Glossary

Probate Goldmine
Glossary of Terms
By Stacy Kellams
Stacy Kellams PROBATE GOLDMINE
Probate Terms
Abatement - A proportional diminution or reduction of the pecuniary

legacies when there are not sufficient funds to pay them in full.
Acknowledgement – An official statement made in the presence of a Notary

Public by a person who has signed a document.
Ademption - The act by which the testator pays to his legatee, during his
life-time, a general legacy which by his will he had proposed to give him at
this death; and the act by which a specific legacy has become inoperative on
account of the testator having parted with the subject.
Adjudicated Newspaper – A newspaper that has court approval to publish

the court’s legal notices.
Administrator (Administratrix) - A person appointed by the court to

administer (i.e. manage or take charge of) the assets and liabilities a decedent
(i.e. the deceased).
Administrator with Will Annexed - One appointed administrator of

deceased’s estate after executors named in will have refused or are unable to
act.
Administration Unnecessary – A small estate where the value of the assets

is below limits requiring a probate. There is no probate of any kind.
Affidavit - A written or printed declaration or statement of facts, made

voluntarily, and confirmed by the oath or affirmation of the party making it,
taken before a person having authority to administer such oath or affirmation.
Ancillary Administration - Administration of estate in state where decedent

has property and which is other than where decedent was domiciled.
www.ProbateGoldmine.com -1-
Attorney of Record – The attorney handling probate of the estate on behalf

of the deceased.
Beneficiary - A party who will benefit from a transfer of property or other

arrangement; beneficiary of a trust, the beneficiary of a life insurance policy,
the beneficiary under a will.
Bequest – To give or leave assets to another individual or an organization by

means of a will.
Charitable Gift Annuity – An agreement in which an individual or

organization transfers cash or other assets to a charitable organization in
exchange for its promise to pay that individual or organization an annuity for
life or a stipulated period.
Charitable Trust – A trust having a charitable organization as its

beneficiary.
Chattel – Another name for personal property such as motor vehicles,

furniture, or jewelry.
Chattel Mortgage – A loan or mortgage secured on personal property rather

than real estate.
Claimant – The individual who administers a small estate.
Codicil - A supplement or an addition to a will; it may explain, modify, add

to, subtract from, qualify, alter, restrain or revoke provisions in the existing
will. Like a will, it can be changed, revoked, or destroyed and must be signed
with all the same formalities of a will.
Common Law – Law that is not necessarily written, but is based on previous
judicial case decisions.
Community Property - Property owned in common by husband and wife

each having an undivided one-half interest by reason of their marital status.
Nine states have community property systems: Louisiana, Texas, New
Mexico, Arizona, California, Washington, Idaho, Nevada, and Wisconsin.
The rest of the states are common law jurisdictions where each spouse owns
whatever he or she earns.
Conservator - A guardian; protector; preserver, appointed by the court to

manage the estate of one who is unable to manage property and business
affairs effectively.
Conservatorship – The legal title of the type of case where a conservator is

appointed to provide care and management of the person, property, or both of
an adult who is unable to provide for his or her own needs.
Contingent Beneficiary - person who may or will benefit if primary

beneficiary dies or otherwise loses rights as beneficiary.
Credit Estate Tax – A state tax assessed against the assets of someone who
has died. It applies only to estates that are required to pay federal estate
taxes. The estate does not pay double taxes. Instead, by paying a credit
estate tax, it “rebates” part of the federal estate tax back to the state.
Decedent – A legal term used to refer to a person who has died.
Devise – To leave someone real estate by means of a will.
Devisee - The person to whom lands or other real property are devised or
given by will.
Disclaimer – The act by which a party refuses to accept an estate which has
been conveyed to him.
Distributee – An individual who inherits; an heir.
Domicile - a person’s legal home; the permanent residence of a person or

the place to which he intends to return even though he may actually reside
elsewhere. A person may have more than one residence but only one
domicile.
Donee –A person who receives a gift.
Donor - The person giving a gift.
Durable Power of Attorney – A written legal document that empowers an

individual to designate another individual to act on his or her behalf in the
event that individual becomes disabled or incapacitated.
Escheat - The preferable right of the state to the property of an estate when
the deceased did not leave a will and has heirs at law surviving him.
Estate - The total property of whatever kind that is owned by a decedent

prior to the distribution of that property in accordance with the terms of a
will, or, when there is no will, by the laws of inheritance in the state of
domicile of the decedent.
Estate Tax – A tax imposed on the right to transfer property by death; levied
on the decedent’s estate and not on the heir.
Executor (Executrix) - A person appointed by testator to carry out the

directions and requests in his will, and to dispose of the property according to
his testamentary provisions after his death.
Ex Parte - A judicial proceeding, order, injunction, that is granted for the

benefit of one party only, and without notice to, or contestation by, any
person adversely interested.
Federal Estate Tax – A federal death tax assessed against the assets of a
person who has died if the value of those assets exceeds certain prescribed
dollar limits.
Fiduciary - A person having duties involving good faith, trust, special

confidence, and candor towards another, created by his undertaking to act
primarily for another’s benefit in such undertaking; includes executor,
administrator, trustee, and guardian.
Foreign Will – The will of any decedent domiciled outside the state in which
the disposition of the estate is being handled.
Gift Tax – A tax imposed upon a donor for the transfer of property by gift;
based on the fair market value of the property on the date of the gift.
Gift Tax Annual Exclusion - The amount that can be excluded each year
when computing the gift tax on the donor without using the lifetime
exemption.
Grantor - The person who makes a grant (transfer) of property; also the
term used for the person who creates a trust.
Guardian - Person who has the legal responsibility for the care and
management of the person, or the estate, or both, of either a child during
minority or an incapacitated person.
Guardianship – The legal title of the type of case where a guardian is

responsible for the care and management of the person, property, or both of a
minor child or a person who has been incapacitated.
Heir – the person who the law would give the decedent’s property, real and
personal, if the decedent died intestate (without a will).
Index – The number assigned to each probate file as it’s being filed in
chronological order.
Inheritance Tax – Tax imposed in some states upon the privilege of

receiving property from a decedent at death; a tax on the right to acquire
property, not a tax on the property itself.
Intestate - When a person dies without making a will, or dies without

leaving anything to testify what his wishes were with respect to the disposal
of this property after his death. If this happens, state law decides who will
receive the decedent’s property.
Inter Vivos Trust - Trust created during the lifetime of grantor (also called
settlor) that is effective during his life. Sometimes called a living trust.
Irrevocable Trust - Trust that may not be revoked after its creation.
Joint Tenancy - Type of ownership of real or personal property by two or

more persons in which each owns an undivided interest in the whole and
usually means that the interest of one owner passes to the other upon death
(not the case in Texas unless it specifically states “joint tenants with right of
survivorship”.
L
Ledger – A large reference book used by many probate file rooms to keep
track of the case names and case numbers of files.
Letters Testamentary – A court document that grants one of two types of

power to the personal representative. If the court grants the personal
representative complete power – called full, unlimited, or unsupervised
authority – the personal representative can sell assets from the estate without
seeking court approval. If the court grants the personal representative limited
or supervised power, the personal representative must seek court approval to
sell assets, such as a house.
Life Estate - A legal arrangement whereby the beneficiary (the life tenant) is
entitled to the income from the property for his or her life and upon the death
of the life tenant, the property will go to the holder of the remainder interest
or to the grantor by reversion.
Life Insurance Trust – A trust that has the proceeds of an individual’s life
insurance policy as its principal.
Life Tenant - one who holds an estate in lands for the period of his own life
or for the life of a specified other person.
Living Will – A legal document directing that the maker’s or signer’s life is
not to be artificially supported in the event of a terminal illness or accident.
Marital Deduction – A deduction allowing for the unlimited transfer of any

and all property from one spouse to the other, generally free of estate and gift
taxes.
Minor - A person who is under the age of legal competence.
Non-Probate Assets – Those assets of a decedent that are not part of the
probate administration because either (a) they are held in the name of a trust
and not in the name of the decedent, (b) they passed to a named beneficiary
under a contract, for example, an insurance policy with a named beneficiary
or bank accounts that are classified as joint with right of survivorship or pay
on death accounts that have a named beneficiary, or (c) they are not included
by state law. For example, some states that recognize community property
allow half of the value of community property to be deducted from the
probate estate when one spouse dies.
Notice to Creditors – A notice published in a local newspaper that informs a

deceased person’s known creditors, and others who might be interested or
have a claim to the estate, of the death of the property owner.
Oath – Some states require that the personal representative take an oath
before assuming the responsibility.
Order – A written command or direction by a judge or court clerk. An order

may outline a decision of the court, direct, or forbid an action, or be the final
decision of the court.
Order for Probate – The court’s response to the petition for probate. This
document states that the court officially accepts the responsibility of
overseeing the probate case. It lists the name of the personal representative
or executor.
Personal Property – All assets other than real estate – like furniture,
jewelry, clothing, stocks, bonds, cars, boats or collectibles – are referred to as
the “personal property” of the estate.
Personal Representative – The person named in the will to oversee the

settling of an estate. The executor or the administrator of the estate.
Petition for Probate – Sometimes called the application for probate. The
legal document filed in court by the estate of the decedent. The petition
begins the probate process of settling the estate by paying liabilities and
distributing assets.
Power of Appointment – A power or authority conferred by one person by

deed or will upon another (the donee) to appoint (select) the person or
persons who are to receive and enjoy an estate or an income therefrom after
the testator’s death, or the donee’s death, or after the termination of an
existing right or interest.
General Power - Allows the donee to designate himself, his

creditors, his estate, the creditors of his estate, or any other person,
as the owner of the subject property.
Specific Power - Limits the donee as to the persons who the donee
can designate as the owners of the property he has a power of
appointment over.
Power of Attorney – A written legal document that authorizes one party to

act on another’s behalf.
Pour-over Will - Provision in a will that directs the distribution of the

property to a trust.
Pretermitted Heir - A child or other descendant omitted by the testator.

Some states have statutes to include them as beneficiary of the estate if born
after execution of the will.
Private Auction – One method in which probate properties can be sold. An

auction company invites interested parties to bid on a probate property. It
follows auction rules with oral bidding.
Private Sale – One method in which probate properties are sold. A sale of
probate property arranged by the attorney for the estate. Sealed bids are
required. Notice for this private sale is published in the newspaper.
Probate Administration - Court procedure by which a will is proved to be

valid or invalid; though in current usage this term has been expanded to
generally refer to the legal process of the administration of decedent’s estate
whether there was a will or not.
Probate Record – A file that holds all the information in a probate case.
These records are open to the public, which means that you can use the
information for your own purposes.
Proof of Publication – A document from the local newspaper showing a

copy of the Notice to Creditors that was published.
Public Auction – One method in which probate properties are sold. An

auction held by the attorney for the estate. It follows auction rules with oral
bidding. It is held in the attorney for the estate’s offices. Notice for this
public auction is published in the newspaper.
www.ProbateGoldmine.com - 10 -
Quasi-Community Property – Property acquired by a decedent prior to

moving to a community property state. For federal estate tax purposes,
quasi-community property is treated like separate property.
Real Property - Land, and generally whatever is erected or growing upon or

affixed to land.
Record – The entering into public record any information affecting the title
to real property.
Remainder Interest - The property that passes to a beneficiary after the

expiration of an intervening income interest.
Resident Agent – An individual living in a state who is authorized to accept

legal documents on behalf of another.
Residue - The surplus of a testator’s estate remaining after all the debts,
taxes, costs of administration, and particular legacies have been discharged.
Residuary Beneficiary - Person who receives all or part of the residue

distributed.
Reversionary Interest - A right to future enjoyment of property that is

currently in the possession or occupation of someone else.
Revocable Trust - A trust whose terms and provisions can be changed,

modified, altered, amended or revoked.
Right of Representation - Sometimes referred to as “per stirpes”, where the

distribution of a deceased beneficiary’s share will be equally divided among
his children.
Separate Property - The property owned by a married person in his or her

own right during marriage.
Settle – To distribute the real estate and personal property among the heirs of
the deceased person according to the provisions of the will, or state law of
secession if there is no will. It can also refer to finalizing a sale, typically
when a contract for sale is involved in the transaction.
Settlor – Person who created a trust.
Small Estate Administration – A simplified process for probating estates

that are less than the specified dollar limit set by state laws.
Specific Performance – An order issued by the court requiring a person to

meet the terms he or she has agreed to do.
Statutory – Established by legislative law.
Summary Administration – A simple way of distributing assets. It usually

needs a notice of administration to be given to all interested parties and an
inventory filed with the court.
Supervised – Court intervention and required approval of all activity and

actions taken by the Personal Representative during the administration of an
estate.
Tenancy by the Entirety – A form of spousal ownership in which the

property is equally shared and automatically transferred to the surviving
spouse. While both spouses are living, ownership of the property can only be
altered by divorce or mutual agreement.
Tenancy in Common - A form of holding title to real or personal property

by two or more persons. Because there is no right of survivorship, the legal
relationships and results are very different from joint tenancy. Tenants in
common need not hold equal interests, and on the death of a tenant in
common, his or her interests will pass by will or according to the laws of
intestate succession.
Testamentary Trust - Trust created within a will and executed with the
formalities required of a will in contrast to an inter vivos trust which is
created by the grantor during his lifetime. This trust does not take effect until
the death of the settlor (grantor).
Testate – Term used when a person dies leaving a will.
Testator – Person who executes a will during his lifetime.
Totten Trust - A tentative trust revocable at will until the bank depositor
dies or completes the gift during his lifetime.
Trust – A legal entity created by a grantor through a written trust instrument

for the benefit of designated beneficiaries and governed by the laws of the
state and the valid provisions of the trust instrument.
Trust Departments – A department in a bank that can act as the trustee of a

trust or be nominated as the personal representative for a deceased client.
The trust department publishes a list of probate properties it is selling.
Trustee – Fiduciary with the duty to manage the assets and income of the
trust for the economic benefit of all of the beneficiaries.
Trustor - Person who creates a trust; also called grantor or settlor.
Uniform Transfers to Minors Act – Allows the transfer of any type of

property, real or personal, to a custodianship for a minor.
Unsupervised – Administration of an estate without court intervention or

approval for any actions or activity.
Will - A document prepared and executed by a person with the formalities

required by the state in which such person is domiciled at execution that
provides direction as to the administration and distribution of his estate upon
his death.
Will Contest – The challenge of a will by a person who believes the will is
unfair, or that one or more of its provisions does not accurately reflect how
the deceased person wanted his or her property distributed.
Witness – An individual who is present at an occurrence or at the signing of

a document such as a will.
Real Estate Terms
Abstract of Title – A condensed and summarized history of a property and is

chain of ownership (title).
Acceleration Clause – A provision in a mortgage that allows the lender to

speed up payments or even demand payment in full for various reasons, such
as falling behind on payments or defaulting on another loan.
Accretion – The gradual addition to or buildup of land by natural forces.

Usually along the shore or water line of a property.
Accrued Interest – Interest that has been earned but not paid.
Acid Test (Quick Ratio) – A formula used to evaluate an individual’s or

company’s creditworthiness: it is the current assets that can quickly be
turned into cash divided by current liabilities.
Acre – A measurement used when referring to land. It is equal to 43,560

square feet or 1/640 square mile.
Addendum – An addition to the original contract, on a separate piece of

paper, detailing terms that are agreed upon and signed by both parties.
Adjustable-Rate Mortgage (ARM) – A mortgage wherein the interest rate

fluctuates up or down in accordance with a predetermined index or market
conditions.
Adjusted Cost Basis – The amount originally paid for the property, plus the
cost of any improvements, less depreciation that has occurred.
Ad Valorem – According to value. A method of taxation based on the value

of the home.
Adverse Possession – Also known as “squatter,” the possession and

occupancy of a property that gains the title and ownership by keeping it for a
specified period of time.
Affidavit – A written statement or affirmation made under penalty of perjury,

and which requires notarization.
After-Tax Cash Flow – The net income remaining after the cost for debt
services, the lost revenues, and other expenses have been taken out.
Agency – A legal relationship based on trust and confidentiality in which one

party acts on behalf of another party to represent his or her best interest in
business dealings. (Also known as a fiduciary relationship.)
All-Inclusive Trust Deed – A junior deed whose face amount is the sum of
the liability secured by the prior deeds plus the cash or equity advanced by
the lender.
All-or-Nothing Order – An order to a broker instructing him or her to only

buy at a certain price or to cancel the deal.
Alternatative Minimum Tax (AMT) – An alternate federal tax system that

uses different rules in determining taxable income and allowed deductions
imposed on individuals, estates, trusts, and corporations to ensure they pay at
least some taxes.
Amortization – The reduction of the balance of a loan with periodic

payments over the term of the loan.
Amortized Loan – A loan that is paid in set, equal installments over the term
of the loan.
Annuity – Income that is received at fixed intervals over a period of time.
Appraisal – Market value of a property according to the professional opinion

of a licensed appraiser.
Appraiser – An expert on determining the value of real estate. Often

employed by banks and lending institutions to evaluate property before
granting a mortgage on the property.
APN – An abbreviation for Appraisal Parcel Number, or Accessor’s Parcel

Number. Many counties use APNs to keep track of plots of land and
properties.
APR – Stands for the Annual Percentage Rate of a loan; considered to be the
total cost of credit. Often the APR is more than the rate quoted.
Appreciation – The increase in value of real estate or personal property due

to market conditions over time.
Appurtenance – A portion of the property that passes with the land at the
time of sale.
Arrears – Being behind in payments.
As Is – An expression used to mean that the buyer doesn’t expect the seller to
fix any problems with the property before the time of sale.
Asking Price – The amount for which the seller is seeking to sell his or her
property.
Assessed Value – The cash value of an asset as determined by a public tax

assessor for the purpose of taxation.
Asset – Any item of economic value such as cash, stocks, inventory,

vehicles, or property.
Asset Allocation – The dividing of investments between a variety of assets.
Assign – Transfer rights from one party to another.
Assumable Mortgage – A mortgage that allows the purchaser to assume the

obligation of the loan without a change in terms.
Assume a Loan – To take over a property owner’s mortgage.
Balance Fund – An investment designed to optimize safety and capital

appreciation.
Balance Sheet – A statement of value that takes into account assets and
liabilities.
Balloon Loan – A loan that requires regular monthly payments until the end
of the term, when the debtor will make a large “balloon” payment that pays
off the remaining amount.
Balloon Payment – A final payment on a debt that is usually substantially

larger and is used to satisfy the remaining balance of the debt.
Bankruptcy – When one’s debts exceed his or her assets, one may file for
relief of liability of debts through the courts.
Basis Point – One percent of one percent.
Bear Market – A market that is in decline.
Bid – An offer.
Bill of Sale – A written document that transfers ownership of personal

property.
Blanket Mortgage – A mortgage that covers more than one piece of

property.
Blended Interest Rate – The sum of all interest payments on multiple

mortgages over a specified period, divided by the sum of all balances of the
mortgages over the same period of time.
Boilerplate – The customary language of a contract or other agreement that

specifies the terms and conditions.
Bounds – The boundary lines of a property.
Broker – A state-licensed agent who arranges the buying and selling of real
estate for a fee.
Bull Market – A market that is rising.
Buyer’s Broker or Agent – A broker or agent who represents the buyer in a

transaction.
Buyer’s Market – When there are more houses for sale than there are people
seeking to buy them, tends to cause the houses to sell for less than they would
under normal conditions.
Call – To demand payment of a loan.
Capacity – Your income and current debts.
Capital – Assets, including cash and property, that are used for investing.
Capital Distribution – The distribution of profits derived from the sale of

assets.
Capital Gains Tax – The tax owed on the profits made from selling an asset.
Cash Flow – The movement of cash in and out of an investment.
Cash Market – A market where payment and receipt of an asset are

immediate.
Caveat Emptor – Latin for “Let the Buyer Beware.” In this case, the buyer
takes all of the risk in regards to the quality or condition of the property
purchased.
Certificate of Deposit (CD) – A financial instrument where the investor

agrees to deposit money for a fixed period of time in return for a fixed
interest rate.
Chain of Title – The chronological record history of a property’s title. The

documented succession of legal owners.
Character – In lending terms, it implies, based on past history, the

probability that you will repay a debt.
Claim – A demand for payment of money or recognition of ownership.
Closing – The final act of getting financing and purchasing real estate in
which documents are signed between the buyer and seller and/or their
respective representation, and all money and consideration changes hands.
Closing Costs – Fees due at the end of a real estate sale that are usually
shared by both the buyer and the seller.
Closing Day/Date – The date from the Agreement of Purchase and Sale upon
which all of the terms of the agreement are to be met, purchase price paid in
full and title transferred.
Cloud on Title – The title of ownership for a property is not clear. There
might be several owners, liens, or other problems which would complicate
buying the property.
Collateral – The property used to secure a loan; the borrower risks losing the
property if the loan is not repaid according to the terms of the loan
agreement.
Commission – A percentage of the purchase price that is paid to the real

estate broker or agent for the services he or she renders.
Commodity – Goods or services exchanged for money or other assets.
Competent Party – Someone who is legally capable of entering into a

contractual agreement and not drunk, insane, under the influence of drugs, or
underage.
Comps – Short for “comparables;” properties that are substantially similar to

the property under consideration. Comps are used to establish fair market
value of a property not yet sold by comparing it to similar properties recently
sold.
Comps Range – The range of property values for the properties around the
one you’re interested in buying.
Compound Interest – Interest earned on not only the principal, but also the
accumulated interest at the time of calculation.
Concessions – Price reductions or other incentives offered by a party to

encourage another party to enter a contract.
Condemnation – The taking of the property of a private owner by the

government for public or government use. The private owner is paid what is
considered fair compensation for the property.
Condominium – Multiple-unit complex in which the units are individually

owned and common areas are jointly owned.
Consideration – An item of value, such as money, given by one party to

persuade another to enter into a contract.
Contingency – A condition that must be satisfied before a contract is

considered legally binding.
Contract – A written agreement enforceable by law between two or more

parties.
Contract for Deed – A contract for sale in which the seller maintains the
title pending the buyer’s completion of the agreed upon payments for the
property. This is also known as an agreement for deed.
Contractor – An individual or company hired to work on construction of a

property. The general contractor can hire subcontractors, who specialize in
areas like plumbing, electrical work, and roofing.
Conveyance – The transfer of the title to a property from one party to

another.
Co-Operative – A form of property ownership where instead of receiving the

title to the property, the residents receive shares in a company that owns the
property.
Corporate Fiduciary – An institution that acts for the benefit of an

individual or other legal entity.
Cosmetic Repairs – Simple repairs like painting, landscaping, and general

clean-up. Cosmetic repairs make a house more attractive and as a result more
valuable and easier to sell.
Cosmetics Only- A house requiring painting, carpeting, landscaping, and

other minor improvements to improve its appearance.
Cost Basis – Adjusted cost of a property for tax purposes that takes into
account appreciation/depreciation.
Cost Recovery – A provision of the tax law that allows the owner of real and
personal property to recover the cost of that property over a period of time
specified by law.
Counteroffer – A response to the buyer or seller’s original offer, in which

the offer is not necessarily rejected but is returned to the submitter with
changes to one or more of the terms of the original offer.
Crawl Space – A raised foundation in which the property rests on a concrete

perimeter and posts.
Creative Financing – A situation in which a borrower makes arrangements

to acquire money from an unconventional source, such as an individual rather
than a bank or mortgage lender.
Credit Bureau – A company that purchases and accumulates the credit data
collected by credit repositories to calculate the creditworthiness of
individuals and businesses.
Credit Limit – The maximum amount of credit a bank or lender will extend
to its customer.
Credit Rating – An estimate of a person’s ability and likelihood to repay a

debt based on the individual’s borrowing and repayment history, outstanding
debts, and available assets.
Credit Repository – An agency that collects the data of individuals provided

by creditors and sells it to credit bureaus.
Credit Report – A detailed report of an individual’s credit history used to

determine his or her creditworthiness.
Credit Score – A three-digit number based on a computer calculation of an

individual’s creditworthiness.
Creditor – An individual or institution to whom money/debt is owed.
Curb Appeal – The appearance and appeal of a house as a potential buyer

first sees it.
Cure Date – The last day that a mortgage can be made current, or cured. It is
set at the beginning of the foreclosure process.
Current Assets – Cash and other assets that can be converted to cash within
a year.
Current Liabilities – Debts that must be paid within a year.
Current Ratio – Current assets divided by current liabilities. It measures the

ability to convert assets to cash.
Dead Asset – An Asset of little or no value to an investor.
Debenture – A debt obligation backed only by the good credit standing and
integrity of the borrower.
Debt Balance – Total remaining debt owed.
Debt Consolidation – Taking out one loan, usually at a lower interest rate, to
replace multiple loans.
Debt Equality Ratio – Comparison of the amount owed on a property and its
equity. It is the property’s value less the amount owed on it.
Debt Securities – Payments made by the borrower on a debt that includes

both the principal and interest due.
Debt Services – The payments of principal and interest made on a loan.
Debt-to-Income Ratio – The ratio between gross monthly income and

monthly debt obligations.
Deduction – An expense that is directly related to the cost of doing business

and can be used to reduce gross income when calculating taxes.
Deed – A legal document that conveys property ownership to the buyer. The
seller delivers a deed to the buyer after the transaction, including when the
exchange of funds, has been completed.
Deed in Trust – Conveys legal title of a property to a trustee.
Deed of Trust – Legal document used instead of a mortgage in some states

to secure the repayment of borrowed money.
Default – The inability to meet the terms of an agreement or make the

payments on an outstanding debt.
Deficiency Judgment – A court judgment against the borrower for the

remaining balance on the loan after a foreclosure.
Deflation – Decrease in price levels.
Delinquency – Term used when a mortgage payment is late. Lenders report

late mortgage payments to credit-reporting agencies.
Delinquent Account – A credit account where a payment or payments are

more than thirty days late.
Deposit – Money given to put the item you plan on purchasing “on hold.”
The deposit will be deducted from the purchase price after you buy the item.
Depreciation – An expense recorded and used to reduce the value of a

property for tax purposes.
Depression – A sustained downward trend in the economy.
Disclosure – A requirement in most states for a seller to list all known

problems with a property for the buyer.
Discount – The difference between the lump-sum payoff amount of a

mortgage and the balance owed.
Discount Fee – Fee paid by the borrower to the lender in order to lower the
interest rate on payments.
Discounting a Note – An interest-earning note that is sold at a discount so

that the seller of the note gets cash instead of the monthly income payments.
Discrimination – To make a distinction between people on the basis of class

or category without regard to individual merit, including race, religion,
ethnicity, gender, sexual orientation, and age.
Distressed Property – A property that is priced below its current market

value because it is in poor physical condition, or its owner is in a state of
financial instability (behind on mortgage and other payments, and maybe
even headed for bankruptcy.)
Document Inspection – The inspection of three key documents the day

before closing: usually the HUD-1, the note, and the mortgage or deed of
trust. Document inspection is performed to locate any errors that may appear
in the loan and closing documents.
Down Payment – The difference between the sales price and the loan
amount.
Due-on-Sale Clause – A provision in a loan that calls for the paying off of
the loan upon sale or transfer of title of the property.
Duplex – A single structure that houses two living units.
Earnest Money – A deposit by the potential homebuyer to show that he or

she is serious about buying the property. This amount is applied toward the
total price of the property.
Easement – A right given by landowners to another party that allows the use
of or access to a portion of their land.
Effective Interest Rate – The nominal interest rate plus any other interest
owed due to compounding.
Eminent Domain – The government’s right to take private property for

public use.
Encroachment – When a structure, such as a fence, crosses the property

lines of a neighboring property.
Encumbrance – A claim against a property by someone other than the

property owner, such as a mortgage or lien.
Equity – The difference between the fair market value of a property and the
amount still owed on the mortgage.
Escape Clause – A provision in a contract that allows one or more parties the
option of ending the contract.
Escrow – The depositing of money and/or documents from a real estate

transaction with a third party who will distribute them to the rightful parties
when all of the conditions of the transaction have been met.
Escrow Account – An account set up by the lender to set aside part of the
loan to cover expenses such as property taxes and homeowner’s insurance.
Estimate – An approximate calculation of the cost of work to be done.
Exchange – The trading of a business property you own for another property
that is of like kind. No taxes are due in such an exchange, under a given set
of circumstances.
Expenses – The cost of insurance, maintenance, repairs, taxes, and other

costs relating to a property.
Extension Clause – A provision that details the terms under which an

agreement can be extended.
Face Value – The value that is printed on the front of a bond or debt
instrument.
Fair Market Value – The current selling price for a property or item when
sold in a competitive market.
Farm – A term referring to the way one tends to and works the area in which
he or she has decided to invest.
Fee Simple – Outright ownership of a property without any liens or other

claims against it.
FHA Loan – A loan insured by the Federal Housing Administration intended

for borrowers who have limited funds available for a down payment, poor
credit, or both.
FICO – A mathematical model used as a tool for lenders to evaluate the risk
associated with lending money. FICO stands for Fair Isaac & Company, Inc.,
the company that originally created the popular scoring model.
Financial Leverage – Equal to total assets divided by net worth, or the use of
borrowed money to invest.
Financing – The act of obtaining money or capital to purchase property.
First Deed of Trust – A loan with first priority over junior loans. Also
known as first mortgage or primary lien.
Fixed-Income Security – Security or debt that has a fixed rate of return or

interest.
Fixed-Rate Mortgage – A mortgage with a rate of interest that is fixed for

the term of the loan.
Fixer-Upper – A property that must be restored to good condition in order to

maximize its sale price.
Fixture – A property that would normally be considered personal property

except that it has been permanently attached to the real estate.
Fix-Up Expenses – The cost of cosmetic repairs, painting the house, and
cleaning up the landscape.
Flexible seller – A seller who is willing to negotiate the terms and/or price of
a property in order to sell it.
Flipping – Purchasing and quickly reselling a property for profit.
Floating-Rate Notes – Note on which the rate is not fixed but varies with the
market.
Floor Plan – How the interior of the property is laid out, or a drawing or
sketch of the arrangement of rooms.
Forced Sale – When the seller has to sell under duress due to court order or
financial problems such as bankruptcy.
Foreclosure – The process in which property is sold or taken from the owner
to satisfy a debt. A property is foreclosed on when the owner has not made
payments and has not shown the ability or willingness to bring the account to
a current status; in effect the lender “seizes” the property to satisfy the debt.
Freddie Mac / The Federal Home Loan Mortgage Corporation – A

government-charted corporation that purchases qualified mortgage loans in
order to sell shares in them.
Front Foot – Front footage, also known as frontage, is the measurement of

the property line that runs along the street or waterfront.
FSBO – Property offered for sale directly by its owner and without the owner
having solicited the help of a real estate broker; no real estate commission is
associated with the sale.
Functional Obsolescence – Loss in value of a property caused by structural

defect and/or out-of-date equipment.
Fundamental Analysis – Using supply-and-demand information to

anticipate future needs and prices.
Futures – Contracts that agree to purchase or sell a specified sum of a

commodity for future delivery on a commodity exchange.
General Obligation – A bond secured by a pledge of the issuer’s “full faith

and credit.”
General Partnership – A business agreement between two or more parties

in which profits, losses, liability, and ownership are shared.
Ginnie Mae / Government National Mortgage Association (GNMA) – A

government-owned corporation that provides financial assistance to low-to-
moderate-income homebuyers.
Grandfather Clause – An exception that allows something that is pre-

existing to remain unaffected by new regulations or laws.
Grantee – Party who buys a property.
Grantor – Party who sells a property.
Gross Income Multiplier – A figure that is multiplied by the annual gross

income (of a rental property) to find its estimated market value.
Gross Margin – The difference between gross income and operating cost.
GFCI (Ground Fault Circuit Interrupter) – A circuit breaker device

contained in an electrical outlet designed to prevent fires by detecting non-
working electrical arcs and disconnecting power before the arc starts a fire.
Hazard Insurance – An insurance policy that protect homeowners against

wind, fire, vandalism, and other hazard claims. Often part of homeowner’s
insurance policy.
Hedging – Investing in different assets in order to reduce the overall risk of a

portfolio.
Holding Cost – The cost of the loan, homeowner’s insurance and property
taxes while you fix up and sell the property.
Homeowner’s Insurance – An insurance policy that protects against damage

to one’s home or its use, or damage to one’s personal possessions. The
policy also includes liability insurance to protect against accidents in one’s
home.
Homestead Tax Exemption – The body of state laws that enables the head
of the family to keep that family’s primary residence safe from creditors, or
exempts a protion of that home’s assessed value from state or county taxes.
Home Inspector – A professional who is licensed to evaluate the quality and

condition of a home, inside and out.
Home Warranty Policy – An insurance policy sold by escrow and title

companies. Policies can cover the repair/replacement of major appliances,
heating/air conditioning systems, roofs and electrical, wiring, plumbing, and
some structural failures.
HUD-1 – Government-supplied form that lists charges and closing costs for
buying a property, such as loan fees, recording fees, tax stamps, real estate
commissions, escrow costs, title insurance charges. HUD-1 forms are
available from the United States Department of Housing and Urban
Development.
Improvements – Repairs and/or the addition of structures that enhance an

existing property.
Income Statement – A financial statement detailing all income, expenses,

costs, and taxes.
Indemnification – An agreement that one party will compensate another in

case of losses.
Indenture – A legal document used instead of a mortgage in some states to

secure the repayment of borrowed money.
Individual Retirement Account (IRA) – An interest-earning savings

account that is not taxed until the funds are withdrawn.
Inflation – An increase in the price of goods and services over an extended

period of time.
Initial Price Estimate – A rough estimate based on preliminary information

gathered from your walk-around, comps found online, or through an agent or
title officer.
Insolvency – When an individual or company is unable to pay debts that are

due; for example, when liabilities surpass assets.
Installment Contract – A type of purchase agreement that delays the

transfer of title until a specified number, or all, of the payments have been
made.
Installment Loan – A loan that the lender and borrower agree will be paid
back in regular periodic payments.
Installment Note – A note that specifies the amount and due date of
mortgage payments.
Installment Sales – The separating of the price of the property into

installment payments, rather than a lump sum.
Instant equity – The difference between the property’s market value and the
amount for which it was purchased.
Interest – Any right or degree of ownership in a property.
Interest Rate – The fee that a bank or lender charges for lending you money.
Interest is calculated in percentages; it is a percentage of the money
borrowed.
Interest Rate Risk – The risk that interest rates may rise and in turn cause a
decrease in the value of an investment.
Intermediate Theory – Similar to title theory, but it requires the lender to

foreclose to obtain the title.
Involuntary Lien – A lien or claim, such as taxes, that is imposed on

property without the legal owner’s consent.
Irrevocable Trust – A trust the terms and provision of which cannot be

changed, modified, altered, amended, or revoked.
Joint Tenancy – A form of property ownership where two parties hold equal
rights to the property. In many states, the right of survivorship, where if one
of the joint owners dies, the other inherits the property, also applies to this
form of ownership.
Joint Venture – An agreement between two or more parties to invest in a

property.
Judgment – A formal decision made by the courts and used to settle a claim.
Judicial Foreclosure – A foreclosure ordered by the courts.
Junior Lien – A lien that is subordinate to another or primary lien.
Junior Mortgage – A loan whose claim is subordinate to another or primary

loan.
Land Contract – A contract for sale in which the seller maintains the title
pending the buyer’s completion of the agreed-upon payments for the
property. This is also known as an agreement for deed.
Land Trust – Real property ownership where a trustee appears to hold legal
and equitable title to trust property; however, the trust agreement restricts the
trustee’s powers and the beneficiary usually has the actual management and
control of the trust property.
Late Charges – Fees lending institutions charge if payment for a loan is not
received when due.
Lead Paint – Many buildings constructed before 1960 contain heavily leaded
paint. Some properties built as recently as 1978 can also contain lead paint.
This paint could be on window frames, walls or other surfaces inside or
outside of the property. Lead paint can cause serious health risks.
Lease – A written agreement (legal contract) between the property owner and
the tenant that allows a tenant to use the property for a specified period of
time for a specified rent.
Lease Option – A financing option that allows the buyer to lease the
property with the option to buy.
Legal Description – The formal geographic description of a property that is

recognized by law and is based on government surveys that spell out its exact
boundaries.
Lending Institution – Banks, credit unions, and savings and loan companies
are lending institutions.
Lessee – A person who leases a property in order to acquire occupancy rights

from the lessor (also known as a tenant).
Lessor – A person or company who leases their property to the lessee (also
known as a landlord).
Letter of Intent – Not a binding contract, but a letter asserting a buyer’s

intent to make an offer for the acquisition of a specific property.
Leverage – Using a small amount of money to borrow, and control, a large

amount of money.
Lien – A legal claim a creditor can place upon a property to secure the
payment of a debt.
Lien Theory – Allows the lender to claim, or to place a lien on, the
mortgaged property.
Limited Liability Company (LLC) – Similar to a partnership, except

members of an LLC can participate in the management of the company but
are not liable for the company’s debts and liabilities.
Limited Partnership – A business agreement between two or more parties in

which the limited partners provide capital for a share in profits but have
limited legal liability. Management is left to the general partners.
Line of Credit – An agreement by a financial institution to extend credit up

to a certain amount to a borrower.
Liquidity – The ease and speed at which an asset can be converted into cash.
Lis Pendens (Notice Of) – A legal notice of an existing dispute over a piece
of property.
Listing Agreement – A contract between a seller and a real estate broker that
authorizes the broker to facilitate the sale or lease of a property and details of
the terms of the sale.
Listing – An agreement between the seller of a property and a real estate

broker that the broker will act as the seller’s agent in the sale of that property.
For the listing, the broker will receive a commission when the property sells.
The commission is a percentage of the sale. Most listings are exclusive; a
property is typically listed with only one broker.
Loan Seasoning – When a certain number of payments have been made on a

loan, it is considered “seasoned” or mature. A loan with only one or two
payments made is not considered seasoned. Different lenders have different
loan seasoning requirements, typically the requirement is at least one year.
Loan-to-Value Percentage – The amount of the loan/mortgage in

relationship to the value or selling price of the property.
Long-Term Liabilities – Liabilities, such as mortgages, that are expected to

be outstanding for long periods of time.
Mark-Up – The difference between the wholesale price for an item and its
retail price.
Market Value – Also known as fair market value. The price that a property
would sell for when listed with a real estate broker.
Mechanic’s Lien – A lien against a property that is filed by a contractor,

laborer, or someone who supplies materials for work on the property because
payment was not made in full.
Molding – Material, such as wood, that is placed where the wall meets the
ceiling as a decoration.
Moratorium on Interest – A time during the term of a loan in which

payment of interest is postponed or suspended.
Mortgage – The agreement between a borrower and a lender that pledges a

property as security for the repayment of a loan. A loan secured to purchase
a home, where the pledge of the property to a creditor is used as security for
repayment of the loan.
Mortgage Broker – A person or company that connects lenders to borrowers

who meet qualifications that the lenders have set.
Mortgage Consultant – A professional who works for the borrower and

advises on which mortgage loan programs best meet the borrower’s needs.
Mortgage Guarantee Insurance Corporation (MGIC) – The largest

private mortgage insurance company in the United States.
Mortgage-Backed Security – A security whose value is based on a pool of

mortgages.
Mortgagor – The borrower in a mortgage loan.
Multiple Listing Service (MLS) – A listing that allows real estate brokers of
potential sellers to share information on properties with real estate brokers of
potential buyers.
Multiple Offers – When two or more potential buyers submit offers to

purchase the seller’s property.
Net Offer – An offer by the buyer that includes one hundred percent of the
closing costs, thus netting the seller’s equity.
Net Operating Income (NOI) – The cash remaining after operating

expenses have been taken out of the gross income of a property.
Net Worth – The total value of all your assets. Your net worth is calculated
by totaling all real estate, personal property and other investments, after
subtracting all debts.
Notarize – A document authenticated by a Notary Public.
Note – A legal document requiring repayment of a loan at a specified interest

rate over a certain period of time.
Open Listing – A listing contract in which the same listing is offered to

multiple brokers. The broker who sells the property is the only one who will
be paid a commission.
Option – A financing option that allows the buyer to lease the property with
the option to buy.
Optionee – The holder of the option to purchase a specific property in the

future.
Optionor – The seller of a property who must remove the property off the
market while the optionee decides to act on his or her option.
Owners of Record – All persons recorded as owners on the deed that is filed
with the county court.
PN – An acronym that stands for Parcel Number, also referred to as APN, or

Appraisal Parcel Number. Parcel numbers are one of the ways that the city or
county tax assessor keeps track of property location, size, and ownership.
Partnership – A relationship between two or more persons or entities for the

purpose of conducting business for their mutual benefit.
Passbook Loan – A loan made using funds in a savings account as collateral.

The borrower may not withdraw those funds from the account while the loan
is unpaid, so the lender faces no risk in making the loan.
Pass-Through – Income and/or losses that are passed through a business to

the individual partners and are then claimed on their personal tax returns.
Payoff Letter – A letter specifying the precise unpaid balance, including

interest, through the closing date of the loan.
Points – A charge paid at the beginning of a loan, on top of interest, for the
lender securing the loan. One point equals one percent of the amount of the
original balance.
Positive Cash Flow – Rental income that exceeds all expenses like loan
payments, taxes and insurance. Positive cash flow means rents are more than
your cost.
Prepayment Penalty – A provision in some loan contracts stating that in the

event the borrower pays off the loan entirely ahead of time, he or she will pay
a penalty.
Pre-Qualify – To have a loan amount approved by a lending institution

before finding a property to buy.
Prime Rate – Interest rate banks charge to their best, most creditworthy
customers.
Principal – The original amount of the debt prior to interest.
Principal Amortization – The paying off of a debt (loan) through periodic

installments over a specific period of time.
Private Mortgage Insurance (PMI) – To protect lenders against loss if the

borrower defaults on the mortgage. Lenders require PMI if more than eighty
percent of the purchase is being financed.
Profit – Is the surplus of income over expenses.
Profit Loss – Is the surplus of expenses over income.
Profitability Ratio – A ratio used to measure how successful a business is at

earning a return on its investment.
Pro Forma Statement – A balance sheet itemizing projected income and

expenses.
Promissory Note – A legal and binding contract between a lender and a

borrower detailing the terms of a loan, including the amount, interest rate,
and time period.
Property Exchange – The trading of real estate for real estate.
Property Tax – The tax collected, usually on an annual basis, from the
property’s legal owner. Property tax is based on a property assessment,
usually conducted by the county or city tax assessor or tax recorder.
Proprietorship – An unincorporated business owned and operated by one

person.
Pro Rata – Dividing of the income and/or equity from a property according
to percentage of interest held in the property.
Pro-Ration Credits – Credits given at a real estate closing for future

expenses such as the seller’s share of taxes.
Proxy – A person legally authorized to act on behalf of another in certain

matters.
Purchase Money Mortgage – A mortgage loan extended to the borrower by

the seller to facilitate the sale of the property.
Quit Claim Deed – A deed that does not guarantee title, but transfers the
right and interest in a property from the grantor to the grantee.
Radon – A naturally occurring gas, usually found in basements, suspected of

causing lung cancer.
Rate-Adjustment Cap – The maximum interest rate hike allowed under the
terms of the ARM.
Rate of Return – The percentage of profit or loss on an investment over a

period of time.
Real Estate – A legal term that encompasses land along with anything
permanently affixed to the land, such as buildings.
Real Estate Agent – A person who has passed a state-run examination and is
licensed to sell real estate. Real estate agents work for real estate brokers and
their clients.
Real Estate Broker – A person who is licensed by the state to list properties
for sale and negotiate between a buyer and a seller. A real estate broker may
own his or her own real estate brokerage company and earns commissions for
listing and selling properties. Real estate brokers employ real estate agents.
Real Estate Investment Trust (REIT) – A publicly held trust or company

that concentrates its holdings in real estate with the intent of making profit.
Real Estate Owned (REO) – A property that is acquired as a result of a

foreclosure.
Real Estate Tax Lien – A lien that is placed on a title because the owner has
not paid property, assessment, or other taxes.
Real Return – The return on an investment, minus the rate of inflation.
Realtor – A real estate agent or broker who is a member of the National

Association of Realtors.
Recession – A decline in the Gross Domestic Product (GDP) over two or

more successive quarters. It is marked by low consumer spending and high
unemployment rates.
Redemption – Repayment of the principal amount of mortgage.
Refinancing – To pay off one loan by taking out another.
Rehab – To restore a property to good condition.
Reinstatement – The restoring of a loan to a current status after it has fallen

into delinquency and stopping the foreclosure process.
Release Clause – A provision that allows for a portion of the property to be

released as security for a loan after a predetermined amount of the loan is
satisfied.
Remainder Interest – An ownership interest in property that will become a

present interest after the present owner or life tenant has received all the
property benefits to which he or she is entitled.
Rent Control – Price caps set by the government on the amount of rent that
can be charged by a landlord.
Reproduction Cost Approach – Method which uses the estimated cost of

building the same structure, using the same materials, construction standards,
and quality of workmanship, of the original structure and then adding the cost
of land and subtracting an allowance for wear and tear.
Reversionary Interest – An ownership interest in property that returns to the

original owner when the intervening interest expires.
Return on Equity – Used to figure out how well a company is using its
money. It is the return earned on a company’s stock. To calculate, divide the
company’s net income by its average equity.
Return on Investment (ROI) – A measurement used to calculate the

efficiency of an investment. To calculate ROI, divide the profit of an
investment by its cost.
Right – The interest a party has in a specific piece of property.
Right of Way – A strip of land that is used with permission by a party other
than the landowner. Usually for public transportation, power lines, pipes, or
other public interest.
Riparian Right – The right to the use of a body of water by a landowner

whose property is bordered by it.
Risk – The possibility that the return on an investment will be different than
expected. The result could be a loss of some or all of the original investment.
It is calculated by using the history and average performance of a specific
investment.
Risk Premium – The anticipated added return for making a risky investment
rather than a safer one.
Rollover – A loan whose terms and interest rate is renegotiated or rolled over
after a specified period of time.
S Corporation/Subchapter S Corporation – A small business corporation

with a limited number of shareholders that is treated as a partnership in
regards to taxes.
Sales Contract – A contract in which a property title is transferred for an

agreed-upon sum.
Sales Cost – The commission paid to the real estate broker who lists the
property and sells it.
Satisfaction of Mortgage – A legal document filed that states and proves the
borrower has completely paid off the mortgage.
Seasoning – A specified amount of time one must have a second mortgage

before he or she can refinance.
Second Mortgage – A second loan that is taken out on a piece of property.

Its rights are subordinate to the first or primary mortgage.
Secondary Market – A market where existing mortgages are bought and

sold.
Security Deposit – Money required by the landlord and deposited by the

tenant to protect the landlord from losses resulting from damage or terms not
met by the tenant.
Seller Financing – A real estate transaction in which the seller finances part
or all of the purchase price instead of a lending institution.
Seller’s Market – When there are less houses for sell than there are people
willing to buy them; tends to cause the price of those homes to increase.
Signature Loan – A loan made by a lender without requiring collateral; you

borrow the money “on your signature,” meaning on your reputation and
pledge to repay the loan.
Simple Interest – Interest calculated on the principal balance only.
Sublease – A rental agreement or lease between a tenant and a new tenant

(third party) who agrees to take over the terms of the lease for a shorter
period than the original lease.
Subordinate – A loan whose claim is secondary to another or primary loan.
Subordinate Interest – Investors who are paid after the primary investors.
Substitution-of-Collateral Clause – A provision in a mortgage that allows

for the substitution of one asset for another of equal or greater value as
collateral.
Sweat Equity – Doing the fix-up and repair work on a property yourself
rather than paying contractors.
Tangible Investments/Tangibles – In contrast to equity investments such as

stocks and bonds, tangible investments are objects such as art, gems, precious
metals, and collectibles.
Tax Assessor – The official or officials who determine the value of a

property in order to determine the tax liability.
Tax Credit – An IRS-approved deduction that reduces taxable income. Loan

interest paid is tax-deductible, reducing the amount you owe in income tax.
Tax Deduction – An item that is deductible from one’s gross income when
determining his or her taxable income.
Tax Deed – A special deed issued when a property is purchased at a tax sale.
Tax Incentive – A concession on your taxes.
Tax Liability – The amount of money in taxes the owner is obligated to pay
on a property.
Tax Lien – A claim against a property for the non-payment of taxes.
Tax Lien Certificate – A certificate issued to investors when a tax lien is

issued on a delinquent property.
Tax Shelter – An investment that results in a reduction or elimination of

taxes.
Taxable Income – The income not excluded from your standard deductions,
it is the portion of your income left over after subtracting exemptions,
deductions, and any other approved adjustments.
Teardown – A property in such poor condition that demolishing and

replacing it with a new house makes the best investment sense.
Tenant – A person who pays rent to use or occupy a residence.
Tender – A formal offer to buy at a specific price.
Terms – The specifics agreed to in a contract.
Term of a Loan – The conditions of a loan, including its length and interest
rate.
Thrift – A name often used for banks and saving and loans associations.
Timeshare – Property that is sold in fractional shares, where each share is

sold by specific time slots.
Title – A legal document that provides evidence of ownership of a property.
Title Insurance – A policy protecting the owner of the property in case their
ownership is challenged due to faults in the title chain (title history).
Title Company – A company that inspects the title of the property you want
to buy and issues title insurance, guaranteeing that the title is free and clear of
any encumbrances and can be transferred to you.
Title Search – Analyzing all transactions in the public record to determine

whether any title defects could interfere with the clear transfer of property
ownership.
Title Theory – Allows the lender to become the legal owner of the
mortgaged property at the initiation of the loan.
Trust Deed – A document used to create a mortgage lien; the borrower

conveys title to a trustee who holds it as security for the benefit of the note
holder (the lender); also called a deed of trust. It is a legal document that
conveys possession and ownership.
Truth in Lending Act – A federal law designed to protect consumers by

requiring clear disclosure of what the terms mean in any mortgage or loan.
Umbrella Policy – A policy covering losses above the limit of any

underlying policy or policies. Terms of coverage are sometimes broader than
those of the underlying policies.
Unsecured Creditor – A lender who does not require collateral to secure a

loan.
Unsecured Line of Credit – An extension of credit that does not require the
borrower to proved collateral.
Usury – Charging an illegally high rate on money lent.
Vacancy Rate – The percentage of all units not rented at a particular time.
VA Loan – A government-backed loan offered to veterans of the U.S. Armed

Forces; not restricted to low-income borrowers.
Vendor – A person who sells goods or services.
Walk-Around – A casual inspection of a property to get a general idea of its

condition.
Walk-Through – A final inspection of a property prior to closing, done as

close to the closing date as possible, to insure that the property is in the same
condition as when the sales agreement was signed.
Warrant – A legal assurance that the conveyed title is free and clear.
Warranty Deed – A deed the seller warrants to be a good, clear title free of
any liens or claims.
Wash Sale – An illegal trade or sale in which no change in ownership takes

place, or if it does, it is only for a short period of time.
Wraparound Mortgage – A form of secondary financing in which the

seller extends to the purchaser a junior mortgage which wraps around and
exists in addition to one or more superior mortgages.
Zero-Down Loan – A loan that allows a buyer to purchase a home without

committing any money as a down payment.
Zoning Law – A law that regulates the division of an area of land or

property. Zoning laws regulate the use of residential, commercial, industrial,
and agricultural areas.

Glossary

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Glossary

Uploaded by

Copyright:

Available Formats

Probate Goldmine

Abatement - A proportional diminution or reduction of the pecuniary

Acknowledgement – An official statement made in the presence of a Notary

Adjudicated Newspaper – A newspaper that has court approval to publish

Administrator (Administratrix) - A person appointed by the court to

Administrator with Will Annexed - One appointed administrator of

Administration Unnecessary – A small estate where the value of the assets

Affidavit - A written or printed declaration or statement of facts, made

Ancillary Administration - Administration of estate in state where decedent

Attorney of Record – The attorney handling probate of the estate on behalf

Beneficiary - A party who will benefit from a transfer of property or other

Bequest – To give or leave assets to another individual or an organization by

Charitable Gift Annuity – An agreement in which an individual or

Charitable Trust – A trust having a charitable organization as its

Chattel – Another name for personal property such as motor vehicles,

Chattel Mortgage – A loan or mortgage secured on personal property rather

Claimant – The individual who administers a small estate.

Codicil - A supplement or an addition to a will; it may explain, modify, add

Community Property - Property owned in common by husband and wife

Conservator - A guardian; protector; preserver, appointed by the court to

Conservatorship – The legal title of the type of case where a conservator is

Contingent Beneficiary - person who may or will benefit if primary

Decedent – A legal term used to refer to a person who has died.

Devise – To leave someone real estate by means of a will.

Distributee – An individual who inherits; an heir.

Domicile - a person’s legal home; the permanent residence of a person or

Donee –A person who receives a gift.

Donor - The person giving a gift.

Durable Power of Attorney – A written legal document that empowers an

Estate - The total property of whatever kind that is owned by a decedent

Executor (Executrix) - A person appointed by testator to carry out the

Ex Parte - A judicial proceeding, order, injunction, that is granted for the

Fiduciary - A person having duties involving good faith, trust, special

Guardianship – The legal title of the type of case where a guardian is

Inheritance Tax – Tax imposed in some states upon the privilege of

Intestate - When a person dies without making a will, or dies without

Joint Tenancy - Type of ownership of real or personal property by two or

Letters Testamentary – A court document that grants one of two types of

Marital Deduction – A deduction allowing for the unlimited transfer of any

Minor - A person who is under the age of legal competence.

Notice to Creditors – A notice published in a local newspaper that informs a

Order – A written command or direction by a judge or court clerk. An order

Personal Representative – The person named in the will to oversee the

Power of Appointment – A power or authority conferred by one person by

General Power - Allows the donee to designate himself, his

Power of Attorney – A written legal document that authorizes one party to

Pour-over Will - Provision in a will that directs the distribution of the

Pretermitted Heir - A child or other descendant omitted by the testator.

Private Auction – One method in which probate properties can be sold. An

Probate Administration - Court procedure by which a will is proved to be

Proof of Publication – A document from the local newspaper showing a

Public Auction – One method in which probate properties are sold. An

Quasi-Community Property – Property acquired by a decedent prior to

Real Property - Land, and generally whatever is erected or growing upon or

Remainder Interest - The property that passes to a beneficiary after the

Resident Agent – An individual living in a state who is authorized to accept

Residuary Beneficiary - Person who receives all or part of the residue

Reversionary Interest - A right to future enjoyment of property that is

Revocable Trust - A trust whose terms and provisions can be changed,

Right of Representation - Sometimes referred to as “per stirpes”, where the

Separate Property - The property owned by a married person in his or her

Settlor – Person who created a trust.

Small Estate Administration – A simplified process for probating estates