A • B • C • D • E • F • G • H • I • J • K • L • M • N • O • P • Q • R • S • T • U • V • W • X • Y • Z • Notes on Using this Glossary - B -Bankruptcy: A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts. Binder or Offer to Purchase: A preliminary agreement, secured by the payment of earnest money, between a buyer and seller as an offer to purchase real estate. A binder secures the right to purchase real estate on agreed-upon terms for a limited period of time. If the buyer changes her mind or is unable to purchase, the earnest money is forfeited unless the binder expressly provides that it is to be refunded. Bona fide: Made in good faith; good, valid, without fraud; such as a bona fide offer. Breach: The breaking of law, or failure of a duty, either by omission or com mission; the failure to perform, without legal excuse, any promise that forms a part or the whole of a contract. Broker, Real Estate: Any person, partnership, association, or corporation that, for a compensation or valuable consideration, sells or offers for sale, buys or offers to buy, or negotiates the purchase or sale or exchange of real estate, or rents or offers to rent, any real estate or the improvements thereon for others. Most state laws require that agents work under the direction of a licensed real estate broker. - C -Caveat Emptor: The Latin phrase literally means “Let the buyer beware.” Under this doctrine, the buyer is duty bound to examine the property being purchased and assumes conditions that are readily ascertainable upon view. Certificate of Title: A certificate issued by a title company or a written opinion rendered by an attorney that says the seller has good marketable and insurable title to the property that he is offering for sale. A certificate of title offers no protection against any hidden defects in the title that an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence. The protection offered a homeowner under a certificate of title is not as great as that offered in a title insurance policy. Chain of Title: A history of conveyances and encumbrances affecting the title to a particular real property. Chapter 7: Individual or business liquidation under Federal Bankruptcy Code. Chapter 11: Business reorganization under the Federal Bankruptcy Code. Chapter 12: Reorganization for farmers under the Federal Bankruptcy Code. Chapter 13: Relief available under the Federal Bankruptcy Code in which a debtor retains possession of his or her property while making payments to creditors under a court approved plan. Collateral Estoppel: Prior judgment from a lawsuit between parties on a different cause of action that bars re-litigation of those matters in a subsequent lawsuit. Chattels Items of moveable personal property, such as animals, household furnishings, money, jewelry, motor vehicles, and all other items which are not permanently affixed to real property and which can be transferred from one place to another. Closing Costs: The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to the price of the property and are items prepaid at the closing day. Typical closing costs include fees for recording, attorneys, title insurance, appraisals, surveys, inspections, and commissions, to name a few. The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs. Most of these items are negotiable, but in some states it may be mandated that either the buyer or the seller pay for certain items. For example, in Michigan the seller must pay what is known as the state transfer tax unless it is expressly stated otherwise in the contract. Closing Day: The day on which the formalities of a real estate sale are concluded. The certificate of title, abstract, and deed are generally prepared for the closing by an attorney, and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are paid. The final closing merely confirms the original agreement reached in the agreement of sale. Cloud on Title: An outstanding claim or encumbrance that adversely affects the marketability of title. Collateral Security: A separate obligation attached to a contract to guarantee its performance; the transfer of property or of other contracts or valuables to ensure the performance of a principal agreement or obligation. Commission: Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price ranging anywhere from 6 to 7 percent on single family houses and 10 percent on land. Condominium: Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multiunit project. Consideration: Something of value, usually money, that is the inducement of a contract. Any right, interest, property, or benefit accruing to one party; any forbearance, detriment, loss, or responsibility given, suffered, or undertaken may constitute a consideration that will sustain a contract. Conventional Mortgage: A mortgage loan not insured by HUD or guaranteed by the Veterans’ Administration. It is subject to conditions established by the lending institution and state statutes. The mortgage rates may vary with different institutions and between states. Conversion Clause: A provision in some ARMs that allows you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate will be set at current rates, and there may be a charge for the conversion feature. Cooperative Housing: An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation that entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own the unit, he has an absolute right to occupy this unit for as long as he or she owns the stock. Covenant: An agreement between two or more persons entered into by deed whereby one of the parties promises the performance of certain acts, or that a given state does or shall, or does not or shall not exist. Credit Report: A report detailing the credit history of a prospective borrower; it is used to help determine borrower creditworthiness. |