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 Earnest Money: The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying a house or any other type of real property. If the sale goes through, the earnest money is applied against the down payment. If the sale does not go through, the earnest money will be forfeited or lost unless the binder or offer to purchase expressly provides that it is refundable. Economic Life: The period over which a property may be profitably utilized or the period over which a property will yield a return on the investment, over and above the economic or ground rent due to its land. Economic Obsolescence: Impairment of desirability or useful life arising from economic forces, such as changes in optimum land use, legislative enactments that restrict or impair property rights, and changes in supply and demand relationships. Eminent Domain: The superior right to property subsisting in every sovereign state to take private property for public use upon the payment of just compensation. This power is often conferred upon public service corporations that per form quasi-public functions, such as providing public utilities. In every case, the owner whose property is taken must be justly compensated according to fair market values in the prevailing area. Encroachment: An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line. Encumbrance: A legal right or interest in land that affects a good or clear title and diminishes the land’s value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether she wants to purchase with the encumbrance, or what can be done to remove it. Equity: The value of a homeowner’s unencumbered interest in real estate. Equity is computed by subtracting from the property’s fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property. A homeowner’s equity increases as he or she pays off the mortgage or as the property appreciates in value. When the mortgage and all other debts against the property are paid in full, the homeowner has 100 percent equity in the property. Escheat: The reverting of property to the state by reason of failure of persons legally entitled to hold it, or when heirs capable of inheriting are lacking the ability to do so. Escrow: Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual. In FHA mortgage transactions, an escrow account usually refers to the funds a mortgagor pays the lender at the time of the periodic mort gage payments. The money is held in a trust fund, provided by the lender for the buyer. Such funds should be adequate to cover yearly anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, and special assessments. Estate: The degree, quantum, nature, and extent of interest that one has in real property. Estoppel: A party prevented by his own actions from claiming a right to the detriment of a second party when the second party did some act in reliance on the first party’s actions. An estoppel arises when one is forbidden by law to speak against his own action or deed. Execute : To perform what is required to give validity to a legal document. To exe cute a document, for example, means to sign it so that it becomes fully enforce able by law. |