Glossary of Real Estate Terms "A"

Like many other industries, the real estate industry has its own unique language and vocabulary. Without some knowledge of this specialized language, you may find yourself a bit confused if you become involved in a real estate transaction.

Whether entering the real estate market for the first time or if you have invested before, this handy reference will provide an understanding of basic real estate words and phrases.


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Abstract – A history of all transactions shown in the public records affecting a particular tract of land. Title Insurance is a more common method of providing evidence of marketable title in today's real estate industry.

Abstract plant – See Title Plant.

Adjustable Rate Mortgage (ARM) – Mortgage loans under which the interest rate is periodically adjusted, in accordance with some market indicator (i.e. Treasury Bills, Financial Indexes, etc.), to more closely coincide with the current rates. The extent and number of these adjustments are agreed to in the mortgage note at the time the loan is executed.

Adverse Possession – The possession, by one person, of land belonging to another in a manner deemed adverse to the interest of the owner. In Michigan, by operation of law, title to the land could become vested in such a person after a fixed number of years if the owner fails to assert his or her rights.

Affidavit – A written statement made under oath before a notary public or other judicial officer. There can be many types of affidavits used in real estate transactions. Some may be required by a title insurance company, others may be part of a lender's closing package.

Agreement – A legally binding contract made between two or more persons.

A.L.T.A. (American Land Title Association) – The trade association of the title insurance industry, which has adopted certain insurance policy forms to standardize coverage on a national basis.

Amortization – Payment to reduce the principal of a debt in regular, periodic installments. An amortization schedule can be printed to show the breakdown between principal and interest of payments and the principal balance after each payment has been applied.

Appraisal – A report from an independent third party detailing the estimated value of real estate. An appraisal is required in most first mortgage liens lending situations.

Appurtenance – A right or privilege that is a part of the ownership of property, such as a right of way to a highway across the land of another. Water rights are also an example.

Assessment – (1) The valuation of real estate for purposes of taxes or special improvement or assessment charges. (2) The amount of taxes or special improvement or assessment charges. Special improvement or assessment charges are usually for the costs of streets, sidewalks, sewers, drains, etc.

Assignment – (1) The act of transferring an interest, such as a loan secured by a mortgage, from one person to another. (2) The instrument or paper by which one person transfers such ownership to another.

Attorney's Opinion – A statement by an attorney as to the validity of a title, arrived at after investigation of the history of the title as recorded in the public records – usually a review of an updated Abstract of Title or a review of a title insurance commitment. Title Insurance is more commonly used in today's real estate transactions, rather than, in the past, an updated Abstract and an Attorney's Opinion of the title's abstract.




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