Market Value: The highest price in the terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgably and neither affected by undue pressures.
Mechanic’s Lien: A line created by statute which exists against real property in favor of persons who have preformed work or furnished materials for the improvement of the real property.
Metes and Bounds: A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles. Metes (length or measurements) and Bounds (boundaries) description is often used when a great deal of accuracy is required.
Monument: A fixed object and point established by surveyors to establish land locations.
Negative Amortization: Occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance, so that the unpaid interest must be added to the principal due.
Net Lease: A lease requiring a lessee to pay charges against the property such as taxes, insurance and maintenance costs in addition to rental payments.
Notary Public: An appointed officer with authority to take the acknowledgement of persons executing documents, sign the certificate, and affix official seal.
Note: A signed written instrument acknowledging a debt and promising payment, according to the specified terms and conditions. A promissory note.
Option: A right given for a consideration to purchase or lease a property upon specified terms withing a specified time, without obligating the party who receives the right to exercise the right.
Ownership: The right of one or more persons to possess and use property to the exclusion of all others. A collections of rights to the use and enjoyment of property.
Power of Attorney: A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an attorney in fact.
Prepayment Penalty: The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity.
Principal: This term is used to mean the employer of an agent; or the amount of money borrowed, or the amount of the loan. Also, one of the main parties in a real estate transaction, such as a buyer, borrower, seller, lessor.
Promissory Note: Following a loan committment form the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.
Proration: Adjustments of interest, taxes, and insurance, etc., on a pro rata basis as of the closing or agreed upon date. Fire insurance is normally paid for three years in advance. If a property is sold during this time, the seller wants a refund on that portion of the advance payment that not been used at the time the title to the property is transferred. For example, if the property is sold two years later, seller will want to receive 1/3 of the advance premium that was paid. Usually done in escrow by escrow holder at time of closing the transaction.
Purchase Money Mortgage or Trust Deed: A trust deed or mortgage given as part or all of the consideration for real property. In some states the purchase money mortgage or trust deed loan can be made by a seller who extends credit to the buyer of property or by a third party lender (typically a financial institution) that makes a loan to the buyer of real property for a portion of the purchase price to be paid for the property. In many states there are legal limitations upon mortgagees and trust deed beneficiaries collectiong deficiency judgments agains the purchase money borrower after the collateral hypothecated under such security instruments has been sold through the foreclosure process. Generally no deficiency judgment is allowed if the collateral property under the mortgage or trust deed is residential property of four units or less with the debtor occupying the property as a place of residence.