Title Insurance and Closing Services Since 1954
Terms Defined
The Real Estate Industry has its own unique language and, without some knowledge of this language, you may find yourself a bit confused if you become involved in a real estate transaction. Wayne County Title Agency, Inc. has compiled the following Definition of Terms commonly used in the real estate industry. Whether you are entering the real estate market for the first time or have invested in it before, this handy reference will provide an understanding of basic real estate words and phrases.
Balloon Note
A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.
Balloon Payment
A large lump sum payment of unamortized principal and accrued interest at the end of the term of a loan in which the consecutive monthly installment payments are insufficient to amortize the entire principal and interest over its terms.
Bankruptcy
A special proceeding under federal, or in some instances state, laws by which the property of a debtor is protected by the court and may be divided among the debtor’s creditors and the debtor. Chapter 7, Chapter 13, and Chapter 11 are different types of bankruptcy proceedings.
Beneficiary (of a trust)
A person designated to receive some benefit from the trust or estate.
Binder or Commitment
See Commitment. (Has different meanings in related businesses such as real estate, mortgage lending, etc.)
Blanket Mortgage
A mortgage or trust deed that covers more than one lot or parcel of real property, and often an entire subdivision. As individual lots are sold, a partial reconveyance or release from the blanket mortgage is ordinarily obtained.
Bona Fide Purchaser
One who buys property in good faith, for fair value, and without notice of any adverse claim or right of third parties.
Bond
(1) An insurance agreement under which one party becomes surety to pay, within stated limits, financial loss caused to another by specified acts or defaults of a third party. (2) An interest bearing security evidencing a long term debt, issued by a government or corporation, and sometimes secured by a lien on property.
Breach of Contract
Failure to perform a contract, in whole or part, without legal excuse.
Building (restriction) Line or Setback
A line fixed at a certain distance from the front and/or sides of a lot or at a certain distance from a road or street, which line marks the boundary of the area within which no part of any building may project. This line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.
Building Contract
An agreement between an owner or lessee and a building contractor, setting forth terms relative to the construction of a proposed structure or improvement.
Buydown
A payment to the lender from the seller, buyer, third party, or some combination of these, causing the lender to reduce the interest rate during the early years of a loan. The buydown is usually for the first one to five years of the loan. (See also: Certificate Backed Mortgage).