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Earnest Money—The
deposit money given to the
seller or his agent by the
potential buyer upon the signing
of the agreement of sale to show
that he is serious about buying
the house. If the sale goes
through, the earnest money is
applied against the down
payment. If the sale does not go
through, the earnest money will
be forfeited or lost unless the
binder or offer to purchase
expressly provides that it is
refundable.
Easement Rights—A
right-of-UTy granted to a person
or company authorizing access to
or over the owner's land. An
electric company obtaining a
right-of-UTy across private
property is a common example.
Encroachment—An
obstruction, building, or part
of a building that intrudes
beyond a legal boundary onto
neighboring private or public
land, or a building extending
beyond the building line.
Encumbrance—A
legal right or interest in land
that affects a good or clear
title, and diminishes the land's
value. It can take numerous
forms, such as zoning
ordinances, easement rights,
claims, mortgages, liens,
charges, a pending legal action,
unpaid taxes, or restrictive
covenants. An encumbrance
doesn’t legally prevent transfer
of the property to another. A
title search is all that is
usually done to reveal the
existence of such encumbrances,
and it is up to the buyer to
determine whether he wants to
purchase with the encumbrance,
or what can be done to remove
it.
Equity—The
value of a homeowner's
unencumbered interest in real
estate. Equity is computed by
subtracting from the property's
fair market value the total of
the unpaid mortgage balance and
any outstanding liens or other
debts against the property. A
homeowner's equity increases as
he pays off his mortgage or as
the property appreciates in
value. When the mortgage and all
other debts against the property
are paid in full the homeowner
has 100% equity in his property.
Earnest Money—A
buyer's partial payment to the
seller as a show of good faith
in completing the transaction.
Equity—The
difference between the current
market value of a property and
the claims--such as the unpaid
portion of a mortgage--that
exist against it.
Escrow—Funds
paid by one party to another
(the escrow agent) to hold until
the occurrence of a specified
event, after which the funds are
released to a designated
individual. In FHA mortgage
transactions an escrow account
usually refers to the funds a
mortgagor pays the lender at the
time of the periodic mortgage
payments. The money is held in a
trust fund, provided by the
lender for the buyer. Such funds
should be adequate to cover
yearly-anticipated expenditures
for mortgage insurance premiums,
taxes, hazard insurance
premiums, and special
assessments.
Exclusive Listing—A
written agreement in which the
seller appoints only one agent
to market the property for a
specific period of time. If the
owner sells the property
himself, he is not required to
pay a commission.
Exclusive Right of Sale
Listing—A
written agreement between an
agent and a property owner
stating that the owner will pay
a commission to the agent if the
property is sold during a
specific time period--whether or
not the agent is responsible for
the sale.
