Real Estate Terms - Glossary

Are you sometimes confused by the terms Realtors use? Below are some common phrases and words which we may use, believing you know what we're talking about!

Agency - A relationship created when one person (the principal) delegates to another person (the agent) the right to act on the principal's behalf. In New Jersey we are mandated by law to disclose our agency relationship in all real estate transactions. We can be a Buyer's Agent, a Seller's Agent, a Transaction Agent or a Disclosed Dual Agent (one who represents both Buyer and Seller in a transaction). Make sure you understand the Agency you have with any Realtor before you enter a transaction!

Agreement - A shortened form of Purchase And Sale Agreement. Also called simply the Contract.

Attorney Review - In the State of New Jersey there is a mandated attorney review period when you use an attorney. It takes 3 business days. The reason for this is to protect you the buyer. During this time the attorney reviews the agreement that was written up by a Realtor to make sure everything is correct. Sometimes attornies spit out a form letter to buy time, do not be frightened of this. Also during attorney review when a property is "hot" other contracts may come in and be reviewed by the seller. So it is always advisable to try to get "out of attorney review" as quickly as possible
Broker - Generally, this term refers to the Realtor who is responsible for managing a Real Estate office. When a Realtor has a question, they go to their Broker for advice.

Closing - The act of finalizing a real estate transaction. In New Jersey typically we close at an Attorney's office. This attorney usually represents the Buyer, sometimes the Seller's attorney will do the closing.

Closing Date - The date upon which the Buyer can move into their new home.

Condominium - A type of dwelling wherein units have shared walls and common space. In this form of ownership, the area owned is considered to be the space inside of the walls of each unit and a shared interest in the common areas of the complex. There is a monthly fee assessed to cover the cost of maintaining the exterior of each building and the common areas. This fee could be hefty, so make sure you inquire when checking out any condo you may consider buying.

Cooperatives Co-ops for short, look like condos, townhouses, cluster houses or apartment buildings. They can be commercial or residential.
A corporation owns the building and the land under the building. The corporation is formed by a sponsor who usually obtains the loans on which interest must be paid.
Like any corporation, co-ops have by laws. The sponsor forms a Board of Directors, which governs the co-ops, making decisions on finance, maintenance and such mundane matters as who gets to live there. The sponsor also writes a proprietary lease, heavily in their favor.
The sponsor then begins selling shares in the coop, just like any corporation. The coop is the lessor. The shareholder is the lessee. The terms of ownership of the shares are governed by the proprietary lease and the by laws. As units are sold shareholders elect the entire Board.
In a coop the shareholder gets to occupy the unit that he/she bought. The person who is to occupy the unit must be approved by the Board of Directors.
The shareholder, based on number of shares, pays a maintenance fee every month to the coop. This usually covers all the taxes on the building, the interest on the debt of the building, the outside lights, water, maintenance of the buildings and grounds, wages of the maintenance and administration personnel and other costs common to all residents of the coop.
The IRS has ruled that the shareholder may deduct the taxes and interest portion of the maintenance fee.
When a coop shareholder wants to sell his/her shares to a buyer the Board of Directors must approve the buyer.

Deed - A written document that, when properly executed and delivered, conveys title to land and/or property. After the close of the sale, this document is filed in the county courthouse.

Earnest Money - The money that accompanies an offer to purchase as evidence of good faith. Also called good faith deposit/money. This money is held in escrow until the closing, when it is applied to the Buyer's down payment.

Fee Simple - This term most often relates to ownership of a house. In this type of ownership, your property generally consists of everything "from the ground up to the sky," as compared to Condominium ownership wherein you own the space within the walls of the dwelling. You are responsible for the upkeep everything on the exterior and the property. Sometimes there are Townhomes that have this type of ownership and then you are responsible for roof, and everything in front, in back and to the side if you are an end unit. Most of the times there is no maintenance fee involved; however there may be a home association that is in charge of the landscape, street, garbage and snow removal and therefore have a fee for that.

Home Inspection - Gives the buyer more detailed information about the home. In the state of New Jersey home inspectors must be qualified and certified. A home inspection gives the buyer an impartial, physical evaluation of the overall condition of the home and items that need to be repaired or replaced. The inspection gives a detailed report on the condition of the structural components, exterior, roofing, plumbing, electrical, heating, insulation and ventilation, air conditioning and interiors.
The inspector takes an in-depth, unbiased look at your future home to:
evaluate the physical condition: structure, construction and mechanical systems.
identify items that need to be repaired or replaced
estimate the remaining useful life of major systems, equipment, structure and finishes.

Lender - A mortgage broker or bank where you acquire your loan.

Mortgage - A document which makes the property a security for the repayment of a debt. This payment consists of four or five sub-parts, which we often call "The PITI payment." Principle + Interest + Taxes + Insurance = Mortgage Payment. There may also be another aspect of the payment, the PMI or Private Mortgage Insurance, which is collected whenever the down payment is less than 20% of the loan amount. This amount is added to your monthly mortgage payment.

Offer - We use this term when we refer to "making an offer" on a home. The Buyer takes the first step in negotiating a sale when they present their offer by putting it in writing. The Seller then comes back with a "counter offer." This process goes back and forth until an agreement is reached at which point it becomes a binding contract after the seller signs. Or when both signatures are on the contract.

Seller's Property Disclosure Statement - The document provided by the Seller disclosing all known problems and repairs, past and present, with the house. A Buyer should insist upon seeing a Seller's Disclosure Statement before making an offer to purchase.

Title - The right to or ownership of something. We use this term normally when referring to the deed. The title shows who owns the property.

Walk Through - The day of or 1 day before the closing date. You walk through the home to make sure everything is as it was the first day you saw it and that any repairs etc. were made.

?2003 - No part of this page may be copied in whole or in part by any means without the express written permission of the author, Gloria Benaroch.

Gloria Benaroch
Gloria Benaroch
Broker Associate
23 W. River Road Rumson NJ 07760