Real Estate Terms You Need to Know

Posted by Crystal Olenbush on Tuesday, February 2nd, 2010 at 4:11pm.

When you purchase a home, your Realtor will likely use a number of terms that you are not entirely familiar with.  While your Realtor should be happy to explain these terms to you, it helps if you have a good idea of what they mean before you start the home buying process.  Here are just a few terms you should know!

•    Certificate of title – A document demonstrating legal proof of ownership
•    Chattels – Personal property, of which there are two types.  The first type are real chattels, which are fixtures and buildings.  The other type are personal chattels, which are furniture, clothes, and other similar items.
•    Contract of sale – A written agreement that establishes the terms and conditions associated with the sell of property.
•    Covenant – The conditions that affect the use of property or land that is written into the title.
•    Document preparation fee – A fee that is charged by an attorney that prepares the legal documents required for the transaction.
•    Earnest money – Deposit money that a potential buyer gives to the seller or to the seller’s agent when signing an agreement of sale.  The money is intended to demonstrate that the buyer is serious about making the purchase.  If the sale goes through, the money is applied to the down payment.  If not, the money is forfeited by the buyer unless there was an agreement for the money to be refundable.
•    Encroachment – A situation that occurs when a building overhangs onto someone else’s property or when a fence is built beyond the dividing line that is located between two properties.
•    Encumbrance – A mortgage, liability, or easement that is on a property that gets in the way of completing a transfer or using the property.
•    Inclusions – Removable items that are included in the sell of the property.  These may include air conditioning units, blinds, ceilings, clothes hoist, curtains, dishwasher, fans, fixed cupboards, flyscreens, lights, range hood, stove, and TV antenna.
•    Origination fee – A fee that the buyer has to pay to the lender in order to initiate a new loan.
•    Owner’s title policy – A document that ensure the buyer receives the title to the property.
•    PITI – An abbreviation that stands for Principal, Interest, Taxes, and Insurance.  All of these payments are included in your monthly mortgage payment amount.

These terms and many more will likely be used as you look for a new home and attempt to purchase the one of your choice.  Of course, if you ever have any questions about any terms your Realtor uses, you should always ask and you should make sure you are thoroughly informed throughout the entire process.

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