They say knowledge is power, hence with the right information you make informed decisions. Below are common terms used in real estate.
1. Under Contract – A property is said to be under contract when the seller has accepted an offer from buyer, although the transactions are not complete.
2. Transfer of Ownership – It refers to transfer of property ‘s Title Deed from seller to buyer. Also known as conveyancing.
3. Mortgage – This is an agreement between lender and borrower. Borrower gives lender rights over his or her property to reposses it if loan is not fully paid with interest.
4. Lien – This refers to unpaid debt on a piece of property. It’s a legal notice and explains the legal action to be taken on the property.
5. Foreclosure – This is when a homeowner is unable to pay his or her mortgage and the lender takes a legal action to reposses the property. This is as a result of 90 days default.
6. Escrow account – This is an account operated by the third party, who holds property purchase deposit until transactions are over. When the transactions are complete the third party releases the funds to seller.
7. Encumbrance – A real estate encumbrance is any claim against a property that restricts it’s use or transfer.
8. Earnest Money Deposit – This is a deposit of the property purchase price usually 10%, made by the buyer to seller and funds are kept in an escrow account.
9. Clear Title – Also known as “just title” or “good title”. This title doesn’t have any kind of lien or levy on it. It means it’s legal ownership rights are unquestionable.
10. Closing – This is the final stage of real estate buying process. The closing date is agreed between buyer and seller who are under contract. On the closing day, the property is fully transferred to the seller and green/white card is updated by land registrar to show the new Ownership rights.Having knowledge of the above terms will make your property Investment journey stress-free and you will avoid common mistakes that can lead to loss of your hard earned money.
