Real Estate Terms - From Easements to Good Title
When buying or selling a property, it always helps to have a
basic understanding of real estate terms. In this on going
series of articles, we take a look at definitions starting with
"easements."
1) Easement - permission given to (or acquired by) someone who
does not own a parcel of real property enabling that person (or
entity) to use that parcel for a specific purpose. It may add or
detract value. It may be neutral so far as the value of the
property is concerned. Examples include easements to utility
companies for the purpose of running power lines, easements to
municipalities for running sewer lines, and an easement to a
neighbor to use your driveway for ingress and egress to his
property.
2) Encroachment - a building, fence, wall, driveway, etc. which
is intended to be part of one property and is found to be on, or
partially on, another property.
3) Escrow - money and other items of value held by a third party
for the benefit of the buyer and seller of real property. In
California, items are accumulated in escrow for a stated period
of time until all items needed to finalize the sale are in the
hands of the escrow agent and properly processed. In Virginia,
the items are accumulated but are not signed until everyone
meets at the settlement table. Then the deed is signed, the
lender releases funds, and so on. It is usually the next day
before the change of ownership can be recorded at the
courthouse, so while it isn't customarily referred to that way,
the settlement agent is usually an escrow agent for about 24
hours in Virginia.
4) Equity - The wealth value of a property for the owner. The
equity in a property is equal to the fair market value minus any
debts such as mortgages and taxes.
5) Good Title - title to the real property being clear and clean
enough that a title insurance company will insure it and a
lender will make a loan with it as collateral.
As you can image, there are many real estate terms for which you
have a general understanding. In our next article, we continue
with the terms starting with "Home Inspection."