Plain-English Glossary
Common real estate terms, explained without the legalese.
- Agency
- The legal relationship in which one person (the agent) acts on behalf of another (the principal or client).
- Amortization
- Paying off a loan gradually through scheduled payments of principal and interest.
- Appraisal
- An independent professional estimate of a property's market value.
- Binder
- A short preliminary agreement or deposit receipt showing intent to purchase.
- Closing Costs
- Fees and expenses — beyond the purchase price — paid when a real estate transaction is finalized.
- Closing Disclosure
- A federally required form sent to the buyer at least three business days before closing that itemizes the loan terms, fees, and amounts due.
- Contingency
- A condition in a contract that must be met (for example, inspection or financing) before the deal is binding.
- Deed
- A written legal document that transfers ownership of real property from one party to another.
- Disclosure
- Information a seller or agent is legally required to share with a buyer about a property's condition or history.
- Dual Agency
- When one brokerage represents both buyer and seller in the same transaction. Legal only with written consent in most states.
- Earnest Money
- A good-faith deposit paid by a buyer when entering a contract to show serious intent.
- Easement
- A legal right to use part of someone else's property for a specific purpose — like a shared driveway or utility line.
- Encumbrance
- Any claim, lien, or restriction on a property that may affect its transfer or value.
- Escheat
- The transfer of property to the state when an owner dies with no will and no legal heirs.
- Escrow
- A neutral third-party account that holds funds or documents until the terms of a contract are met.
- Fiduciary Duty
- The highest duty of care one person owes another — including loyalty, honesty, and full disclosure.
- Fixture
- An item permanently attached to a property that usually stays with the home upon sale.
- Foreclosure
- The legal process by which a lender takes ownership of a property after the borrower fails to pay the mortgage.
- Homestead
- Laws that protect a primary residence from certain creditors and reduce property taxes.
- Lien
- A legal claim against a property used as collateral to satisfy a debt.
- Material Defect
- A problem that significantly affects the value, safety, or habitability of a property.
- Mortgage
- A loan used to buy real estate, secured by the property itself.
- NAR Settlement (2024)
- A March 2024 class-action settlement that changed how buyer-agent commissions work in the US. Since August 2024, MLS systems can no longer publish offers of buyer-agent compensation, and buyers must sign a written representation agreement before touring a home.
- Promulgated Contract
- A contract form issued by a state agency that licensed agents are required to use.
- Quitclaim Deed
- A deed that transfers whatever ownership interest the signer has — without guaranteeing the title is clear.
- Security Deposit
- Money a tenant pays up front that a landlord can use to cover unpaid rent or damage beyond normal wear and tear.
- Title
- Legal ownership of a property, or the document that proves it.
- Title Insurance
- Insurance that protects a buyer or lender from losses caused by title defects discovered after purchase.
- Transaction Broker
- A type of agent who helps a transaction proceed without representing either party as a client — no fiduciary duty.
- Transfer Tax
- A tax imposed by a state, county, or city when real estate changes hands. Sometimes called a deed tax, stamp tax, or recordation tax. Who pays varies by jurisdiction and contract.
- Wire Fraud
- A scam in which criminals impersonate a title or escrow company and trick a buyer into wiring closing funds to a fraudulent account. The leading source of consumer financial loss in real estate. Always confirm wire instructions by phone using a trusted number.
- Warranty Deed
- A deed in which the seller guarantees a clear title and defends the buyer against any claims.
- Zoning
- Local laws that regulate how land may be used — for example, residential, commercial, or mixed-use.