CC & R's

Covenants, Conditions and Restrictions; or the rights and obligations of individual owners of real property within a subdivision (or other tract of land where there is more than one owner of property) in relation to other owners, or to the organized association of owners, within the same subdivision, relative to the use and maintenance of the property commonly owned among them

Call option

A provision of a mortgage that allows the mortgagee, or lender, to require the mortgage to be due and payable for any reason at the end of a specified period of time

Cap

A limit placed on an adjustable-rate mortgage (ARM) as to how much the interest rate or mortgage payments may increase or decrease

Capital expenditure

The expense incurred making an improvement to a property in order to extend it useful life or to add to its value

Capital gain

Profit earned from the sale of an asset

Capitalization

A mathematical formula that estimates the value of a property, utilizing the rate of return on the investment and the annual net operating income expected

Capitalization rate

The rate of return a property will produce on the owner's investment

Cash-out refinance

A loan for refinancing a property which offers cash over and above what is needed to repay the first mortgage, closing costs, points and any other mortgage liens due. The additional cash can be used for any purpose

Caveat Emptor

Translation: "buyer beware", meaning that the buyer is responsible for inspecting any real estate or property before purchase for defects, as the seller is not required to disclose any problems to the buyer, though if asked outright, cannot conceal any defects

Certificate of Deposit

A document provided by a bank or financial institution that is proof of a deposit of funds with that bank or institution, also promising to return the deposit plus earnings at a specified interest rate within a specified time period

Certificate of Eligibility

A document issued by the U.S. government certifying a veteran's eligibility for a VA guaranteed loan for a home or business

Certificate of Occupancy

A city or county document certifying that a building is approved for occupancy, often required by insurance companies to insure the property

Certificate of Reasonable Value (CRV)

A document issued by the Department of Veterans Affairs (VA) establishing the maximum loan amount for a VA mortgage

Certificate of Satisfaction

A document recorded with land records and signed by the Noteholder of a property, showing release of a mortgage, deed of trust, or lien on that property

Certificate of Title

A statement of opinion provided by a title company or attorney, based on examining public records, stating that the title to a piece of real estate is legally held by the current owner; because this certification does not cover matters not of record, it is no longer commonly used

Chain

A unit for measuring land equaling 66 feet in length

Chain of Title

The series of all historical title documents showing the succession of owners of a property, as evidenced in the land records, whereby it is proven that the present owner of that property in fact holds the title

Chattel

Personal property

Clear title

A document establishing ownership of a property that is free of any legal questions or controversies as to the current ownership

Closing

Also known as "escrow" or "settlement". The process of finalizing the sale of a property via a meeting of the buyer, seller and lender, at which legally binding documents are executed, money is dispersed, the deed is prepared, and ownership is formally transferred from the seller to the buyer

Closing Costs

A summary financial accounting of a real estate transaction disclosing all cash incoming, outgoing, and any charges or credits made

Closing Statement

When the lender or home builder lowers the interest rate on initial payments on a loan, often for the first few years, allowing a borrower whose income is expected to increase in subsequent years to qualify for a loan they otherwise are currently not qualified for

Clouded Title, or Cloud on Title

Any conditions revealed by a title search, usually during the sale of the property, that make the title to a piece of real estate controversial; can only be removed by a quitclaim deed, release, or court action

Coinsurance

A sharing of insurance risk between the insurer and the insured, and it depends on the amount of the policy and the actual value of the property insured at the time of the loss

Collateral

As asset pledged to secure a loan; collateral for a mortgage is typically the property itself

Co-maker

A person who takes on equal responsibility for the repayment of a loan by signing the promissory note along with the borrower

Commission

The fee charged by a broker or agent for negotiating a real estate or loan transaction, usually a percentage of the selling price of the property or amount of the loan

Commitment Letter

A formal document issued by the lender, stating the terms under which the lender agrees to lend money to a homebuyer

Common area assessments

Fees levied against individual unit owners in a condominium or planned unit development project to generate additional capital to defray homeowners' association expenses, and to pay for repairs, maintenance and improvements to the common areas of the project

Common Interest Community (CIC)

An arrangement among property owners whereby they have mutual ownership of common areas of a property (e.g., condominiums, townhouses and planned unit developments) often through membership in an association

Common Law

Fees levied against individual unit owners in a condominium or planned unit development project to generate additional capital to defray homeowners' association expenses, and to pay for repairs, maintenance and improvements to the common areas of the project

Community Land Trust Mortgage Option

A financing option that enables lower or moderate-income buyers to purchase housing that has been improved by a nonprofit Community Land Trust, as well as to lease the land on which the property stands

Community Property

In some US states, a recognized right of ownership, that any property acquired during a marriage as being jointly owned by both spouses, except that acquired as specifically personal for either individual

Comparables, or Comparable Properties

Properties that are similar in size, style, location and amenities to the property under consideration in an appraisal, which are used in the appraisal process to help determine the approximate fair market value of the subject property

Comparative Market Analysis (CMA)

A comparison of the sale prices of similar properties (e.g., size, style, location, amenities) in a given area, for the purpose of determining the fair market value of a property

Condemnation

The County or City determination that a building is dangerous for occupancy and must be demolished

Conditional-use Permit

Written governmental permission given to allow a use of a property that is ordinarily inconsistent with existing zoning laws, but which is deemed necessary for the common good

Condominium

A system of individual ownership of units within a multi-unit structure, as well as joint ownership of certain common areas; each individual may sell or encumber his own unit within the structure

Construction Loan

A short-term loan for financing the cost of construction of a structure, whereby payments are made to the builder usually in increments as the work progresses

Contingency

A condition that must be met before a contract is legally binding, or where one event or agreement is dependent on the fulfillment or completion of another event

Contract

An oral or written, often legally-binding, agreement between two parties

Contract for Deed, or Land Contract

A method of financing whereby the ownership of a piece of property or real estate remains in the seller's name as security until the buyer pays the purchase price in full

Conventional Loan, or Conventional Mortgage

A real estate loan or mortgage that is not insured or guaranteed by a government agency, such as the VA or FHA

Convertibility Clause

A provision offered in some adjustable-rate mortgages giving the borrower the option to change the ARM to a fixed-rate mortgage at a specified point in time after the loan originated

Convertible ARM

An adjustable-rate mortgage that can be converted to a fixed-rate mortgage under specified conditions

Conveyance

Any document by which the title to real property is transferred

Cooperative (co-op)

A system of multiple ownership in which the residents of a multi-unit housing complex own stock in a corporation that then owns the property, and whereby each resident is given the right to occupy a specific unit pursuant to a lease

Cost Approach

A method used by appraisers to estimate the value of a property, in which the appraiser's estimate of the replacement cost of the building is added to the estimated land value, minus the depreciation

Cost of Funds Index (COFI)

An index used to determine changes in the interest rate for certain adjustable-rate mortgage plans, determined by the weighted-average cost of savings, borrowings, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco

Co-tenancy

Ownership of the same piece of property or real estate by more than one person

Counteroffer

A new offer, with different terms and conditions, made in rejection of an original offer received

Covenant

A clause written into mortgages, deeds or other real estate documents that obligates or restricts the borrower's actions, and which, if violated, can result in foreclosure of the property

Credit History, or Credit Report

A record, prepared by an independent source, of an individual's debts and status of their payment, useful to a lender in qualifying a potential borrower for a loan

Credit Life Insurance

A type of insurance that can be purchased by mortgagors that will guarantee payment of the mortgage if the mortgagor dies while holding the policy