Welcome to the Lexicon of Real Estate Terms
Navigating the world of real estate can be daunting, especially with the myriad of terminology that pervades the industry. Our Lexicon of Real Estate Terms is here to simplify your experience, providing you with more than 3,300 terms and definitions and 33,000 Quizes to help you feel comfortable using modern real estate language.
This comprehensive guide serves as a quick reference for various audiences, whether you are a home buyer or seller, a real estate professional, a business student, an investor, or an attorney. We understand that mastery of the language is crucial in making informed decisions in the real estate market, and our lexicon is designed to empower you.
What You’ll Find in Our Lexicon:
Our lexicon includes detailed definitions for real estate topics from A to Z. Whether you’re looking to understand key concepts for personal knowledge or to enhance your professional repertoire, you’ll find terms related to:
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Appraisal: Learn about the process of determining a property’s market value.
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Architecture: Explore different styles and terminologies that define building design.
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Brokerage: Understand the role of real estate brokers and the services they provide.
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Construction: Familiarize yourself with the terms used in the building process.
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Debenture: Discover financial instruments that could impact real estate investments.
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Flood Plain: Understand the risks and regulations associated with properties in flood-prone areas.
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Negative Amortization: Get insights into loan types that increase in balance over time.
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Security Instrument: Learn about the agreements that secure a loan against a property.
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Subprime Loan: Understand the implications of loans given to borrowers with poor credit.
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Underlying Mortgage: Familiarize yourself with the financial obligations tied to a property.
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Zoning: Get to grips with laws that define how land can be used.
In addition to these definitions, our lexicon provides a wealth of resources, including:
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Common abbreviations used in real estate communications.
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Mathematical formulas essential for calculating mortgage payments, investment returns, and more.
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Charts and diagrams to visually represent complex concepts and processes.
Why Use Our Lexicon?
By utilizing this resource, you’ll gain confidence in your understanding of real estate terminology. Whether you’re conducting research, preparing for a transaction, or simply looking to expand your knowledge base, our lexicon ensures you have access to the information you need at your fingertips.
Join us in diving into the intricate world of real estate language, and empower yourself with the terminology that shapes the industry. Feel free to explore and reference frequently; your journey into mastering real estate has just begun!
An Energy Efficient Mortgage (EEM) is a mortgage loan designed to help homebuyers finance energy-efficient improvements to reduce future utility costs.
In real estate, 'entitlement' refers to the legal rights granted to a developer for the approval of certain land uses, as well as the term associated with the VA loan guarantee available to eligible veterans.
An entity is the legal form under which property is owned, impacting the benefits and risks associated with owning real estate. It can vary widely and includes structures like corporations, individual ownership, joint ventures, limited liability companies (LLCs), limited partnerships, partnerships, and real estate investment trusts (REITs).
An entrepreneur is an individual who initiates, manages, and assumes the risks of a business or enterprise. Entrepreneurs can be found in various industries and sectors and often innovation, creativity, and finance play significant roles in their success.
Entrepreneurial Profit is the compensation for the expertise and successful effort of a skilled businessperson, as calculated in both accounting and economics.
A comprehensive study of land to identify any unique environmental attributes, evaluate potential impacts, and determine the need for further action such as an Environmental Impact Statement (EIS).
An Environmental Impact Statement (EIS) is a comprehensive analysis assessing the potential effects of proposed development or action on the surrounding natural and artificial environment. The requirement for an EIS was established to ensure environmentally informed decision-making in federally funded or permitted projects per the National Environmental Policy Act of 1969 (NEPA).
Environmental Obsolescence refers to a form of depreciation in property value due to external, environmental factors that negatively impact its desirability and usability.
The Environmental Protection Agency (EPA) is an agency of the U.S. government established to enforce federal pollution abatement laws and implement various pollution prevention programs. The EPA regulates various environmental aspects, including air and water quality, waste management, pesticide usage, and industrial pollution.
An Environmental Report provides crucial information about the environmental conditions of a property. It assesses potential environmental liabilities and compliance with environmental regulations before any property transaction.
An Environmental Site Assessment (ESA) is a detailed analysis of a property to identify potential or existing environmental contamination liabilities, typically conducted before acquiring title to the property to comply with legal requirements and mitigate risks.
The Environmental Protection Agency (EPA) is a federal organization tasked with researching, monitoring, regulating, and enforcing laws related to environmental protection, to maintain and improve the health of the natural environment.
Equal and Uniform Taxation is a principle asserting that all individuals and property within the same class must be treated equally, with the same rate and value applied to property being taxed.
The Equal Credit Opportunity Act, enacted in 1974 and amended in 1976, is a federal law aiming to eliminate discrimination by lenders based on sex, marital status, age, race, color, religion, national origin, or receipt of public assistance.
Equalization ensures that property taxes are assessed fairly across properties with similar market values, helping maintain tax consistency within a given area or class of properties.
Equifax is one of the three major credit reporting agencies in the United States that collects and provides consumer financial information to creditors for credit evaluation, loan applications, and other financial decisions.
Equilibrium refers to a state of stability in a real estate market where supply and demand are balanced, resulting in stable prices. Understanding this concept is crucial for appraisers and investors alike to make informed decisions.
Equitable Conversion is a legal doctrine in certain states where, under a contract of sale, buyers and sellers are treated as though closing has already occurred. The seller in possession remains obligated to maintain the property until formal transfer.
An equitable lien is a legal interest granted to a creditor over a debtor's property as security for the debtor's obligation. Unlike a statutory lien, an equitable lien is created by the courts to achieve fairness, often in the absence of a formal written agreement.
An equitable mortgage is a legal arrangement where the property is encumbered similarly to a traditional mortgage loan but may not technically qualify as a mortgage due to a legal error or omission in documentation. Despite these errors, the courts can enforce an equitable mortgage to reflect the intentions of the parties involved.
Equitable title is the interest held by a buyer who has agreed to purchase a property but has not yet completed the transaction. This interest grants the buyer certain rights even though the legal title has not been officially transferred.
Equity buildup refers to the gradual increase in a homeowner's equity or ownership stake in a property as debt principal is paid down through scheduled mortgage payments.
Equity Dividend represents the portion of annual cash flow that an investor receives from their investment in real estate, calculated before taxes.
Equity represents the interest or value that an owner has in real estate over and above the liens or debts against it. It is calculated by subtracting the total liens from the market value of the property.
An equity kicker, also known simply as “kicker,” is a form of equity participation that lenders or investors can demand as part of a loan agreement. It provides the lender the right to share in the future success of the borrowing venture, typically in the form of a percentage of ownership or profits.
An equity loan, often referred to as a home equity loan or second mortgage, allows homeowners to borrow money by leveraging the equity in their homes. It is a type of loan in which the borrower uses the equity of their home as collateral.
Equity of Redemption refers to the right of a property owner to reclaim their property even after defaulting on a mortgage, by paying off the due amounts before the foreclosure is finalized.
The Equity of Redemption is a legal concept in real estate that allows mortgagors to reclaim their foreclosed properties by paying off the outstanding mortgage debt and associated fees before the foreclosure sale is finalized.
Equity participation entails property owners selling an interest in their property to an investor, who, in return, provides capital or financial support. It enables property owners to unlock capital without relinquishing full control.
An Equity Real Estate Investment Trust (EREIT) focuses primarily on investing in real properties, generating most of its revenue from leasing properties and capital appreciation rather than mortgages or construction loans.
Equity sharing is a financing arrangement where the property owner and lender both hold stakes in the property's future value, meaning the lender is entitled to a portion of any resale profits, usually resulting in a lower interest rate for the property owner.
Equity skimming is a type of real estate fraud where an investor takes out a loan exceeding the property's value, often via fraudulent means, and then collects rent on the property without making mortgage payments, increasing negative equity.
Equity stripping involves reducing the equity in a property through refinancing or obtaining additional loans, typically used as a tactic to avoid asset seizure in cases of financial distress or by predatory lenders.
Equity takeout refers to the process of refinancing a property mortgage primarily to raise cash. This results in an increase in the debt secured by the property while leveraging the equity built into the home.
The equity yield rate is the rate of return on the equity portion of an investment, taking into account periodic cash flow and the proceeds from resale. It considers the timing and amounts of cash flow after annual debt service, but not income taxes.
Erosion refers to the gradual wearing away of soil, rock, or other surface materials through natural processes such as water flow, wind, or glacier movement. It is a critical concept in real estate, agriculture, environmental planning, and construction, as it affects land stability, property values, and ecosystem health.
Errors and Omissions Insurance (E&O Insurance) is a form of liability protection that provides coverage against claims of professional malpractice and mistakes in business dealings made by the insured party. It is essential for professionals who provide services and advice to clients, including real estate brokers, to safeguard against potential legal actions arising from errors or omissions in their work.
Escalation clauses and escalation mortgages are tools commonly used in real estate to adjust costs and payments in accordance with specific metrics, such as inflation or interest rates, to accommodate changing economic conditions.
An escalation clause in real estate is a contract provision allowing for an adjustment in the price based on external factors, often used in competitive bidding situations.
An escalator clause is a provision in a lease that requires the tenant to pay additional rent based on an increase in specified costs such as real estate taxes, operating expenses, or other financial metrics.
An Escalator Mortgage, commonly referred to as an Adjustable-Rate Mortgage (ARM), is a type of home loan where the interest rate fluctuates based on a specific financial index, causing periodic payment adjustments over the life of the loan.
An escape clause is a provision in a contract that allows one or more parties to cancel all or part of the contract if certain events or situations do or do not happen.
Escheat is the legal process by which the ownership of property reverts to the state or government when the property owner dies intestate (without a will) and has no legal heirs. This ensures that the property does not remain ownerless and is used in a manner that benefits the public.
Escrow is an arrangement in which a third party holds funds or documents on behalf of the primary parties involved in a transaction, pending the fulfillment of specified conditions.
An escrow account is a financial arrangement where a third party holds funds temporarily until they're needed for specific obligations, such as property taxes, homeowner's insurance, and mortgage insurance in real estate transactions.
An escrow agent is a neutral third party who holds funds or assets during a transaction until specified conditions are met, ensuring a secure process for the involved parties.
Escrow analysis reviews and itemizes expenditures and contributions to an escrow account, primarily conducted at the end of a calendar year, to project the following year's required monthly payments.
Escrow Closing refers to the final phase in a real estate transaction, particularly in states that use deeds of trust instead of mortgages. During this phase, an escrow agent or title company holds onto necessary documents and funds until all conditions of the sale are met.
An escrow payment is part of a borrower's monthly mortgage payment that is set aside in an account to cover property taxes and insurance when they become due.
ESRI (Environmental Systems Research Institute) is a renowned service provider specializing in Geographic Information System (GIS) technology. They offer tools and solutions to analyze geographical and spatial data, aiding diverse fields like urban planning, wildlife preservation, and business logistics.
An estate encompasses the degree, nature, and extent of interest that a person has in real property as well as all their property, real or personal, that they own and leave at death.
An Estate at Sufferance refers to a situation where a tenant continues to occupy a property after the expiration of their lease, without the landlord's permission.
Estate at Will refers to the occupation of real estate by a tenant for an indefinite period, terminable by either the landlord or tenant at any time.
An Estate for Life is a property interest that terminates upon the death of a specified individual. This estate type grants usage rights to the beneficiary during their lifetime, while ensuring the property will revert to another designated party upon the beneficiary's death.
An Estate for Years is an interest in land that grants possession for a specified and limited period, often defined in a lease agreement. It is a fixed-term tenancy where the duration of the estate is explicitly stated.
An estate in reversion is a future interest that a grantor retains for themselves, which begins after the termination of some particular estate that has been granted.
An Estate in Severalty, also referred to as Tenancy in Severalty, is a real estate ownership structure where a single entity, either an individual or a corporation, holds exclusive ownership of a property. This type of ownership means that the owner has the complete responsibility and control over the property, making all decisions independently.
An estate tax is a levy on the estate of a deceased person, based on the value of the property left by the deceased. The tax is typically calculated based on the market value of the estate either at the date of death or six months afterward, taken at the lower value if applicable.
Estoppel is a legal doctrine that stops a party from denying or asserting something that contradicts what they have previously established as the truth in the eyes of another party who has relied on that position or representation in good faith.
An estoppel certificate is a document used in real estate transactions to detail the current status and conditions of a lease agreement, providing verification of lease information to third parties, such as lenders or prospective buyers.
An estoppel certificate is a legal document where the borrower acknowledges the amount of debt secured by a mortgage. It also can be a lease clause where a tenant confirms the lease's enforceability, absence of landlord default, and current rent status.
Estovers refer to the legally supported right to take necessities such as wood for fuel or repair from property. This is particularly relevant in cases where a life tenant requires resources from the land to maintain their daily living needs.
An abbreviation of the Latin phrase 'et alii,' meaning 'and others,' commonly used in real estate documents to reference multiple owners or parties involved.
Et Con. is an abbreviation of the Latin phrase et conjunx, meaning 'and husband.' It is commonly used in legal documents to refer to a party and their spouse, particularly in the context of property transactions and other legal matters.
An abbreviation of the Latin term et uxor, meaning 'and wife.' Commonly used in legal documents to indicate that a husband and wife are both parties to a contract, agreement, or deed involving real estate.
Ethics principles by which one treats colleagues, clients, and the public in a fair, just, and truthful manner. Adherence to such standards is considered one of the requisites for recognition as a profession.
The landmark U.S. Supreme Court decision on the legality of zoning, cited as Village of Euclid, Ohio, vs. Ambler Realty Company, 272 U.S. 365, 1926.
Founded in 1994, the European Real Estate Society (ERES) fosters a structured and permanent network that facilitates collaboration between real estate academics and professionals throughout Europe.
Evaluation in real estate involves a detailed study of the potential uses of a property, but it does not focus on determining the present value. It includes analyses such as market trends, feasibility studies, highest and best use assessments, and base land use.
Eviction is a legal process initiated by a lessor (landlord) to regain possession of their property from a tenant who has violated the lease agreement.
Actual eviction is the legal process where a tenant is removed from a property either by physical force or through legal procedures, typically initiated by the landlord for reasons such as non-payment of rent or breach of lease terms.
Evidence of title refers to the legal documents that demonstrate ownership rights to a property. These documents are essential in confirming and asserting a person's or entity's legal property ownership.
Ex-Situ processes involve offsite handling and treatment of contaminated material, distinct from the property where contamination exists. These methods are often employed in environmental remediation projects.
An Examination of Title involves a review of the title to a piece of real estate. It is typically less thorough than a full Title Search and often focuses on more recent historical records to ensure the property is free from significant encumbrances or defects.
An exception in real estate refers to specific conditions or items that are not covered by an insurance policy. Understanding exceptions is crucial for property buyers and owners as it affects the extent of protection provided by their insurance policies.
Excess accelerated depreciation refers to the accumulated difference between accelerated depreciation claimed for tax purposes and what straight-line depreciation would have been. It's typically recaptured as ordinary income upon sale instead of receiving more favorable capital gains treatment.
Excess land refers to the portion of a property that sits beyond the amount needed to support its current highest and best use, and which has the potential for separate development.
Excess rent refers to the amount by which the rent specified in an existing lease exceeds the rental rate currently demanded in the market for similar properties. It carries implications for property valuation and investor decision-making.
Under Section 1031 of the Internal Revenue Code, like-kind property used in a trade or business or held as an investment can be exchanged tax-free.
Exclusionary zoning refers to municipal regulations that effectively bar certain types of housing or people from living in certain areas, predominantly limiting access for low- and moderate-income individuals.
An exclusive (agency) listing is a written employment contract giving a single brokerage firm the right to sell a property within a specified time frame while also allowing the property owner to sell the property independently without paying a commission.
An employment contract that grants the broker the right to collect a commission if the property is sold by anyone, including the owner, during the term of the agreement.
An exculpatory clause is a provision in a mortgage allowing the borrower to surrender the property to the lender without personal liability for the loan. This means the borrower can walk away from the property if unable to meet the mortgage obligations, without other personal assets being pursued for the debt.
To execute a contract means to sign and implement it, formalizing the agreement between involved parties and potentially fully performing the terms of the contract.
An executed contract is a legal agreement whose terms have been fully fulfilled by all parties involved, signifying the completion of the contract's stipulated obligations.
An executor is an individual named in a will to administer the estate of the deceased according to the terms stipulated in the will. The executor ensures that the estate is distributed to the beneficiaries as per the decedent's wishes.
An executory contract is a contract under which one or more parties has not yet performed their obligations. It remains in a state of incompletion until all terms have been fully met by all involved parties.
An Executrix is a woman appointed by a will or a legal document to execute the last wishes and directives of the deceased, handling the distribution of the estate and ensuring all legal and financial responsibilities are met.
An exemption in real estate refers to certain portions of a property's value or income that are legally excluded from taxation, lowering the overall tax burden.
Exhibits are attachments to leases, mortgages, and other legal documents, providing detailed, supplementary information pertinent to the main document.
The Existing Home Sales (NAR) dataset is a comprehensive measure of the number of completed transactions involving single-family homes, condos, and co-ops. Reported by the National Association of Realtors® (NAR), the data is derived from more than 1,200 local Multiple Listing Services (MLS) and is crucial for gauging the health of the U.S. residential real estate market.
The Expense Ratio is a financial metric used to compare the operating expenses of a property to its potential gross income, allowing investors and property managers to analyze the relative operating efficiency.
An Expense Stop, also known as a Stop Clause, is a provision in a lease agreement that sets a limit on the amount of operating expenses a landlord will cover. Any expenses beyond this limit are the tenant's responsibility.
Expenses in real estate represent the costs associated with acquiring, maintaining, and operating a property. These expenses can significantly impact the profitability of real estate investments and the overall management of properties.
Experian is one of the largest and most prominent credit rating agencies in the world. It plays a critical role in providing credit reports, scores, and other financial information to both individual consumers and businesses.
The term 'expire' refers to the end or termination of a lease, contract, or agreement after a specific period or upon the occurrence of a predetermined event. In real estate, expiration typically pertains to the conclusion of lease terms, rental agreements, or any legal document.
Exposure in a financial context refers to the amount of money that one might potentially lose on an investment or business operation. It represents the degree of risk associated with the unprotected portion of an investment or asset.
Market exposure in the context of real estate refers to the efforts made to advertise and promote a property for sale. This can involve various strategies, ranging from traditional classified ads in newspapers to advanced online listings and signs.
Exposure (Physical) refers to the direction in which a property or building faces, impacting light, heat, and overall energy efficiency.
Exposure Time in appraisal terminology refers to the estimated amount of time it would have taken to sell the subject property prior to the date of the appraised value. This metric contrasts with Marketing Time, which is considered after the appraised value date.
