Basic Terms Used for Real Estate & Mortgages
Real estate & loans may involve other terms. In the event you don't understand some of these terms, ask for help from your real estate agent, lender or attorney.
Earnest Money
Money showing evidence of good faith. The money is usually kept in safe keeping with a real estate broker or escrow company.
Easement
Using land for a specific purpose, the easement can either be temporary or permanent.
Eminent Domain
The governments ability to take over property (condemnation) for public use with compensation to the property owner.
Encroachment
Anything that physically lays or touches on the property of another.
Encumbrance
A legal right or interest in land/property that affects a good or clear title, and reduces the land/properties value. Such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive covenants. An encumbrance will not legally prevent the transfer of the property. A title search is typically done to find the existence of encumbrances. It is up to the buyer to determine whether he wants to purchase an encumbered land/property and what can be done to remove the encumbrance.
Equity
Equity (usually given in a percentage) is equal to the property value minus any liens.
Escrow
A neutral third party that deals with the financial aspects of a real estate transaction. A deposit is put into escrow, the mortgage lender funds the loan into escrow, escrow pays the realtor commission, pays of any liens/loans on the property and any property taxes and other costs associated with the transfer. The remaining funds are then transferred to the property seller.
