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A – Z of Real Estate Terms

Posted by Uget Properties on October 23, 2018
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Like the medical, accounting or computing profession; Real Estate jargons can be quite tasking to decode. Even if the real estate columns do not interest you that much, we know that every adult from time to time will eventually have to sign some tenancy agreement, apply for mortgage loan, sell or buy a property and so on. We all need a fair knowledge of where we live, what we own and things we intend to acquire. Besides, real estate is obviously the largest market and the biggest investment portfolio in the globe. So, few additions to your real estate vocabulary is certainly good for you.

Here is a glossary of real estate terms that will definitely be useful to you from time to time.

Agent

This is someone who represents or has the power to act for another person usually referred to as the principal. The authority may be expressed, implied, or apparent. The property owner as the principal, signs a listing agreement or property management contract authorizing a licensed real estate broker to be his agent.

Agreement of sale

This a written contract by which a buyer agrees to buy certain real estate and the owner or seller agrees to sell, on the terms and conditions set forth in the agreement.

Appreciation

Seen as an increase in the value or worth of a property.

Best and final offer

A best and final offer in real estate is a prospective purchaser’s final and highest offer. When a seller has received numerous offers, he usually will ask either all buyers or the top bidders to submit their best and final offers. In this kind of offer, the buyer usually presents the most favorable terms he or she is willing to purchase the property from the seller.

Commercial real estate

Commercial real estate is one of the three primary categories of real estate, alongside industrial and residential. As its name implies, commercial real estate is used in commerce and business typically, a landlord or an investor owns a building and collects rent from his tenants who are business operators in his premises

Conditional Contract

This is a written agreement signed by the seller and the purchaser but has one or more conditions which need to be met, usually within a specified time period.  For example, “subject to Local Council’s approval of the title.”

Commission

The administrative charge or fees for selling or leasing a property – payable by the seller, and sometimes, the buyer or both to the real estate company. Real estate salespeople and virtually every real estate professional earn commissions for their works and roles in executing real estate transaction. The commissions are paid out of the charges paid by the seller or buyer in the property transaction.

Caveat

This is a notice on the title announcing that a party other than the existing owner may have an interest in the said property.

Caveat emptor

This is Latin word for “buyer beware”.  This is a way of alerting prospective buyers that the ownership or interests in a property is in question, unclear or subject to litigation.

Distressed sale

A distressed sale is a situation where a property, stock or other forms of assets are sold or put up for sale in an urgent manner or due emergency. Distressed sales usually occur at a loss because funds invested in the asset are needed within a short period of time. The fund realized from this sale is most often used to pay debts, meet pressing and time-bound needs, medical expenses or to handle other emergencies.

Equity

Equity means ownership. In homeownership, equity is the value of the occupant/homeowner’s interest in their home. It represents the amount of the value of a home that the buyer has paid for—meaning how much of the principal the homeowner has paid off.

Escrow

Escrow is a type of account that a lender sets up that receives monthly payments from a buyer.

Federal Mortgage Bank of Nigeria (FMBN)

The is the apex mortgage institution in Nigeria. It is also responsible for the management and administration of the workers contributory savings scheme known as the National Housing Fund (NHF). The Bank’s current business model targets partnerships with local and international organizations with financial and technical capacity, interested in delivering affordable mass housing for the low-income end of the market.

Foreclosure

This is a legal process by which property used as collateral for a loan is sold to recover the debt in the event of default in repayment of the mortgage or defaulting in other terms in the mortgage document.

The foreclosure process brings the rights and interest of all parties to an end and transfer the title in the mortgaged property either to the holder of the mortgage or to a third party who will buy the property at the foreclosure sale.

Fittings

These are pieces of equipment or furniture or items used for home furnishing and decorations. It is usually detachable from the house.

Fixtures

These are building materials or Items fixed to a property in a way that would usually damage item or the structure of the property if they were to be removed, such as POP, built-in shelving or wardrobes tiles etc. Usually fixtures are included in the sale of a property.

 Gap

A gap in real estate refer to defect in the chain of title of a particular piece of property; it could be a missing paper or conveyance that raises doubt as to the true ownership and present state of the estate.

Graduated payment mortgage

This is a mortgage facility for which the initial payments or deposits are small but increase over the life of the mortgage loan.

Grant

This is the act of passing on or transferring title to real estate.

Grantee

This is a person to whom real property is conveyed; the purchaser.

Grantor

This is a person who transfer real estate by deed; the seller.

 Heir

Heir is a person who might inherit or succeed to an interest in land under the state law of descent especially when the holder or owner dies without leaving a valid will.

Home Inspection

This is the process in which a professional inspects a home which is about to be sold to ascertain the overall condition of the home and to check for issues that are not openly apparent, then prepares a report for the buyer to review.

Home Protection Plan

A yearly service charge that covers the cost of repairs or replacements to items covered in the plan.

Hybrid

A loan that begins with a fixed interest, then changes to an adjustable rate.

Investment

The fund or resources used for the purchase, improvement, and development of an asset in expectation of income or profits. A good investment has the following features: safety, regularity of yield, marketability, acceptable denominations, valuable collateral, acceptable duration, required attention, and potential appreciation.

Inspection

Home inspections are usually carried out on a property for sale once a prospective buyer makes an offer. Typically, it requires the services of a professional and might cost a few hundred bucks. The purpose home is inspection is to confirm the state of the building’s plumbing, fixtures and fittings, appliances, foundation, and other features. Issues discovered during inspection goes a long to affect negotiation on a final price.

Land

It is the earth’s surface extending downward to the center of the earth and upward infinitely into space, including permanently attached natural objects.

Lease

A contract or agreement executed between a property owner also called the landlord (or the lessor) and a tenant (the lessee) transferring the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated financial consideration (rent).

According to most state law, leases or rental for more than one year is required to be consummated in writing for it to be legally enforceable.

Leasehold estate

A tenant or renter’s right to live in and use a particular real estate during the period of a lease, normally considered to be a personal property interest.

Lessee

The tenant who leases a property.

Lessor

One who leases property to a tenant

Leverage

This is the use of borrowed funds to finance the bulk of an investment.

Mortgage Insurance

An insurance prepared in connection with a mortgage loan that protects the mortgagee in the event that the borrower defaults or cannot repay the loan. Mortgage insurance may not be required if the borrower makes at least twenty percent equity contribution (i.e. 20% down payment).

Mortgage Note

This is a promise to pay a stated sum of money at a going interest rate during a specific term that is secured by a mortgage.

Multiple Listing Service (MLS)

The nationwide listing of real estate properties that are available for sale. MLS usually prove to be a reliable source for a very comprehensive listing information in the country.

National Housing Fund

The NHF scheme is for Nigerians in all sectors of the economy, particularly those within the low and medium income levels who cannot afford commercial housing loans e.g. civil servants, traders, artisans, commercial drivers etc. Any intending beneficiary must be a registered contributor and up to date with his/her contributions.

Open House

An open house is a scheduled duration in which a property is designated to be open for viewing to potential buyers. Realtors advices their client to hold open house during weekends with banners, handbills and billboard for advertisement. Property owners organizing such, usually keep the houses sparkling during this time, to attract good buyers.

Offer

Defined as a signed contract, which states terms and conditions of sale includes the price, , executed by the buyer and presented to the seller.

Performance bond

A binding contract, often accompanied by a warranty and usually executed by one who is to undertake a project for another, that assures that the work being undertaking will be completed as per the agreement or contract.

Power of attorney

This is a written legal instrument authorizing a person (the attorney-in-fact) to act on behalf of the maker to the extent indicated in the instrument.

Property tax

This the tax collected by the government against either a real or personal property. In Nigeria it is called Property and Land Use Charge’ and the right to tax real property lies with the states the government.

Proration

Proration is the proportionate sharing of expenses of property ownership between two or more parties. Closing statement prorations normally include taxes, rents, insurance, interest charges, and assessments.

Qualifying

The process of ascertaining a prospect’s interest and motivation, then matching his or her needs with the available inventory.

Quitclaim deed

A quitclaim is conveyance through which the grantor transfers his or her interest in a real estate without warranties or obligations.

Real estate

Real estate refers to land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached thereto, whether by nature or by man.

Rent

A fixed financial consideration or periodic payment made by a tenant of a property to the owner for possession and use; on term set forth in the tenancy agreement.

Refinancing

Refinancing is the deliberate restructuring of a home loan, replacing the old loan with an entirely new facility that comes with a different rate and payment plan. The primary reason why people refinance their home loans is to access a lower interest rate on their mortgage. Refinancing help holders of home loan to get lower monthly payment and the overall debt owed is reduced, too.

Severalty

The exclusive ownership of real property by one person only; also called sole ownership.

Stigmatized property

A property considered by the public as unwanted because of unpleasant events that may have occurred on the property, like murder or suicide, or present paranormal activities. It even happens sometimes that proximity to undesirable property causes a close by estate to become stigmatized, too.

Subletting

This is when a lessee rents or leases out the premises he or she is occupying to a third party for part of the lessee’s remaining tenure.

Settlement date

The date on which a property sale is confirmed, settled and transfer effected. The buyer pays the vendor and gains possession of the home at this time.

Tenant

One who holds the right to occupy a property or tenement in exchange for a financial consideration
Tenement
Every area covered in the tenancy agreement that may be occupied under a lease by a tenant.

Termination (lease)

The annulment or termination of a lease by the action of either party. A lease may be deemed terminated by expiration of the tenure, surrender and acceptance, constructive and legal eviction by lessor, or other options, when it is clearly provided in the lease for breach of covenants.

Testate

One is said to have died testate when he or she made and left a valid will.

Title insurance

This an Insurance intended to indemnify an estate holder for future losses sustained as result of defects in a title, up to and including the policy limits.

Title insurance is a cost included as part of the closing of a property deal. It covers search into public records to certify that the title is free and unencumbered, and ready for sale. If a home is purchase and it is found later that there exist liens on the property, title insurance covers such development.

Unearned increment

This is a rise in the worth of a property caused by increased population, development, or increase demand for which the owner is not responsible.

Underwriting

A process in which a potential home buyer is appraised to check their financial ability to take and repay a loan. This generally involves a credit check and an evaluation of the property.

Unity of ownership

There are four unities traditionally needed to create a joint tenancy – unity of title, time, interest, and possession.

Urban renewal

The procurement of shabby city areas for purposes of redevelopment.

Useful life

In real estate investment, useful life is the number of years a property will be valuable to the buyer or investors.

Usury

The practice of overcharging or charging more than the rate of interest as permitted by law

Valid contract

This is a contract that complies with all the vital elements on an agreement and is binding and enforceable on all parties to it.

Valid lease

An a legally acceptable and enforceable lease that present the following terms: lessor and lessee with contractual capacity, offer and acceptance, legality of object, description of the estate and premises, considerations, signatures, and delivery. Leases that will run for more than one year must be in writing.

Value

The current worth or future benefits arising from the ownership of real estate. To have value, a property has value if it is usefulness, scarce, have effective demand, and be transferable.

Virtual/Visual Tour

A video presentation of a property usually in a bid to market it.

Writ of Attachment

This is a process by which a debt defaulter’s property is kept in the custody of the law and held as security, pending the decision of the court on a creditor’s suit.

Walk-Through

The viewing and final checkup before closing that permits the buyers one last tour of the estate they are buying.

Will

A document through which person transfers his or her property after death.

X

A mark made by a person who cannot write or physically unable to write, to show intent to endorse or sign an instrument such as a deed or will. In regard to the transfer or conveyance of real property, the person would be required to make such the mark or thumbprint as an intent to sign the document which will be the presence of a witnessed.

Xystus

A garden walk embarked by trees.

 Yield

This is the yearly rental proceed of an investment property, expressed as a proportion of the property’s worth or value.

Zoning

A popular urban planning tool used by local governments to delineate how land is to be used. Examples include low density residential area, high density residential zone, mixed use zone and metropolitan city centers.

Zoning Ordinance

This refers to the set of laws and regulations, mostly, applicable at the local council level, regulating the use of land and development in a given area or zone.

 

 

Reference:

https://www.tomfeeley.com/real-estate-terms/

https://www.investopedia.com/

https://www.investopedia.com/

https://www.investopedia.com/

https://www.proptiger.com/guide/real-estate-glossary/

 

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