Deed
A deed is an official, legal document recognizing full and rightful ownership of a property, and is transferred from one owner to another (the "grantor" and the "grantee") at the conclusion of a real estate transaction. It usually contains an accurate description of the property, and usually must be signed and witnessed in accordance with State law during the closing meeting. |
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Deed of Trust
A Deed of Trust is like a mortgage, in that it is a security instrument that holds real property as collateral for a debt. However, unlike a mortgage, there are three parties: The borrower transfers legal title to the property to the trustee, who then holds the property in trust on behalf of the lender or beneficiary. The deed of trust is nullified if the borrower pays the debt as agreed, but if he defaults in the payment of the debt, then the trusted has the right to sell the property at public auction (under the terms specified in the deed of trust). |
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Default
When a borrower fails to make mortgage payments as agreed to (based upon the terms and conditions specified in the mortgage or deed of trust), he/she is said to have defaulted on the loan. A mortgage is usually considered to be in default if a payment is not received thirty days after the due date (though defaults may also come about by the failure of the borrower to observe and honor other conditions in the mortgage agreement or deed of trust). In the event of default, the mortgage agreement may grant the lender the right to accelerate payments, take possession of the property, receive rents and/or begin foreclosure. |
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Deposit (or "Earnest Money")
Upon signing the agreement of sale, the buyer pays the seller a pre-determined sum in order to demonstrate his/her commitment to purchasing the property. Upon conclusion of the transaction, the deposit is applied against the down payment. If however, the sale does not go through for some unforeseen reason, the deposit is forfeited (unless the binder or offer to purchase expressly provides for it to be refundable). |
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Depreciation
When referring to real estate, "depreciation" is a measurement of the decline in value of a piece of property due to wear and tear, adverse changes in the neighborhood, or some other reason. |
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Discount Points (or "Origination Fees")
The loan processing fees charged by a lender of an FHA (Federal Housing Administration), VA (Veteran's Administration) or conventional loan are applied as a percentage of the loan amount, and are most commonly called "discount points" (for example, one point equals one percent of the loan amount). |
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Documentary Stamps
A State may apply a tax (in the form of stamps, with the amount varying from State to State) on deeds and mortgages when a real estate title passes from one party to another. |
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Down Payment
The down payment is the difference between a property's sale price and the final mortgage amount, and is paid by the purchaser to the seller upon the signing of the agreement of sale (the agreement of sale will specify the amount of the down payment and will acknowledge its receipt). If the purchaser fails to follow through on the transaction without good cause, the down payment is not usually refundable. However, a clause may be included in the agreement of sale stipulating the conditions under which the deposit may be refunded. Also, if the seller fails to deliver valid title, the agreement of sale usually mandates the return of the down payment (as well as compensation for interest and expenses incurred by the purchaser). |
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Draw System
Under a "draw system", a builder may be paid in scheduled installments during the phases on new home construction. An appraiser must inspect the home between each payment ("draw"), and confirm that construction is progressing as planned. |
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Due-On-Sale Clause
A mortgage agreement or deed of trust normally includes an acceleration clause that calls for the loan amount to be due in it's entirety upon transfer of ownership of the property. |
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