Mortgage Note and Deed of Trust Difficult Terms Lexicon
Q
to Z
To help note holders out we’ve compiled a list of the more difficult terms used in real estate and their definitions.
Quiet Title Suit: A lawsuit that determines an owner’s rights over a certain parcel of property.
Quitclaim Deed: A deed that transfers title without representation or warranty about the rights granted. This should never be used to transfer title except among spouses and possibly other trusted family members.
REO: Real Estate Owned. This is usually used to refer to foreclosed property in the hands of a lender.
Redlining: Refusing to lend to someone with a sufficient credit rating because of where they live. This is illegal.
Right of Redemption: The mortgagor’s right to recover his property from foreclosure or a tax sale by paying off outstanding debts.
Right of Survivorship: A surviving joint owner’s right to the interests of the deceased joint owner.
Seller Financing: A situation where a property owner offers to carry some or all or a mortgage debt instead of a third party. This is used to offer properties where a potential buyer doesn’t need to apply for the full mortgage with a financial institution. The drawback is that the seller is directly responsible for collecting payments on what he financed and received them according to an afgreed schedule, rather than the lump sum a third party lender could provide.
Split Funding: A technique whereby an investor offers a small amount of cash to close the deal with the balance due at a later date in the form other than extended monthly payments.
Subordinate: A relatively lower priority condition attached to a property, as compared to some other condition. This usually applies to mortgages, where for example, a second mortgage is usually subordinate to the first mortgage.
Subordination Clause: A mortgage clause that grants priority to one or more subsequent mortgages, instead of taking priority over them.
Tax Sale: Government sale of a property due to the owner’s failure to pay taxes.
Tenancy at Will: A license to use a piece of real estate at the owner's discretion.
Tenancy by the Entirety: Joint ownership between spouses where both possess equal, comprehensive rights over the property during their marriage. When one spouse dies, the other assumes full ownership, taking priority over any probate process.
Tenancy in Common: Joint ownership without the right to of a living partner to claim a deceased partner’s portion.
Tenements: Fixed structures (such as houses) on a piece of land.
Testate: To possess a legally valid will.
Time Value of Money: The effect of inflation on money that makes immediate payouts more valuable than long term payments, as the value of each payment decreases over time.
TPA: Third Party Administrator: usually, the party who is authorized to administer funds from a retirement plan.
Transfer Tax: A tax on transferring ownership of a property.
Trust Deed (Deed of Trust): A real estate contract much like a mortgage, but held by a third party as the beneficiary. This third party (the trustee) is responsible for guaranteeing payment and managing the buyer’s obligations to the seller. Most “mortgages” in California are actually Trust Deeds.
Use Restrictions: A deed clause that limits the property’s use in a specific above and beyond other legal and regulatory restrictions. As part of the deed, the restriction transfers from owner to owner.
Usury: Lending money at illegally high interest rates.
Variance: Special permission to develop property in a way that would normally violate local zoning restrictions.
Wraparound Loan: A new loan that incorporates existing loans.
Zoning: Land use regulations that apply to all properties that do not have an attached variance or another exception. These regulations vary between different zones (residential, commercial, etc.), giving them their name.
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