ABSTRACT OF TITLE: a summary or digest of the conveyances, transfers, and other facts relied on as evidence of title, together with any other elements of record which may affect the marketability of the title.

ACCESSION: the theory that the land owner is entitled to all that the soil produces and all improvements added to the land either intentionally or by mistake.

ADVERSE POSSESSION: a method of acquiring title to real property that is owned by someone else by holding open, continuous, hostile and notorious possession for a statutory period of time.

AFFIDAVIT: a statement or declaration reduced to writing, signed and sworn to before a notary public or other authorized official.

AGENCY: the relationship between principal and agent, formed by a contract in which the principal employs the agent to act in his behalf in dealing with third parties. The contract defines and limits this authority.

AIR LOT: a designated cube of air such as a condominium unit on the second floor. The title to this air space can be transferred just like ownership of any other real property.

AMORTIZED LOAN: a loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payment Plan.

ANNUAL PERCENTAGE RATE (APR): the total cost of credit, expressed as a percentage. The APR includes the interest rate and other finance charges.

APPURTENANCE: anything, such as a physical item or a right or a privilege, that passes with the title to the land (i.e., buildings, fences, fixtures, easements, mineral rights, etc.); that which goes with or pertains to the land.

ASSUMPTION OF MORTGAGE: the process of acquiring title to property which is the security of an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage.

ATTORNEY IN FACT: a person who has been given the authority to act for another person. The document that gives him this authority is called a 'power of attorney'. An attorney in fact may be given the authority to sign contracts that are legally binding on the principal, the person granting the 'power of attorney'.

BALLOON LOAN: a loan in which one (or more) payment is larger than the regular payments. A typical balloon loan, for example, might require $400 per month for ten years and then a final 'balloon' payment of $5,000.

BARGAIN AND SALE DEED: a deed that contains no covenants but does imply that the grantor owns the property being conveyed.

BIANNUAL: occurring twice a year; semiannual.

BIENNIAL: occurring once every two years.

BILL OF SALE: a document used to transfer ownership of personal property (not real estate).

BINDER: a temporary binding agreement usually in writing (such as a written agreement from an insurance company that provides coverage until a formal policy can be issued).

BROKER: a living person or legal entity licensed to act as an agent to negotiate for the sale, lease, exchange, or financing of property for a fee.

CAVEAT EMPTOR: a Latin phrase meaning 'let the buy beware'. Under the theory of this legal maxim, the buyer is expected to inspect, judge, and evaluate the property carefully before purchasing.

CHATTEL MORTGAGE: a mortgage in which personal property is used as collateral.

CLOSING: the settlement; the consummation or finalization of a transaction.

CONDOMINIUM: a system of individual fee ownership of units in a multiunit complex, combined with an interest in the common elements.

CONSTRUCTION LOAN: a loan to finance the improvement of real estate. This is usually 'interim financing' in which portions of the loan are given to the builder as different stages of the construction are completed.

CONTINGENCY: a condition placed in a contract which requires a specific event or action to happen, or not happen, before that contract is binding.

CONVENTIONAL LOAN: a loan which is neither insured or guaranteed by the government. A conventional loan is, therefore, not an FHA insured nor a VA guaranteed loan.

CO-SIGNER: someone who accepts an equal obligation for the performance of a contract, note, or other act by signing the document involved.

COUNTER OFFER: a new offer made in reply to a previous offer received. It constitutes a rejection of the original offer.

DEED: a written document that, when properly drawn, conveys title (or interest in) real property.

DOWER: the legal rights that some states (Michigan for example) give a wife in her husband's property.

DUE-ON-SALE: a clause in mortgages that allows the lender to accelerate the balance owed if the borrower sells the property. This is also called a 'non-assumption clause' or an 'alienation clause'.

EASEMENT: the right or privilege one party has to use land belonging to another for a special purpose. The easement holder does not have title or possession, only a specific limited use, such as the right of ingress and egress (right to enter and exit) in order to go across the property.

ENCROACHMENT: the extension of some improvement or other object across the boundary of an adjoining property; for example, a portion of a building or tree limb that protrudes beyond its property lines.

ENCUMBRANCE: any interest in, claim, or liability on the land of another; i.e., zoning restrictions, easements, claims, mortgages, liens, pending legal action, unpaid taxes, or any form of restrictive covenants.

FARMERS HOME ADMINISTRATION (FmHA): a federal agency, under the U.S. Department of Agriculture, originally created to provide emergency financing for farms, FmHA also loans on single-family homes located on one acre or less in area having a population of less than 10,000. FmHA makes direct loans and also guaranteed loans that are made and serviced by private lenders.

FEDERAL HOUSING ADMINISTRATION (FHA): a federal agency which encourages lenders to loan on homes by providing insurance to safeguard the lenders against the risks. The borrowers pay an insurance premium to pay for this program.

FIXTURE: an article which was once personal property, but is now so affixed to real estate that it has become real property and transfers automatically with the land.

LAND CONTRACT: a written agreement in which real estate is sold to a buyer who pays part of the purchase price when the contract is signed and then makes regular payments over a specified period of time. The title to the property remains with the seller until the total purchase price is paid.

LEVERAGE: using borrowed money to finance an investment so that you will be making money on borrowed money.

LIFE ESTATE: an interest in real property which is given to a person only for the duration of someone's life.

LIS PENDENS: a notice that a lawsuit is pending.

LITTORAL RIGHTS: the rights that a land owner has to the use and enjoyment of a lake or sea that borders his land.

MARKETABLE TITLE: title that is free from defects and which a purchaser would accept without any objections.

MECHANICS LIEN: a lien placed on property by an unpaid workman or a material supplier for improvements to the property.

OPTION: the right to purchase a property at a stipulated price and terms within a certain period of time.

ORIGINATION FEE: finance fee charged by a lender for arranging a mortgage loan.

OWNERS' ASSOCIATION: an association, made up of owners in a condominium or PUD ('Planned Unit Development', for example a subdivision), that meets to establish rules and to regulate and maintain the upkeep of the common elements.

PERSONAL PROPERTY: movable objects; everything that is not real property; also called chattel or personalty.

PITI: stands for principal, interest, taxes, and insurance; refers to the payments in a budget mortgage which includes those four items.

POWER OF ATTORNEY: authorization a person gives to another to act for him.

PUD: 'Planned Unit Development'

PURCHASE MONEY MORTGAGE: a mortgage held by an individual (usually the seller) rather than a financial institution. Title to the property is transferred to the buyer, which is one of the main features distinguishing it from a 'land contract'.

REAL ESTATE: land and everything that is so permanently attached that it transfers with the title to the land.

REGISTRAR OF DEEDS: the government officer in charge of the records office.

REGULATION 'Z': a federal law requiring lenders to disclose information about actual borrowing expenses to all prospective borrowers so that they can compare terms of different lenders.

SECOND MORTGAGE: a mortgage on property that already has a first mortgage loan. The first mortgage usually takes priority over a second mortgage.

TRANSFER TAX: a tax charged to the seller of real estate.

USURY: the act of charging a rate of interest above the limit set by law.

VA GUARANTEED MORTGAGE: a mortgage loan made to a qualified veteran by a lender and guaranteed by the Veteran's Administration in order to limit the lender's risk of loss due to default.

VARIANCE: permission from zoning authorities to a property owner who is unfairly burdened by a zoning law (allowing an exception to the zoning).

WARRANTY DEED: a deed in which the grantor makes certain promises to guarantee the quality of title.