Real Estate Terms Explained: A Simple Glossary for Buyers & Sellers

Amortization

Paying off a loan little by little over time with regular payments that cover both principal and interest.

APR (Annual Percentage Rate)

The yearly cost of borrowing money, shown as a percentage. It includes interest and some fees. It’s useful for comparing loans because it reflects more than just the interest rate.

Appraisal

An expert’s opinion of how much a property is worth.

Broker

A person who helps people buy or sell property and earns a fee for doing it.

Chain of Title

A record of all the past owners of a property. Each transfer of ownership is a link in the chain.

Closing

Also called “settlement”, it’s the final step in buying or selling a home. Papers are signed, money is paid, and ownership officially changes hands.

Closing Disclosure

A document you get before closing that lists all the costs of your mortgage.

Closing Statement

A summary of all the money paid and received at closing.

Contingency

A condition that must be met before a real estate deal can move forward or close — like getting a loan approved, passing an inspection, or getting an appraisal.

Covenants

Rules about how the property can be used, often set by HOAs or developers.

Deed

The “receipt” document that proves a home changed hands.

Depreciation

When something loses value over time because of age, damage, or changes in the market.

Earnest Money

Money a buyer pays upfront to show they are serious about buying a property.

Easements

Rights granted to others to use part of the property (like utility companies or shared driveways).

Endorsement

A change or addition to an insurance policy to meet special needs.

Encroachments

When a neighbor’s structure (like a fence or shed) crosses onto your property.

Encumbrances

Anything that can limit what you can do with a property or affect who really owns it. It’s like a “tag” or “rule” attached to the property that needs to be looked at before buying or selling.

Some examples include:
• Money owed on the property (like unpaid taxes or a mortgage)
• Shared access (like a neighbor using part of your driveway)
• Rules about how the property can be used (like no building a fence or running a business from home)

Encumbrances don’t always stop a sale, but they can cause problems if they’re not handled properly. That’s why title companies check for them during a title search — to make sure everything is clear and legal before you close.

Escrow

A safe way to handle money and paperwork during a home sale. It means a neutral third party — usually a title company or attorney — holds onto the buyer’s deposit and important documents until everything is ready to close.

Think of escrow like a safety net. It protects both the buyer and the seller by making sure no money or property changes hands until all the rules of the deal are followed.

See blog: Understanding Escrow

Escrow Agreement

A written set of instructions for the escrow agent about how and when to direct the money and documents.

Foreclosure

When a lender takes back a property because the owner didn’t pay the mortgage.

General Warranty

A promise in a deed that the seller fully owns the property and will protect the buyer against any claims.

Lien

A legal claim on a property because of unpaid debt.

Mortgage

A loan to buy a home, where the home is the security for the loan.

Owner’s Policy

Insurance that protects a homeowner’s ownership rights.

Power of Attorney

A legal paper that lets someone act for another person.

Premium

The amount you pay for insurance.

Probate

The legal process of proving a will is valid.

Promissory Note

A written promise to pay back money.

Settlement

Another word for closing—the final step in a real estate deal.

Special Warranty Deed

A deed where the seller only promises they didn’t cause any problems with the title.

Survey

A map showing the property’s boundaries and features.

Title

The idea that you have the right to live in, sell, rent out, or give away the property. When someone says, “I have title to the home,” they mean they’re the legal owner.

Sometimes, a title can have issues — like shared ownership, unpaid bills (called liens), or other legal claims (encumbrances). That’s why we do a title search during closing — to make sure no one else has a claim on the property and that it’s safe to transfer.

See blog: Title vs. Deed

Title Commitment

A promise to issue title insurance, listing any conditions or exceptions.

Title Covenants

Promises in a deed to protect the buyer from claims against the property.

Title Defect

A problem with the ownership record of a property.

Title Examination

Reviewing property records to confirm ownership.

Title Examiner

A person who reviews property records to confirm ownership and legal status.

Title Insurance

Insurance that protects against problems with property ownership.

Title Plant

A collection of property records kept by a title company.

Title Search

Looking through public records to check property ownership.

See blog: Tittle Search

Underwriter

An insurance company that issues policies.