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LOUDOUN COUNTY VIRGINIA
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Abstract (Of Title)
A summary of the public records relating to the title to a particular
piece of land. An attorney or title insurance company reviews an abstract
of title to determine whether there are any title defects which must be
cleared before a buyer can purchase clear, marketable, and insurable title.
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Acceleration Clause
Condition in a mortgage that may require the balance of the loan to
become due immediately, if regular mortgage payments are not made or for
breach of other conditions of the mortgage.
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Agreement of Sale
Known by various names, such as contract of purchase, purchase
agreement, or sales agreement according to location or jurisdiction. A
contract in which
a seller agrees to sell and a buyer agrees to buy, under certain specific
terms and conditions spelled out in writing and signed by both parties.
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Amortization
A payment plan which enables the borrower to reduce his debt gradually
through monthly payments of principal.
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Appraisal
An expert judgment or estimate of the quality or value of real estate
as of a given date.
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Assumption of Mortgage
An obligation undertaken by the purchaser of property to be personally
liable for payment of an existing mortgage. In an assumption, the purchaser
is substituted for the original mortgagor in the mortgage instrument and
the original mortgagor is released from further liability under the mortgage.
Since the mortgagor is to be released from further liability in the
assumption, the mortgagee's consent is usually required. The original mortgagor should
always obtain a written release from further liability if he desires to be
fully released under the assumption
Failure to obtain such a release renders the original mortgagor liable
if the person assuming the mortgage fails to make the monthly payments.
An "Assumption of Mortgage" is often confused with "purchasing subject
to a mortgage." When one purchases subject to a mortgage, the purchaser
agrees to make the monthly mortgage payments on an existing mortgage, but the
original mortgage or remains personally liable if the purchaser fails to
make the monthly payments. Since the original mortgagor remains liable in
the event of default, the mortgagee's consent is not required to a sale
subject to a mortgage.
Both "Assumption of Mortgage" and "Purchasing Subject to a Mortgage"
are used to finance the sale of property. They may also be used when a
mortgagor is in financial difficulty and desires to sell the property to
avoid foreclosure.
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Basement Styles
Walk-out: A basement with a ground level exit without steps. Outside Welled Exit: A basement with a steps leading from a basement door along the house to the ground level. Daylight Basement: A basement which is only 4-6 feet less than ground level with 4-6 six feet wide steps leading directly to the ground level. Usually from a sliding glass or french doors. In-Ground Basement: A basement with no exit directly to the outside.
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Binder or "Offer to Purchase"
A preliminary agreement, secured by the payment of earnest money,
between a buyer and seller as an offer to purchase real estate. A binder
secures the right to purchase real estate upon agreed terms for a limited
period of time. If the buyer changes his mind or is unable to purchase, the
earnest money is forfeited unless the binder expressly provides that it is
to be refunded.
NOTE: In the Maryland and Virginia home buying market place, offers to buy a home are in writing and contain all terms and conditions offered by the buyer. The earnest money check accompanies the offer, but is not deposited until all terms and conditions of the contract have been agreed upon and signed off by the buyer and seller and ratified by the last realtor to obtain signatures. Once the contract is ratified, the earnest money is deposited and will not be returned to the buyer in case of default or change of mind. Our contracts state that the earnest money go to the seller as "liquidated damages" since the seller has been harmed by the house being off the market.
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Broker
See real estate broker
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Building Line or Setback
Distances from the ends and/or sides of the lot beyond which
construction may not extend. The building line may be established by a
filed plat of subdivision, by restrictive covenants in deeds or leases, by
building codes, or by zoning ordinances.
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Certificate of Title
A certificate issued by a title company or a written opinion rendered
by an attorney that the seller has good marketable and insurable title to
the property which he is offering for sale. A certificate of title offers
no protection against any hidden defects in the title which an examination
of the records could not reveal. The issuer of a certificate of title is
liable only for damages due to negligence. The protection offered a
homeowner under a certificate of title is not as great as that offered in a
title insurance policy.
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Closing Costs
The numerous expenses which buyers and sellers normally incur to
complete a transaction in the transfer of ownership of real estate. These
costs are in addition to price of the property and are items prepaid at the
closing day. This is a typical list:
- Documentary Stamps on Notes Cost of Abstract
- Recording Deed and Mortgage
- Documentary Stamps on Deed
- Escrow Fees
- Real Estate Commission
- Attorney's Fee Recording Mortgage
- Title Insurance Survey Charge
- Appraisal and Inspection
- Escrow Fees
- Survey Charge Attorney's Fee
The agreement of sale negotiated previously between the buyer and the
seller may state in writing who will pay each of the above costs.
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Closing Day
The day on which the formalities of a real estate sale are concluded.
The certificate of title, abstract, and deed are generally prepared for the
closing by an attorney and this cost charged to the buyer. The buyer signs
the mortgage, and closing costs are paid. The final closing merely confirms
the original agreement reached in the agreement of sale.
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Cloud (On Title)
An outstanding claim or encumbrance which adversely affects the
marketability of title.
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Commission
Money paid to a real estate agent or broker by the seller as
compensation for finding a buyer and completing the sale. Usually it is a
percentage of the sale price-6 to 7 percent on houses, 10 percent on land.
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Condemnation
The taking of private property for public use by a government unit,
against the will of the owner, but with payment of just compensation under
the government's power of eminent domain. Condemnation may also be a
determination by a governmental agency that a particular building is unsafe
or unfit for use.
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Condominium
Individual ownership of a dwelling unit and an individual interest in
the common areas and facilities which serve the multi-unit project.
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Contract of Purchase
See agreement of sale
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Contractor
In the construction industry, a contractor is one who contracts to
erect buildings or portions of them. There are also contractors for each
phase of construction: heating, electrical, plumbing, air conditioning,
road building, bridge and dam erection, and others.
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Conventional Mortgage
A mortgage loan not insured by HUD or guaranteed by the Department of
Veterans Affairs.
It is subject to conditions established by the lending institution and
State statutes. The mortgage rates may vary with different institutions and
between States. (States have various interest limits.)
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Cooperative Housing
An apartment building or a group of dwellings owned by a corporation,
the stockholders of which are the residents of the dwellings. It is
operated for their benefit by their elected board of directors. In a
cooperative, the corporation or association owns title to the real estate.
A resident purchases stock in the corporation which entitles him to occupy
a unit in the building
or property owned by the cooperative. While the resident does not own his
unit, he has an absolute right to occupy his unit for as long as he owns
the stock.
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Deed
A formal written instrument by which title to real property is
transferred from one owner to another. The deed should contain an accurate
description of the property being conveyed, should be signed and witnessed
according to the laws of the State where the property is located, and
should be delivered to the purchaser at closing day. There are two parties
to a deed: the grantor and the grantee. (See also deed of trust, general
warranty deed, quitclaim deed, and special warranty deed.)
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Deed of Trust
Like a mortgage, a security instrument whereby real property is given
as security for a debt. However, in a deed of trust there are three
parties to the instrument: the borrower, the trustee, and the lender, (or
beneficiary). In such a transaction, the borrower transfers the legal title
for the property to the trustee who holds the property in trust as security
for the payment of the debt to the lender or beneficiary. If the borrower
pays the debt as agreed, the deed of trust becomes void. If, however, he
defaults in the payment of the debt, the trustee may sell the property at a
public sale, under the terms of the deed of trust. In most jurisdictions
where the deed of trust is in force, the borrower is subject to having his
property sold without benefit of legal proceedings. A few States have begun
in recent years to treat the deed of trust like a mortgage.
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Default
Failure to make mortgage payments as agreed to in a commitment based
on the terms and at the designated time set forth in the mortgage or deed
of trust. It is the mortgagor's responsibility to remember the due date and
send the payment prior to the due date, not after. Generally, thirty days
after the due date if payment is not received, the mortgage is in default.
In the event of default, the mortgage may give the lender the right to
accelerate payments, take possession and receive rents, and start
foreclosure. Defaults may also come about by the failure to observe other
conditions in the mortgage or deed of trust.
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Depreciation
Decline in value of a house due to wear and tear, adverse changes in
the neighborhood, or any other reason.
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