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Frequently Asked Questions

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ABSTRACT OF LAW / JUDGMENT

The summary of a court judgment that has created a lien against a piece of property.

ABSTRACT OF TITLE

A summary of public records in regard to the title on a piece of property. Abstracts must be consulted to be certain there are no liens or other claims outstanding against the property before the buyer can purchase it.

ACCELERATED COST RECOVERY

A system of tax calculation that allows for greater depreciation of a piece of property in the first few years it is owned. (Also known as accelerated depreciation)

ACCELERATION CLAUSE

A provision in a mortgage that allows the lender to request the remaining balance of the loan if payments are not made on time.

ACCELERATED DEPRECIATION

See accelerated cost recovery.

ACCEPTANCE

A written document that the seller of a property has accepted the offer from a potential buyer.

ACCESSIBILITY

How easily a handicapped person can enter a building.

ACCRETION

A buildup of land caused by wind or water (usually occurs on waterways such as rivers and streams).

ACKNOWLEDGMENT

A written document that states that the person who signs it is doing so of their own free will (usually attached to legal documents).

ACRE

43,560 square feet of land.

ACRE FOOT

The volume needed to cover an acre of land one foot deep.

ACTUAL AGE

The precise age of a building since its construction.

ADDENDUM

An addition or change to an existing contract. Sometimes known as a rider.

BACK TITLE LETTER

A letter sent to an attorney that allows them to examine a property's title for insurance purposes.

CALL OPTION

A mortgage provision that allows a buyer to find out their balance at any time.

DEBT-TO-INCOME RATIO

The ratio of monthly payments on long-term debts divided by gross income, usually expressed as a percentage.

EARLY OCCUPANCY

Being able to move into a property before the official sale is completed.

FAIR CREDIT BILLING ACT

A federal law that allows consumers to sue credit card companies to recover funds lost due to billing errors.

GAG RULE

A contract provision that prevents property owners from publicly complaining about that property's builder.

HAZARD INSURANCE

Insurance that protects against common hazards such as fire or winds. It is generally required by all lenders before a mortgage is approved.

IMPACT FEES

Fees paid by property developers to finance community parks, schools, etc.

JOINT LIABILITY

When two or more people are liable for the terms of a mortgage.

LAND CONTRACT

See contract for deed.

MAJORITY

The age at which a person is no longer considered a minor.

NEEDS-BASED PRICING

A seller basing the price of their property on items that need to be fulfilled (i.e., buying another property). This may add to (or subtract from) the property's asking price.

OFFER

A monetary proposal for a property, usually from the buyer to seller.

PARCEL

Any officially designated plot of land.

QUALIFYING RATIO

A ratio used by a mortgage lender to determine how much a buyer can afford to borrow.

RATE-IMPROVEMENT MORTGAGE

A mortgage that includes a clause entitling a property buyer to a one-time interest reduction without having to go through the process of refinancing.

SALE-LEASEBACK

A property arrangement in which the buyer agrees to lease back the property to the seller for a period of a time.

TAP FEE

A fee charged by utility companies to begin service.

UNDERWRITING

A process by which mortgage lenders assess the risk of a potential property buyer, and adjust their loan terms accordingly.

VA LOAN

A Department of Veterans Affairs program that allows qualified veterans to secure a mortgage with little or no down payment.

WAIVER

The voluntary relinquishment of a right.

ZONING

The local regulation of land usage.

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