Earnest Money Deposit
Definition: A deposit made to a seller showing the buyer’s good faith in a transaction. Often used in real estate transactions, earnest money allows the buyer additional time when seeking financing. Earnest money is typically held jointly by the seller and buyer in a trust or escrow account. An earnest money deposit shows the seller that a buyer is serious about purchasing a property. When the transaction is finalized, the funds are put toward the buyer’s down payment. If the deal falls through, the buyer may not be able to reclaim the deposit. Typically, if the seller terminates the deal, the earnest money will be returned to the buyer. When the buyer is responsible for retracting the offer, the seller will usually be awarded the money.
Definition<: The right of one party to use the property of another party. A fee is paid to the owner of the property in return for the right of easement. Easements are often purchased by public utility companies for the right to erect telephone poles or run pipes either above or beneath private property. An important factor to consider with easements is how they affect the value of the property. For example, an unsightly power line on your property can lower the visual appeal and, consequently, the money you receive if you sell. In many cases, a real estate lawyer should be consulted to determine the effects of the easement on your property.
Definition: A homeowner’s financial interest in a property. Equity is the difference between the fair market value of the property and the amount still owed on its mortgage and other liens.
Definition: An item of value is in escrow when that item is transferred to a third party (an escrow agent) for delivery to the grantee only upon the fulfillment of pre-specified conditions (after transference the item is no longer in escrow). Items commonly held in escrow include money, property, a deed, or a bond. ‘In escrow’ is most commonly used in real estate transactions (buyers and sellers talk about their homes being in escrow). The term ‘in escrow’ is used during the home buying/selling process when the home title, the buyer’s purchase money, and any other money (e.g., for repairs) are held in escrow. These items are no longer in escrow once they’re transferred to the appropriate parties.
Definition: Once you close your purchase transaction, you may have an escrow account or impound account with your lender. This means the amount you pay each month includes an amount above what would be required if you were only paying your principal and interest. The extra money is held in your impound account (escrow account) for the payment of items like property taxes and homeowner’s insurance when they come due. The lender pays them with your money instead of you paying them yourself.
Definition: Once each year your lender will perform an “escrow analysis” to make sure they are collecting the correct amount of money for the anticipated expenditures.
Definition: The use of escrow funds to pay real estate taxes, hazard insurance, mortgage insurance, and other property expenses as they become due.
Definition: The ownership interest of an individual in real property. The total amount of all the real property and personal property owned by an individual at their time of death.
Definition: A landlord’s legal removal of a tenant from his rental property. Eviction may occur when rent has not been paid, when the terms of the rental agreement have been breached or in certain other situations.
Definition: An individual appointed to administrate the estate of a deceased person. The executor’s main duty is to carry out the instructions and wishes of the deceased. The executor is appointed either by the testator of the will (the individual who makes the will) or by a court, in cases where there was no prior appointment. The executor is responsible for making sure all assets in the will are accounted for, along with transferring these assets to the correct party. He or she also needs to ensure that all the debts of the deceased are paid off, including any taxes. The executor is legally obligated to meet the wishes of the deceased and act in the interest of the deceased. The executor can be almost anyone but is usually a lawyer, accountant or family member, with the only restriction being that he or she must be over the age of 18 and have no prior felony convictions.