Real estate transactions come with lots of paperwork, which can be overwhelming, but a clear understanding of industry-specific terminology will help make the process feel less daunting. This first of two articles will break down the lingo to know when buying or selling a home.

Betterment: An improvement that increases a property’s value. Betterments can be private (such as adding a room) or public (like accepting an interest-free loan from a town over a specified number of years to tie into town water and sewer).

Consideration: The legal term for anything of value exchanged between parties. This is an essential element for a valid contract. Consideration can be money, property, a promise to perform or even a promise not to do something.

Deed: A legal document that transfers ownership of real estate from one party to another. Key elements include the names of the grantor (seller) and grantee (buyer), a description of the property, words of conveyance and an affidavit of consideration. When the parties close on the property, a new deed is recorded at the county’s registry of deeds.

Easement: A legal right that grants a third party the right to use a portion of someone else’s property for a specific purpose, such as a utility company running lines or someone granting access to their property to another neighbor to use their driveway or satisfy a zoning requirement. Easements can be temporary or permanent and typically are recorded at the registry to legally enforce them.

Lender’s title insurance: Insurance that protects the mortgage lender’s financial interest in a property against title defects, such as liens or fraudulent deeds, that could arise after closing. The borrower typically is required to purchase this policy as a condition for getting a mortgage.

Lien: A legal claim against a property to secure the repayment of a debt (for example, unpaid contractor bills or solar company contracts that could be transferred to the next homeowners with all parties’ approval). This claim may give a lienholder the right to seize and sell a property if the owner fails to meet their financial obligations, such as the mortgage or taxes. Liens typically must be paid off and resolved (a “clear title”) before a property can be sold.

Owner’s title insurance: A one-time-cost policy that protects the homeowner against financial loss from title defects that existed before the policy was issued and during the life of your ownership, and that could challenge the property’s ownership, such as undisclosed liens. This typically is good for the life of a loan and could be requested again when refinancing.

Remember, your real estate agent and attorney are your experts. Always ask if you have any doubts about definitions.

Kim Foemmel
Foemmel Fine Homes
1 Lumber Street, Suite 207C
Hopkinton, MA
(508) 808-1149
Kim.Foemmel@gmail.com
FoemmelFineHomes.com

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