Language of Real Estate

Abstract of title vs. Title insurance An abstract of title summarizes the various instuments and documents affecting the title to real property, whereas title insurance is a comprehensive indemnity contract under which a title insurance company warrants to make good a...

Foreclosure vs. Forfeiture A foreclosure action extinguishes any claim the mortgagor may have to the real property securing a defaulted loan, whereas a forfeiture refers generally to the loss of a right to something as a result of nonperformance of an obligation or...

Unilateral contract vs. Bilateral contract A unilateral contract involves one promise to perform (option contract), whereas a bilateral contract involves mutual promises to perform (as in a sales contract). Unilateral contract --  A contract in which one party makes...

Deposit vs. Down payment The down payment is the amount of cash offered by a buyer or purchaser at the time of purchase. Even though the down payment usually includes the earnest money deposit, the terms are not synonymous. Earnest money is applied toward the total...

Actual eviction vs. Constructive eviction In an actual eviction, the landlord evicts the defaulting tenant, whereas in a constructive eviction the landlord fails to provide the necessary services so the tenant then is legally entitled to cancel the lease. Actual...

Quiet enjoyment vs. Quiet title Quiet enjoyment is the right to uninterrupted use of the property, whereas quiet title is the name of a legal action to prove valid title to real property. Quiet enjoyment -- The right of an owner or lessee legally in possession of...

Specific performance vs. Liquidated damages With respect to remedies upon breach of contract, specific performance is a legal action brought in a court of equity to compel a party to carry out the terms of a contract, whereas liquidated damages is an amount...

Covenants vs. Conditions A covenant is a promise to do something (as in a covenant of quiet enjoyment in a deed), whereas a condition is a contingency that must be met, otherwise a particular property right could be gained or lost. A covenant is an agreement or...

Adverse possession vs. Trespass Adverse possession is the acquiring of title to real property owned by someone else by means of open, notorious, hostile and continuous possession for a statutory period of time; whereas trespass is any wrongful, unauthorized invasion...

Capitalization rate vs. Recapture rate The capitalization (cap) rate is the rate of return the investor wants on a property; it consists of the return on the investment plus the recapture (through depreciation) of the investment. Capitalization (CAP) rate -- The...

Purchase-money mortgage vs. Contract for deed  Both types of financing involve seller carryback financing; the difference is that legal title remains with the seller in a contract for deed. Purchase-money mortgage --  A mortgage given as part of the buyer's...

Mark Twain once said: The difference between the right word and the almost right word is the  difference between lightning and a lightning bug. Here's a few words we commonly see misused in real estate parlance: Selling agent vs. Seller's agent -- The selling agent...