adjustable Rate Mortgage (ARM):
A mortgage in which the interest rate is adjusted periodically according to a preselected index. The terms, adjustment schedule and index to be used can vary based on the particular lender.
A relationship created when one person (the principal) delegates to another (the agent) the right to act on his or her behalf in business transactions.
American Land Title Association (ALTA):
A national association of title insurance companies, abstractors and agents. The association adopts standard title policy forms.
The process of paying off a debt in installments over a given period of time without a final balloon payment.
Annual Percentage Rate (APR):
An expression of the percentage relationship of the total finance charges to the total amount to be financed as required under the federal Truth-in-Lending Act.
An opinion of the value of property resulting from an analysis of facts affecting market value.
The value that a taxing authority places upon real or personal property for the purpose of taxation.
A mortgage loan which can be transferred to another person without a change in the terms of the loan.
The unpaid principal amount of a loan due on a specific date in the future. Usually the amount that must be paid in a lump sum at the end of the term.
The person who is entitled to receive funds or property under the terms and provisions of a will, trust, insurance policy or security instrument. In connection with a mortgage loan the beneficiary is the lender.
Bill of Sale:
An instrument by which title to personal property is transferred or conveyed.
A person licensed to act as an agent for another in negotiating the sale or purchase of real property in return for a fee or commission.
A financing technique used to reduce the monthly payment for the home buying borrower during the initial years of ownership. Under some buy down plans, a residential developer, builder or the seller will make subsidy payments (in the form of points) to the lender that “buy down,” or lower, the effective interest rate paid by the home buyer, thus reducing monthly payments for a set period of time.
CC & R’s (Covenants, Conditions and Restrictions):
Limitations placed on the use and enjoyment of real property. These are found most often in condominiums, subdivisions and planned unit developments.
Chain of Title:
A chronological list of recorded instruments tracing title to land from the original owner to the present owner.
Title to property which is free from liens, defects or other encumbrances.
The process of completing a real estate transaction during which the seller delivers title to the buyer in exchange for payment of the purchase price. Called a “settlement” in some areas.
Expenses, beyond the selling price, such as loan fees, title fees, etc. Paid when documents are executed and/or recorded and the sale is complete.
A summary, in the form of a balance sheet, showing the amounts of debits and credits to which each party to a real estate transaction is entitled upon closing.
Cloud on Title:
Any document, claim, unreleased lien or encumbrance, which, if valid, would affect or impair title to a property.
Compensation due a real estate broker for acting on behalf of the principal.
An abbreviation for comparable properties used for comparative purposes in the appraisal process.
A required element in all contracts by which something of value, including a promise, is exchanged for the act or promise of another.
Action conditioned upon a certain event. Acceptance of the terms of a contract based on something else happening or certain conditions being met.
The transfer of title or an interest in real property by means of a written instrument such as a deed of trust.
The tax, based on sales price, which is charged by the State of Hawaii on the transfer of real property.
The lender’s statement of the amount due to pay off a loan.
A clause in a mortgage loan which gives the lender the right to demand payment in full when the property changes ownership. Not applicable to FHA or VA loans.
The cash deposit paid by a prospective buyer as evidence of good faith to bind a sale of real estate.
A limited right or interest in land of another that entitles the holder of the right to some use, privilege or benefit over the land.
A claim, right or lien upon real property held by someone other than the owner.
The value of a person’s interest in real property after all liens and charges have been deducted.
The process in which a disinterested third party holds money and documents for delivery to the respective parties in a transaction on performance of established conditions.
Fair Market Value:
An appraisal term for the price which a property would bring in a competitive market given a willing seller and willing buyer, each of whom has a reasonable knowledge of all pertinent facts, with neither being under any compulsion to buy or sell.
An estate under which the owner owns a complete interest in the property and is entitled to the unrestricted use and enjoyment of the property including the right to dispose of the property.
Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac):
An agency that purchases conventional mortgages in the secondary mortgage market from depository institutions and Department of Housing and Urban Development (HUD) approved mortgage bankers.
Federal Housing Administration (FHA):
A division of the Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans by private lenders.
Federal National Mortgage Association (FNMA, Fannie Mae):
A tax paying corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by VA as well as conventional home mortgages.
A total of all costs imposed directly or indirectly by the creditor and payable either directly or indirectly by the customer, as defined by the federal Truth-in-Lending laws.
A mortgage on property that is superior in right to any other mortgage.
Fixed Rate Loan:
A loan on which the same rate of interest is charged for the life of the loan.
Personal property which is permanently attached to real property, and, as such, becomes part of the real property.
Foreign Investors Real Property Tax Act (FIRPTA):
Amount withheld by the buyer in a transaction involving Hawaii real estate where the seller is not a citizen of the United States.
One to whom a grant is made. The purchaser of real property.
One who has made a grant. The seller of real property.
Hawaii Real Property Tax (HARPTA):
Amount withheld by the buyer in a transaction involving Hawaii real estate where the seller is a non-resident of Hawaii.
An account held by a lender for the payment of taxes, insurance or other periodic debts against real property.
A means of ownership in which two or more persons own legal shares in real property. Upon the death of one tenant, his/her share passes to the remaining tenant(s) until the title is vested in the last survivor.
A description by which property can be definitely located by reference to surveys or recorded maps.
A recorded document which claims an interest in real property as security to a debt owed. Such liability may be created by contract, such as a deed of trust, or by court judgment.
Legal notice that a lawsuit is pending. Also called a Notice of Pendency of Action.
Loan to value ratio:
The ratio of the mortgage loan’s principal to the property’s appraised value or its sales price, whichever is lower.
An appraisal term denoting the highest price that a buyer, willing but not compelled to buy, would pay and the lowest a seller, willing but not compelled to sell, would accept.
A lien on real estate which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvement on real estate.
Metes and bounds:
A form of land description in which boundaries are described by courses, directions, distances and monuments.
A legal document used to secure the performance of an obligation.
The certification by a notary public that a person signing a document has been properly identified. Notarization does not certify the content of a document, only validity of signature.
A fee charged by the lender to fund a loan, in addition to and separate from other fees charged. One point equals one percent of the amount of the loan.
The sum of money outstanding upon which interest is payable. Also refers to one who is served by an agent.
The method used in dividing charges into that portion which applies only to a party’s ownership up to a particular date.
The process of reviewing a prospective borrower’s credit and payment capacity prior to approving a loan.
A deed relinquishing all interest, title or claim in a property by a grantor. Accomplished without representing that such title is valid, nor containing any warranty or covenants of title.
Real Estate Settlement Procedures Act (RESPA):
A federal statute requiring disclosure of certain costs in the sale of residential, improved property which is to be financed by a federally insured lender.
Involves filing for record in the Bureau of Conveyances and/or the Office of the Assistant Registrar of the Land Court of the State of Hawaii for the purpose of giving constructive notice of title, claim or interest in real property.
The original recording system of Hawaii. Documents in this system are recorded in the Bureau of Conveyances.
An agreement under which a prior or superior lien is made inferior or subject to an otherwise junior lien.
A statutory lien imposed against real property for nonpayment of taxes.
Tenancy in Common:
Co-ownership in a property by two or more persons, each of whom has an undivided interest in the whole property.
A person who holds title in trust for the benefit of another. In a deed of trust the trustee is the person named to hold title in trust for the benefit of the lender until the loan is paid off.
Uniform Settlement Statement:
The real estate closing form required by the Real Estate Settlement Procedures Act (RESPA) in order to account for all funds received, all disbursements made,and all expenses and all credits at closing.The form is more commonly known as a HUD-1.
Title which contains defects that would allow a purchaser to be released from his obligation to purchase.