Glossary of Terms in Real Estate

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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.
 

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.
 

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 indexAn 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

• n 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 - Close Of Escrow (COE)

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.
 

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.
 

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 (CMA)
 

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.