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 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.

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.

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.

Before-tax income Total income before taxes are deducted.

Beneficiary The lender who makes a loan, also called a mortgagee. The person borrowing money is the mortgagor.

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.

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.

Blue-ribbon condition A house maintained close to its original condition. Also called mint condition.

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.

Board-and-batten siding Siding is composed of 8- to 12-inch wide wooden boards nailed vertically to create a barn-like exterior.

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 contract without 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.

Broker A person licensed by the state to deal in real estate.

Brokerage The act of bringing together two or more parties in exchange for a fee or commission.

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.

Builder upgrades Extra house features or better finishing materials that a builder offers.

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 line or setback Guidelines that limit how close an owner can build to the street or an adjacent property.

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.

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 home buyers 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.

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.

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.

Cashier's check A check the bank draws on itself rather than on a depositor's account.

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.

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."

Cavedium A courtyard or atrium.

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 frequency The adjustment schedule on an adjustable-rate mortgage.

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.

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.

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.

Co-maker A person who signs a promissory note with the borrower and assumes responsibility for the loan.

Co-signer A second party who signs a promissory note and takes responsibility for the debt.

Codicil A change to a will that adds or subtracts provisions or clarifies portions of the document.

Coign The cornerstone of a building that differs in shape or color from the rest of the wall.

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.

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 law A body of laws based on custom, usage and rulings by courts in various jurisdictions.

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.

Community Reinvestment Act A federal law that encourages financial institutions to loan money in the neighborhoods where minority depositors live.

Community property Property accumulated through the joint efforts of husband and wife. It is a classification of property peculiar to certain states.

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.

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.

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.

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.

Deadbolt lock Locks that require a key to open from the outside and a turn button from the inside.

Debt Any amount one person owes to another.

Deck A roofless, floored area that adjoins a house.

Deed The legal document that transfers ownership of a piece of property.

Deed of trust A document that gives a lender the right to foreclose on a piece of property if the borrower defaults on the loan.

Deep-seal floor drain A drain used to dispose of water from the basement floor to a sewer line.

Default The failure to fulfill a duty or promise or discharge an obligation, such as making monthly mortgage payments.

Deferred maintenance Any repair or maintenance of a piece of property that has been postponed, resulting in a decline in property value.

Delinquent mortgage A mortgage that involves a borrower who is behind on payments. If the borrower cannot bring the payments up to date within a specified number of days, the lender may begin foreclosure proceedings.

Density test An analysis of soil to determine if the surface can support the foundation of a house.

Dentils Small rectangular blocks that project from a building, usually under cornices or along rooflines.

Deposit Money given by the buyer with an offer to purchase property. Also called earnest money.

Depreciation The decline in value of a piece of property.

Design/build A project in which the owner contracts directly with an individual or company to perform design and construction.

Designer Unlike architects, designers are limited to drawing blueprints.

Digital images Images that are incorporated into house listings to give potential buyers a view of the property.

Dimension plans Plans which show the layout of a house but are less detailed than full blueprints.

Disability insurance An insurance policy which covers an individual's ability to produce income.

Disclosure A statement to a potential buyer listing information relevant to a piece of property, such as the presence of radon or lead paint.

Discount points Fees that a borrower pays at the time the lender makes the loan. A point equals 1 percent of the total loan amount.

Distressed property Property that is in poor physical or financial condition.

Document needs list A list of documents a lender requires when a potential submits a loan application.. The required documents range from paycheck stubs to credit card statements.

Domed ceiling A hemispherical ceiling that projects upward without support.

Domicile A person's primary or permanent home.

Dormer A window set upright in a sloping roof.

Double-hung window A window that consists of two sashes that slide up and down.

Dovetail joints Joints that lock two pieces of wood together with meshed teeth.

Down payment The amount of money a buyer agrees to give the seller when a sales agreement is signed. Complete financing is later secured with a lender.

Down spouts A vertical gutter that empties water from the roof to the ground.

Drainage A system of gutters and drainpipes that carry water away from the foundation of a house.

Draw A payment made to subcontractors or suppliers from a construction loan.

Dropped ceiling A flat ceiling built lower than the original ceiling.

Dry rot A fungal decay that causes wood to become brittle and crumble.

Drywall A construction material composed of gypsum or plaster wrapped in paper and produced in large sheets that can be nailed to wall studs.

Dual agency A relationship in which a real estate agent or broker represents both parties in a transaction.

Duct Any kind of pipe or channel that carries water, wiring or conditioned air through a house.

Due-on-sale clause Standard language in a mortgage which states that the loan must be paid when a house is sold.

Duplex A structure that consists of two separate family units.

Dutch colonial style A design that features barn-like gambrel roof, a ground-level front porch, and dormers.

Earnest money Money a buyer gives with an offer to purchase a property. Also called a deposit.

Earthquake insurance A policy that provides coverage against damage to a home from an earthquake.

Easement A right given to a third party to use a portion of the property for certain purposes, such as power lines or water mains.

Eaves The projecting overhang at the lower edge of a roof.

Effective age The age of a structure estimated by its condition rather than its actual age.

Effective gross income Additional income that a lender considers when assessing the loan application of a potential borrower.

Electric service panel A panel that transfers power from the utility line into a house to be distributed through fuses or circuit breakers.

Elevations The exterior view of a home design that shows the position of the house relative to the grade of the land.

Ell An extension or wing of a house that is at right angles to the main structure.

Eminent domain The government's right to condemn private land for public use, such as the routing of a public highway.

Employer-assisted housing Programs which help employees purchase homes through special plans developed with lenders.

Empty nesters Potential buyers who have raised their families and want to move into a smaller home.

Encroachment Fences or other structures that extend into the property of another owner.

Encumbrance A claim or lien on a property which complicates the title process.

End loan The conversion from a construction loan to permanent financing a condominium buyer secures after all units in a project have been completed.

Endorser A person who signs over ownership of property to another party.

English Tudor style An architectural design that features stone or brick exterior walls and exposed beams.

Environmental impact statement A government-mandated evaluation of all aspects and effects a development will have on the environment of a proposed site.

Environmentally friendly home construction A method of construction that utilizes recycled materials.

Equal Credit Opportunity Act. A federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age. The law also prohibits a creditor from refusing to grant credit because the applicant receives public assistance.

Equifax Equifax Credit Information Services, Inc., is one of the "Big Three" credit-reporting bureaus that operate nationwide. Address: P.O. Box 740249, Atlanta, GA 30374.

Equity A determination of the value of a property after existing liens are deducted.

Errors and omissions insurance A policy that pays for any mistakes a builder or architect makes in a project.

Escrow A neutral third party holds the documents and money involved in a real estate transaction and ensures that all conditions of a sale are met.. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.

Escrow account An account that a lender or mortgage service establishes to hold funds for the payment of expenses such as homeowners insurance and property taxes. Also known as an impound account.

Escrow agent A neutral third party who ensures that all conditions of a real estate transaction are met.

Escrow analysis A lender's periodic examination of an escrow account to determine if the lender is withholding enough funds from a borrower's monthly mortgage payment to pay for expenses such as property taxes and insurance.

Escrow closing Escrow closes when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer.

Escrow company Firms that act as neutral third parties to ensure that all conditions that the buyer, seller and lender establish in a real estate transaction are met.

Escrow payment Funds that a mortgage service withdraws from a borrower's escrow account to pay property taxes and insurance.

Estate The total assets of a person, including real property, at the time of death.

Eviction A legal procedure to remove a tenant for reasons including failure to pay rent.

Examination of title An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Excavation The process of clearing trees, removing topsoil and grading land before the foundation is laid.

Exclusive listing A contract that gives an agent the exclusive right to market a property for a specific period of time.

Executor A person appointed to carry out the instructions in a will. If there is no will, a probate court will appoint an executor.

Exhaust fan Ventilating devices that remove water vapor, undesired smells or smoke.

Facade The part of a building facing the street or a courtyard.

Fair Credit Billing Act A federal law that governs credit and charge card billing errors. If a credit or charge card company violates any provision, consumers can sue to recover damages.

Fair Credit Reporting Act. A federal law passed in 1971 that regulates the activity of credit bureaus. It is designed to prevent inaccurate or obsolete information from staying in a consumer's credit file and requires credit bureaus to have reasonable procedures for gathering, maintaining and disseminating credit information. The act also requires credit bureaus to show a consumer their credit file if the consumer presents proper identification, although the bureau reserves the right to charge a fee for doing so.

Fair Debt Collection Practices Act. A federal law passed in 1977 which outlaws debtor harassment and other types of collection practices. The act regulates collection agencies, original creditors who set up a separate office to collect debts, and lawyers hired by the creditor to help collect overdue bills. An original creditor--the company or individual that originally granted the credit--is not covered by the act, but may be covered by similar measures approved by state governments.

Fair Housing Act Landmark federal law passed in 1965 and amended in 1988 that makes it illegal to deny rent or refuse to sell to anyone based on race, color, religion, sex or national origin. The 1988 amendment expanded the protections to include family status and disability.
Fannie Mae The official name of the Federal National Mortgage Association, it is a congressionally chartered, shareholder-owned company that buys mortgages from lenders and resells them as securities on the secondary mortgage market.

Farmer's Home Administration A U.S. Department of Agriculture agency that provides credit to farmers and rural residents.

Fascia A board that connects the ends of the roof rafters and provides a surface to support gutters.

Federal Home Loan Mortgage Corporation,law The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac. The company buys mortgages from lending institutions, pools them with other loans and then sells shares to investors.

Federal Housing Administration (FHA) This government agency operates a variety of home-loan programs. Its most popular is the Sec. 203(b), program, which provides low-rate mortgages to buyers who make a down payment as small as 3 percent.

Federal National Mortgage Association Now officially dubbed Fannie Mae, this federally chartered agency buys mortgages from lending institutions, pools them with other loans and sells shares to investors.

Federal Reserve Board A group of economists and other experts who set the nation's monetary policy. Its chief tool to control inflation is the power to control interest rates.

Federal Trade Commission The government agency responsible for regulating a variety of companies and industries, from credit bureaus and collection agencies to timeshare operators and certain types of creditors. National headquarters: Sixth and Pennsylvania Avenue NW, Washington, D.