When buying or selling a property, it always helps to have a basic understanding of real estate terms. In this on going series of articles, we take a look at definitions starting with “condominium.”
1) Condominium – A type of ownership in real property where all of the owners in a collection of properties jointly own everything except the interior of each property. Accordingly, the jointly area is run by a homeowner’s association, which can assess fees to the owners for improvements, etc.
2) Contract, or Sales Contract, or Contract of Purchase and Sale – the agreement between buyer and seller. In most jurisdictions it must be in writing in order to be enforceable. It covers such things as the identity of the property, the purchase price, any conditions of the sale, the settlement date or escrow period, when the buyer will occupy the property, etc.
3) Contract for Deed – a written document which provides that Deed does not pass to the buyer until the final payment has been made. In the event of default by the buyer, the property reverts to the seller. (One sees these occasionally. I’ve seen them when an owner was financing the sale of raw land for a buyer.)
4) Deposit, or Good Faith Deposit – an amount of money tendered by the buyer at the time a contract offer is made on real property. The contract spells out who holds it, and circumstances under which the seller gets it, and circumstances under which it’s returned to the buyer. Typically, the seller gets it as part of the purchase price at settlement, or as liquidated damages if the buyer defaults. The buyer usually gets it back if a condition of settlement is not met.
5) Deed – the written document which conveys title to real property. Some states are “record” states and ownership is defined by the deed’s being recorded at the courthouse in which the property lies.
6) Deed of Trust – the document which allows a third party to act for the lender should the lender need to forclose on real property used as collateral for a loan.
As you can image, there are many real estate terms for which you have a general understanding. In our next article, we continue with the terms starting with “Easement.”