Real Estate Terms

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• Caveat emptor   A legal principle derived from Latin than means “let the buyer beware.”
• Ceiling height   The standard height of a ceiling is eight feet.
• Central air conditioning   A device that generates cold air through an outside unit that is connected to ductwork inside the house.
• Central business district   The area of a city where most large businesses are located.
• Certificate of Deposit (CD)   A document which shows that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm or other financial institution.
• Certificate of deposit index   An index based on the interest rates on six-month CDs. It used to determine the interest rate for some adjustable-rate mortgages.
• Certificate of eligibility   A document issued by the Veterans Administration that verifies the eligibility of a veteran for a loan program.
• Certificate of occupancy   A document which states that a home or other building has met all building codes and is suitable for habitation.
• Certificate of sale   A document issued at a judicial sale, which entitles the buyer to receive a deed after court confirmation of the purchase of the property.
• Certificate of title   A written opinion on the status of a piece of property based on an examination of the public record.
• Chain of title   The official record that details the ownership history of a piece of property.
• Chair railing   Decorative trim installed on a wall about 32 inches above the floor, which protects against scuffs from furniture.
• Change order   A modification of the construction contract to authorize a change in the work, an adjustment in the amount of the contract or a change in the contract time. The owner, architect and contractor must sign the change.
• Change frequency   The adjustment schedule on an adjustable-rate mortgage.
• Chattel   Personal property such as furniture, clothing or a car.
• Chattel mortgage   A lien on personal property used as collateral for a loan.
• Chimney back   The back wall or lining of a fireplace or furnace chimney.
• Chimney flue   The passage inside a chimney that channels smoke and heat to the outside.
• Chimney pot   A short pipe at the top of a chimney that increases ventilation to the fireplace and reduces smoke.
• Cinder block   A block made of ash and cement that is used in construction.
• Cinder fill   Cinders used below a basement or around a foundation to promote drainage.
• Circuit breaker   An electric fuse that activates or deactivates a circuit.
• Cistern   A tank used to store rainwater.
• Classified property tax   A tax that varies in rate depending on the use of the property.
• Clear title   A property that does not have liens, defects or other legal encumbrances.
• Closing   The final procedure in which documents are signed and recorded, and the property is transferred.
• Closing costs   Expenses incidental to the sale of real estate, including loan, title and appraisal fees.
• Closing statement   A document which details the final financial settlement between a buyer and seller and the costs paid by each party.
• Cloud on title   An invalid encumbrance on real property.
• Cluster development   A method of squeezing more homes into less space.
• Codicil   A change to a will that adds or subtracts provisions or clarifies portions of the document.
• Co-housing   Individual housing units that are clustered around a common building where residents share cooking and other activities.
• Coign   The cornerstone of a building that differs in shape or color from the rest of the wall.
• Co-insurance   Coverage that involves the use of two or more insurers..
• Collar beam   The structural element that connects roof rafters.
• Collateral security   Additional security that a borrower supplies to obtain a loan.
• Collection   The series of steps a lender takes to bring a delinquent mortgage up to date.
• Collusion   The action of two or more people to break the law.
• Colonia   Unincorporated communities along the U.S.-Mexico border.
• Column   A slender upright structure that consists of a base, a round or square shaft and a capital.
• Column footing   The support base for a load-bearing column. The footing is usually made of reinforced concrete.
• Co-maker   A person who signs a promissory note with the borrower and assumes responsibility for the loan.
• Combination door   An outer door with interchangeable screen and glass panels.
• Combination window   A window with interchangeable screen and glass panels.
• Commercial bank   A financial institution that provides a broad range of services, from checking and savings accounts to business loans and credit cards.
• Commercial property   An area that is zoned for businesses.
• Commingling   The mixing of money held in trust with other funds.
• Commission   The negotiable percentage of the sales price of a home that is paid to the agents of the buyer and seller.
• Commitment   A promise by a lender to make a loan with specific terms for a specified period.
• Commitment fee   The fee a lender charges for promising to make a loan.
• Common area   An area inside a housing development that is owned by all residents.
• Common-area assessments   Fees paid by the owners of a condominium project or planned-unit development to maintain, repair, improve or operate common areas.
• Common-interest development   A project composed of individually owned units that share usage and financial responsibility for common areas.
• Common law   A body of laws based on custom, usage and rulings by courts in various jurisdictions.
• Community property   Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states.
• Community Reinvestment Act   A federal law that encourages financial institutions to loan money in the neighborhoods where minority depositors live.
• Commute   The distance and time it takes a person to reach the workplace.
• Comparables   Properties used as comparisons to determine the value of a certain property.
• Comparative market analysis   An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.
• Competent   A term for a buyer who is legally fit to enter into a sales contract.
• Compound interest   The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.
• Concrete tilt-up   The process of pouring concrete into forms on the ground, allowing the forms to harden and then raising the material to a vertical position to form walls.
• Condemnation   The process the government uses to take private property for public use without the consent of the owner.
• Conditional commitment   A promise by a lender to make a loan if the borrower meets certain conditions.
• Condominium   Individual units in a building or development in which owners hold title to the interior space while common areas such as parking lots, community rooms and recreational areas are owned by all the residents.
• Condominium conversion   The change in title from a single owner of an entire project or building to multiple owners of individual units.
• Conduit   A metal pipe that houses electrical wiring.
• Consent judgment   A binding written agreement between two parties to have a judgment entered and recorded.
• Conservator   A court-appointed guardian.
• Consideration   Anything that is legal, has value and induces a person to enter into a contract.
• Construction budget   The funding that an owner arranges for the construction of a project.
• Construction documents   Drawings and specifications from an architect that provide detailed requirements for the construction of a project.
• Construction loan   Short-term loans a lender makes for the construction of homes and buildings. The lender disburses the funds in stages.
• Construction to permanent loan   The conversion of a construction loan to a longer-term traditional mortgage after construction has been completed.
• Consumer Credit Counseling Service (CCCS)   A nationwide, nonprofit organization that helps consumers get out of debt and improve their credit profile. National headquarters: 8701 Georgia Avenue., Suite 507, Silver Springs, MD 20910. Phone: (800) 388-2227.
• Contemporary style   A design that features streamlined shapes, large unadorned windows and industrial materials.
• Contiguous lots   Pieces of property that are adjoined.
• Contingency   A condition specified in a purchase contract, such as a satisfactory home inspection.
• Contingency listing   A property listing with a special condition attached.
• Contingent fee   A fee that must be paid if a certain event occurs.
• Contract   An agreement between two or more parties that creates or modifies an existing relationship.
• Contract for deed   A contract in which the seller agrees to defer all or part of the purchase price for a specified period of time.
• Contract to purchase   A contract the buyer initiates which details the purchase price and conditions of the transaction and is accepted by the seller. Also known as an agreement of sale.
• Contractor   The individual who contracts for the construction of a home or project.
• Contractual lien   A voluntary obligation such as a mortgage or trust deed.
• Controlled growth   Any restrictions imposed on the amount or type of new development in an area.
• Conventional loan   A long-term loan a lender makes for the purchase of a home.
• Convertible adjustable-rate mortgage   A mortgage which starts as an adjustable-rate loan, but allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.
• Conveyance   The transfer of title of property.
• Conveyance tax   A tax imposed on the transfer of real property.
• Cooperating broker   A real estate broker who finds a buyer for a property that another broker has listed.
• Cooperative corporation   A business trust that holds the title to a cooperative residential building and grants occupancy rights to shareholders in the corporation.
• Cooperative mortgages   Any loans related to a cooperative residential project.
• Cooperative project   A project in which a corporation holds title and sells shares representing individual units to buyers who then receive a proprietary lease as their title.
• Cornice   A horizontal molding that projects from the top of a structure or wall.
• Corporate relocation   An arrangement by which employers pay to transfer and move employees.
• Co-signer   A second party who signs a promissory note and takes responsibility for the debt.
• Counteroffer   A response to an offer.
• Corner bead   A reinforcement placed in the corner where two walls intersect.
• Corner influence   The effect on the value of a property because it is situated on a corner or near a corner.
• Corrective work   Necessary or desired repairs to remedy problems uncovered by a home or specialized inspection.
• Cost-plus contract   A construction contract that determines the builder’s profit based on a percentage of the cost of labor and materials.
• Cottage   A small, one-story house.
• Covenant   A legal assurance or promise in a deed or other document, or implied by the law.
• Covenants, conditions and restrictions (CC&Rs)   Rules and regulations for a development, such as acceptable landscaping or improvements that can be made to individual units.
• Craftsman style   An architectural style that evolved as part of the Arts and Craft movement near the turn of the century.
• Crawl space   The space between the ground and the first floor of a home, usually no higher than four feet.
• Creative financing   Innovative home-financing arrangements that help sell a property.
• Credit   The money a lender extends to a buyer for a commitment to repay the loan within a certain time frame.
• Credit history   A record of an individual’s current and past debt payments.
• Creditor   An individual or institution to whom a debt is owed.
• Credit life insurance   Insurance that pays off a mortgage in the event of the borrower’s death.
• Credit rating   The degree of credit worthiness assigned to a person based on credit history and financial status.
• Credit report   A credit bureau report that shows a loan applicant’s history of payments made on previous debts. Several companies issue credit reports, but the three largest are Trans Union Corp., Equifax and Experian (formerly TRW ).
• Credit repository   Large companies that gather financial and credit information from various sources about individuals who have applied for credit.
• Credit union   Nonprofit cooperative organizations that provide banking and financial services, including mortgages, home improvement loans and home equity loans, to their members.
• Cross-bridging   The strengthening of a structure by bracing cross members between beams.
• Cul de sac   A street or alley that is closed at one end.
• Cupola   A dome-like structure that sits on top of a roof.
• Curable defect   A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.
• Curb appeal   The first impression of a house as seen from the street.
• Curtain wall   An exterior wall that encloses a yard or other area but does not provide any structural support to a home.
• Custom builder   A builder who constructs a home or building based on plans created by the owner.
• Custom home   A structure designed by an architect hired by the owner.
• Call option   A clause in a loan agreement that allows a lender to ask for the balance at any time.
• Can lights   Cylindrical chambers with bulbs recessed into the ceiling.
• Cancellation clause   A clause that details the conditions under which each party may terminate the agreement.
• Cantilever   A projecting structure supported on one end, such as a balcony.
• Cap   A limit on the amount the interest rate or monthly payment can increase in an adjustable-rate mortgage.
• Cape Cod style   A wood-frame or shingled house with a steep roof and several windows projecting from the second floor.
• Capital   Money used to create income, such as funds invested in rental property.
• Capital expenditure   The cost of making improvements on a property.
• Capital gains   Profits an investor makes from the sale of real estate or investments.
• Capital gains tax   A tax placed on the profits from the sale of real estate or investments.
• Capital improvement   Any improvement that extends the life or increases the value of a piece of property.
• Capitalization   A mathematical formula that investors use to compute the value of a property based on net income.
• Capitalization rate   The percentage rate of return estimated from the net income of a piece of property.
• Caravan   A group of real estate agents who tour a house that has been recently listed for sale.
• Carport   A roof that covers a driveway or other parking area.
• Casement window   A window hinged on its sides to allow it to swing open vertically.
• Cash flow   The amount of cash a rental property investor receives after deducting operating expenses and loan payments from gross income.
• Cashier’s check   A check the bank draws on itself rather than on a depositor’s account.
• Cash-out refinance   The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan. The borrower can use the extra funds in any manner.
• Cathedral ceiling   A high open ceiling formed by finishing exposed roof rafters.
• Caulk   An acrylic or silicon sealant used to fill cracks, crevices and holes in a home.
• Cavedium   A courtyard or atrium.
• Caveat   A formal notice, that asks a court to suspend action until the party which filed the challenge can be heard.

• Back fill   Soil used to solidify the foundation of a structure.
• Back title letter   A letter that a title insurance company gives to an attorney who then examines the title for insurance purposes.
• Back-to-back escrow   Arrangements that an owner makes to oversee the sale of one property and the purchase of another at the same time.
• Backup offer   A secondary bid for a property that the seller will accept if the first offer fails.
• Backwater valve   A valve in a sewer line that prevents sewage from flowing back into a house.
• Balance sheet   A statement that shows the assets, liabilities and net worth of an individual.
• Balloon-frame construction   A type of framing used in two-story homes in which studs extend from the ground to the ceiling of the second floor.
• Balloon loan   A mortgage in which monthly installments are not large enough to repay the loan by the end of the term. As a result, the final payment due is the lump sum of the remaining principal.
• Balloon payment   The final lump sum payment due at the end of a balloon mortgage.
• Balustrade   Railing held up by a set of posts on a porch or stairway.
• Bankruptcy   A proceeding in which an insolvent debtor can obtain relief from payment of certain obligations. Bankruptcies remain on a credit record for seven years and can severely limit a person’s ability to borrow.
• Bargain sale   The sale of a piece of property for less than market value.
• Baseboard   Any board or molding found at the bottom of an interior wall.
• Baseboard electric heat   Heating units installed in the floor that can be controlled by a central thermostat.
• Basement   The area of a home below ground level.
• Basis Point   A basis point is one one-hundredth of one percentage point. For example, the difference between a loan at 8.25 percent and a mortgage at 8.37 percent is 12 basis points.
• Bay   The opening between two columns or walls that forms a space.
• Bay window   A window that projects outward in a curve.
• Bearing wall   A wall that supports its own weight in addition to other parts of a structure.
• Beneficiary   The lender who makes a loan, also called a mortgagee. The person borrowing money is the mortgagor.
• Before-tax income   Total income before taxes are deducted.
• Bequest   Personal property given to a person through a will.
• Betterment   An improvement that increases a property’s value as opposed to repairs that maintain the value.
• Bidding war   Offers from multiple buyers for a piece of property. Agents also sometimes compete to list a house for sale.
• Bilateral contract   A contract in which the parties involved give mutual promises. Also called “reciprocal” contracts.
• Bill of sale A document that transfers ownership of personal property.   
• Binder   A report issued by a title insurance company that details the condition of a home’s title. and provides guidelines for a title insurance policy.
• Biweekly mortgage   A mortgage that requires payments every two weeks and helps repay the loan over a shorter term.
• Blanket insurance policy   A policy that covers more than one person or piece of property.
• Blanket mortgage   A mortgage that covers more than one property owned by the same borrower.
• Blighted area   A neighborhood that has deteriorated.
• Blind nailing   Nails driven into a wall and concealed with putty.
• Blueprint   
• Blue-ribbon condition   A house maintained close to its original condition. Also called mint condition.
• Blue sky laws   Regulations on the sale of securities to prevent consumers from investing in fraudulent or high-risk companies without being informed of the risks.
• Board-and-batten siding   Siding is composed of 8- to 12-inch wide wooden boards nailed vertically to create a barn-like exterior.
• Board foot   Measurement of lumber that is the equivalent of 144 cubic inches.
• Board of Equalization   A state board charged with ensuring that local property taxes are assessed in a uniform manner.
• Boilerplate   Form language used in deeds, mortgages and other documents. Details can be added by individual parties.
• Bona fide   A legal term that refers to actions or persons that are honest and in good faith.
• Bond   An agreement that insures one party against loss by acts or defaults of another party.
• Book value   The value of a property as a capital asset based on its cost plus any additions, minus depreciation.
• Boring test   An analysis of soil in which holes are bored into the ground and samples are removed.
• Borough   A section of a city that has authority over local matters.
• Borrow   Sand, gravel or other material used for grading.
• Borrow pit   The hole at a site that has been excavated.
• Boulevard   A street lined with trees or constructed with a landscaped median.
• Boundary   The dividing line between two adjacent properties.
• Braced framing   A construction method in two-story homes in which the frame is reinforced with posts and braces.
• Breach of contract   The failure to perform provisions of a contractwithout a legal excuse.
• Breach of covenant   The failure to obey a legal agreement.
• Breach of warranty   A seller’s inability to pass clear title to a buyer.
• Break-even point   The point in which the owner’s rental income matches expenses and debt.
• Breast height   The height at which the diameter of a tree is measured: four feet, six inches above the ground.
• Breezeway   A roofed passageway with open sides.
• Brick   Building material made from clay molded into oblong blocks and fired in a kiln.
• Bridge loan   A short-term loan for borrowers who need more time to find permanent financing.
• Brokerage   The act of bringing together two or more parties in exchange for a fee or commission.
• Broker   A person licensed by the state to deal in real estate.
• Broom clean   The ideal condition of a building when it is turned over to an owner or tenant.
• Brownstone   A vintage row house constructed of red sandstone.
• Buffer strip   A parcel of land that separates two or more properties.
• Building and loan association   An organization that raises money to helps its members purchase real estate or construct a building.
• Building code   A comprehensive set of laws that controls the construction or remodeling of a home or other structure.
• Building inspector   A city or county employee who enforces the building code and ensures that work is correctly performed.
• Building moratorium   A halt on home construction to slow the rate of development.
• Building paper   A thick, water-resistant paper that serves as insulation.
• Building permit   A permit issued by a local government agency that allows the construction of home or renovation of a house.
• Builder upgrades   Extra house features or better finishing materials that a builder offers.
• Building line or setback   Guidelines that limit how close an owner can build to the street or an adjacent property.
• Building restrictions   Regulations that limit the manner in which property can be used.
• Built-ins   Appliances or other items that are framed into a home or permanently attached.
• Bulkhead   A retaining wall designed to hold back water from the ocean or another body of water.
• Bundle of rights   The various interests or rights an owner has in a property.
• Bungalow   A small one-story house or cottage.
• Butterfly roof   A roof formed by two gables that dip in the middle to resemble a butterfly’s wings.
• Buy-down mortgage   A home loan in which the lender receives a premium as an inducement to reduce the interest rate during the early years of the mortgage.
• Buyer broker   A real estate broker who exclusively represents the buyer’s interests in a transaction and whose commission is paid by the buyer rather than the seller.
• Buyer’s market   A slow real estate market in which buyers have the advantage.
• Buyer’s remorse   An emotion felt by first-time homebuyers after signing a sales contract or closing the purchase of a house.
• Bylaws   The rules and regulations that a homeowners association or corporation adopts to govern activities.