Here are a few terms you may or may not hear during the real estate transaction. If you don’t understand something throughout the transaction, please make sure to get clarification
Additional Provisions- Additional material attached to and made a part of a document. The sales contract should incorporate the additional provisions by referring to it as part of the agreement. It should be initialed by all parties
Agent- A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf. An agency gives rise to a fiduciary relationship and imposes on the agent certain duties, obligations, and high standards of good faith and loyalty.
Affordable/Attainable Housing- Property that has a deed restriction. There will be strict rules as to who can purchase and how the property is to be sold. Purchasers usually have to show that they earn below a certain level per year and have worked in the area for several years.
Chain of Title- The recorded history of matters that affect the title to a specific parcel of real property, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title.
Commission- The compensation paid to the real estate broker (usually by the Seller) for services rendered in connection with the sale or exchange of real property. The commission is normally stated as a percentage of the gross sales price, and the exact rate is subject to negotiation.
Comparables- Recently sold properties that are similar to a particular property being evaluated and are used to indicate a value for the subject property. Appraisers also use comparable to help them decide on value of a particular property.
Contingency- A provision in a contract that requires the completion of a certain act or the happening of a particular event before that contract is binding.
Deed- A written instrument by which a property owner as “grantor” conveys and transfers to a “grantee” an ownership interest in real property. There are many types of deeds including warranty deed, quit claim, sheriff’s deed, etc.
Due Diligence- A time period in which a buyer is given the opportunity to have experts inspect the property, examine the title, review the leases to determine whether the property matches the buyer’s needs.
Earnest Money- The cash deposit paid by a respective buyer in a real estate transaction as evidence of good-faith intention to complete the transaction.
Encumbrance- Any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of the property but not necessarily prevent transfer of title.
Escrow- The process by which money and/or documents are held by a disinterested third party until satisfaction of the terms and conditions have been met. In Wyoming Title companies typically handle all escrow and holding of earnest money.
Fiduciary- A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another.
Homeowners’ Association (HOA)- A nonprofit association of homeowners organized pursuant to a declaration of restrictions or protective covenants for a subdivision, PUD, or condominium.
HUD- A federal cabinet department officially known as the Department of Housing and Urban Development. HUD is active in national housing programs.
Leach Field- are subsurface wastewater disposal facilities used to remove contaminants and impurities from the liquid that emerges after anaerobic digestion in a septic tank.
Marketable Title- Good or clear salable title reasonably free from risk of litigation over possible defects; also referred to as merchantable title.
Nonconforming Use- A permitted use of real property that was lawfully established and maintained at the time of its original construction but that no longer conforms to the current zoning law.
Origination Fee- The finance fee charged by a lender for making a mortgage. It covers initial costs such as preparation of documents, credit, inspection and appraisal fees.
Personal Property- Things that are tangible and movable; property that is not classified as real property. Title to personal property (refrigerator, washer, dryer, etc.) is transferred by way of a bill of sale.
Planned Unit Development (PUD)- A housing development designed to produce a high density of dwellings and maximum use of open spaces. This efficient use of land allows greater flexibility for residential land and development.
Riparian Rights- Those rights and obligations that are incidental to ownership of land adjacent to or abutting on watercourses such as streams and lakes. Examples of such rights are the right of irrigation, swimming, boating and fishing.
Septic Tank- A sewage settling tank in which part of the sewage is converted into gas and liquids before the remaining waste is discharged by gravity into a leaching bed underground.
Setback- Zoning restrictions on the amount of land required surrounding improvements; the amount of space required between the lot line and the building line. These can be found in local zoning regulations, or they may be established by restrictive covenants in subdivisions.
Special Assessment- A tax or levy customarily imposed against only on those specific parcels of realty that will benefit from a proposed public improvement. Only those affected by the improvement must pay this special lien. Examples are water, sidewalks and sewer assessments. They are usually paid in installments over several years, although the owner also has the option to pay in full.
Survey- The process by which boundaries are measured and land areas determined; the on-site measurement of lot lines, dimensions and position of houses on a lot, including the determination of any existing encroachments, easements, party walls and compliance with setback requirements.
Tax-deferred Exchange (1031)- Some or all o the realized gain from the exchange of one property for another may not have to be immediately recognized for tax purposes. It is not, however, a tax-free transaction- the payment of taxes is simply deferred to a later transfer.
Title- The right to ownership of land. Title to property encompasses all that bundle of rights an owner possesses. Title can be owned in many forms- individually, jointly, in a trust.
Title Insurance- A comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any liens or encumbrances thereon. Unlike other types of insurance, which protect a policyholder against loss from some future occurrence (such as fire, or auto accident), title insurance protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title.