Chicago Real Estate Lawyers

Real Estate Glossary

Vacating or giving up use of or rights in real property. This also refers to a tenant vacating the premises before a lease expires without consent of the landlord.

Adjustable Rate Mortgage Loans (ARM):
Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as (but not always) Treasury bill rates. If interest rates rise, your monthly payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an ARM loan.

Annual Percentage Rate (APR):
How much a loan costs annually. The APR includes the interest rate, points, broker fees and certain other credit charges a borrower is required to pay.

Application Fee:
The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.

A professional analysis used to estimate the value of the property. This includes examples of sales of similar properties.

An increase in the market value of a home due to changing market conditions and/or home improvements.

A toxic material that was once used in housing insulation and fireproofing. Because some forms of asbestos have been linked to certain lung diseases, it is no longer used in new homes. However, some older homes may still have asbestos in these materials.

Assessed Value:
Typically the value placed on property for the purpose of taxation.

A public official who establishes the value of a property for taxation purposes.

Assignment of Mortgage:
A document evidencing the transfer of ownership of a mortgage from one person to another.

Assumable Mortgage:
A mortgage loan that can be taken over (assumed) by the buyer when a home is sold. An assumption of a mortgage is a transaction in which the buyer of real property takes over the seller’s existing mortgage; the seller remains liable unless released by the lender from the obligation. If the mortgage contains a due-on-sale clause, the loan may not be assumed without the lender’s consent.

A homebuyer’s agreement to take on the primary responsibility for paying an existing mortgage from a home seller. There is also typically an assumption fee charged to the buyer by the lender.

Automated Underwriting:
An automated process performed by a technology application that streamlines the processing of loan applications and provides a recommendation to the lender to approve the loan or refer it for manual underwriting.

Balloon Mortgage:
A mortgage with monthly payments based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage contains an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met. The final lump sum payment that is made at the maturity date of a balloon mortgage is known as a balloon payment.

Bridge Loan/Swing Loan:
A short-term loan secured by the borrower’s current home (which is usually for sale) that allows the proceeds to be used for building or closing on a new house before the current home is sold.

An individual or firm that acts as an agent between providers and users of products or services, such as a mortgage broker or real estate broker.

Building Code:
Local regulations that set forth the standards and requirements for the construction, maintenance and occupancy of buildings. The codes are designed to provide for the safety, health and welfare of the public.

An arrangement whereby the property developer or another third party provides an interest subsidy to reduce the borrower’s monthly payments typically in the early years of the loan. These funds are usually put into a buydown account so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.

For an adjustable-rate mortgage (ARM), a limitation on the amount the interest rate or mortgage payments may increase or decrease.

Cash-out Refinance:
A refinance transaction in which the borrower receives additional funds over and above the amount needed to repay the existing mortgage, closing costs, points, and any subordinate liens.

Chain of Title:
The history of all of the documents that have transferred title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Clear Title:
Ownership that is free of liens, defects, or other legal encumbrances.

The process of completing a financial transaction. For mortgage loans, the process of signing mortgage documents, disbursing funds, and, if applicable, transferring ownership of the property. In some jurisdictions, closing is referred to as “escrow,” a process by which a buyer and seller deliver legal documents to a third party who completes the transaction in accordance with their instructions.

Closing Costs:
The fees charged in connection with a mortgage loan transaction. Money paid by a buyer (and/or seller or other third party, if applicable) to effect the closing of a mortgage loan, generally including, but not limited to a loan origination fee, title examination and insurance, survey, attorney’s fee, and prepaid items, such as escrow deposits for taxes and insurance. To read more about closing costs, see “closing costs” under the Buyer or Seller tabs on my website.

Closing Date:
The date on which the sale of a property is to be finalized and a loan transaction completed.

Closing Statement:
See “HUD-1 Settlement Statement”

Any borrower other than the first borrower whose name appears on the application and mortgage note, even when that person owns the property jointly with the first borrower and shares liability for the note.

An asset that is pledged as security for a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan agreement. In the case of a mortgage, the collateral would be the house and property.

The fee charged for services performed, usually based on a percentage of the price of the items sold (such as the fee a real estate agent earns on the sale of a house).

Commitment Letter:
A binding offer from your lender stating the amount of the mortgage, the number of years to repay the mortgage (the term), the interest rate, the loan origination fee, the annual percentage rate and the monthly charges.

Common Areas:
Those portions of a building, land, or improvements and amenities owned by a planned unit development (PUD) or condominium project’s homeowners’ association (or a cooperative project’s cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for building maintenance, property upkeep, taxes and insurance on the common areas and reserves for improvements.

Construction Loan:
A loan for financing the cost of construction or improvements to a property; the lender disburses payments to the builder at periodic intervals during construction.

A condition that must be met before a contract is legally binding. For example, home purchasers often include a home inspection contingency; the sales contract is not binding unless and until the purchaser has the home inspected.

Conventional Mortgage:
A mortgage loan that is not insured or guaranteed by the federal government or one of its agencies, such as FHA, VA or RHS. Contrast with “Government Mortgage.”

Conversion Option:
A provision of some adjustable-rate mortgage (ARM) loans that allows the borrower to change the ARM to a fixed-rate mortgage at specified times after loan origination.

Convertible ARM:
An adjustable-rate mortgage (ARM) that allows the borrower to convert the loan to a fixed-rate mortgage under specified conditions.

Cooperative (Co-op):
A project in which a corporation holds title to a residential property and sells shares to individual buyers, who then receive a proprietary lease as their title.

An offer made in response to a previous offer. For example, after the buyer presents their first offer, the seller may make a counter-offer with a slightly higher sale price.

Debt-to-Income Ratio:
The percentage of gross monthly income that goes toward paying for your monthly housing expense, alimony, child support, car payments and other installment debts, and payments on revolving or open-ended accounts such as credit cards.

The legal document transferring ownership or title to a property

Deed-in-Lieu of Foreclosure/Voluntary Conveyance:
The transfer of title from a borrower to the lender to satisfy the mortgage debt and avoid foreclosure.

Deed of Trust:
A legal document in which the borrower transfers the title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full the trustee transfers title back to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.

Failure to fulfill a legal obligation. A default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non-monetary. For example, a tenant not properly maintaining the property may be in default of the lease.

Failure to make a payment when it is due. The condition of a loan when a scheduled payment has not been received by the due date, but generally used to refer to a loan for which payment is 30 or more days past due.

A decline in the value of a house due to changing market conditions or lack of upkeep on a home.

Discount Point:
A fee paid by the borrower at closing to reduce the interest rate. A point equals 1 percent of the loan amount.

Discrimination (in renting):
Denying a person housing, telling a person that housing is not available (when the housing is actually available at that time), providing housing under inferior terms, harassing a person in connection with housing accommodations, or providing segregated housing because of a person’s race, color, religion, sex, sexual orientation, national origin, ancestry, source of income, age, disability, whether the person is married, or whether there are children under the age of 18 in the person’s household. Discrimination also can be refusal to make reasonable accommodation for a person with a disability.

Down Payment:
A portion of the price of a home, usually between 3-20%, not borrowed and paid up front in cash.

Due-on-sale Clause:
A provision in a mortgage that allows the lender to demand repayment in full of the outstanding balance if the property securing the mortgage is sold.

Earnest Money Deposit:
The deposit to show that you’re committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer, unless one of the sales contract contingencies is not fulfilled.

A right to the use of, or access to, land owned by another.

The intrusion onto another’s property without right or permission.

Any claim on a property, such as a lien, mortgage or easement.

The value in your home above the total amount of the liens against your home. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

An item of value, money, or documents deposited with a third party to be delivered upon the fulfillment of a condition. For example, the deposit by a borrower with the lender of funds to pay taxes and insurance premiums when they become due, or the deposit of funds or documents with an attorney or escrow agent to be disbursed upon the closing of a sale of real estate.

Escrow Account:
An account that a mortgage servicer establishes on behalf of a borrower to pay taxes, insurance premiums, or other charges when they are due. Sometimes referred to as an “impound” or “reserve” account.

Escrow Analysis:
The accounting that a mortgage servicer performs to determine the appropriate balances for the escrow account, compute the borrower’s monthly escrow payments, and determine whether any shortages, surpluses or deficiencies exist in the account.

The legal act of removing someone from real property.

Fair Market Value:
The price at which property would be transferred between a willing buyer and willing seller, each of whom has a reasonable knowledge of all pertinent facts and is not under any compulsion to buy or sell.

Fannie Mae:
A New York stock exchange company. It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages. Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers. A Fannie Mae-Seller/Servicer is a lender that Fannie Mae has approved to sell loans to it and to service loans on Fannie Mae’s behalf.

Federal Housing Administration (FHA):
An agency within the U.S. Department of Housing and Urban Development (HUD) that insures mortgages and loans made by private lenders.

Fee Simple:
Absolute ownership of real property.

FHA-Insured Loan:
A loan that is insured by the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD).

First Mortgage:
A mortgage that is the primary lien against a property.

First Time Home Buyer:
A person with no ownership interest in a principal residence during the three-year period preceding the purchase of the security property.

Five-Day Notice:

A notice that is used when a tenant is behind on their rent. It is the first step in the eviction process.

Fixed-Period Adjustable-Rate Mortgage:
An adjustable-rate mortgage (ARM) that offers a fixed rate for an initial period, typically three to ten years, and then adjusts every six months, annually, or at another specified period, for the remainder of the term.

Fixed-Rate Mortgage:
A mortgage with an interest rate that does not change during the entire term of the loan.

Flood Certification Fee:
A fee charged by independent mapping firms to identify properties located in areas designated as flood zones.

Flood Insurance:
Insurance that compensates for physical property damage resulting from flooding. It is required for properties located in federally designated flood hazard zones.

A legal action that ends all ownership rights in a home when the homebuyer fails to make the mortgage payments or is otherwise in default under the terms of the mortgage.

The loss of money, property, rights, or privileges due to a breach of a legal obligation.

Fully Amortized Mortgage:
A mortgage in which the monthly payments are designed to retire the obligation at the end of the mortgage term.

Good-Faith Estimate:
A form required by the Real Estate Settlement and Procedures Act (RESPA) that discloses an estimate of the amount or range of charges, for specific settlement services the borrower is likely to incur in connection with the mortgage transaction.

Government Mortgage:
A mortgage loan that is insured or guaranteed by a federal government entity such as the Federal Housing Administration (FHA) or guaranteed by the U. S. Department of Veterans Affairs (VA), or the Rural Housing Service (RHS).

Government National Mortgage Association (Ginnie Mae):
A government-owned corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies. Popularly known as Ginnie Mae.

Gross Monthly Income:
The income you earn in a month before taxes and other deductions. It may also include rental income, self-employed income, income from alimony, child support, public assistance payments, and retirement benefits.

Ground Rent:
Payment for the use of land when title to a property is held as a leasehold estate (that is, the borrower does not actually own the property, but has a long-term lease on it).

Growing-Equity Mortgage (GEM):
A fixed-rate mortgage in which the monthly payments increase according to an agreed-upon schedule, with the extra funds applied to reduce the loan balance and loan term.

A person who does not have the rights of a tenant, such as a person who staying for a short time in a hotel.

A rental unit that is fit for human beings to live in. A rental unit that substantially complies with building and safety code standards that materially affect tenants’ health and safety is said to be “habitable.”

Hazard Insurance:
Insurance coverage that compensates for physical damage to a property from fire, wind, vandalism, or other covered hazards or natural disasters.

Home Equity Conversion Mortgage (HECM):
A special type of mortgage-developed and insured by the Federal Housing Administration (FHA) that enables older home owners to convert the equity they have in their homes into cash, using a variety of payment options to address their specific financial needs. Sometimes called a reverse mortgage.

Home Equity Line of Credit:
A type of revolving loan, that enables a home owner to obtain multiple advances of the loan proceeds at his or her own discretion, up to an amount that represents a specified percentage of the borrower’s equity in the property.

Home Inspection:
A professional inspection of a home to determine the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.

Homeowner’s Insurance:
A policy that protects you and the lender from fire or flood, which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances

Homeowner’s Warranty (HOW):
Insurance offered by a seller that covers certain home repairs and fixtures for a specified period of time.

Homeowners’ Association:
An organization of homeowners residing within a particular area whose principal purpose is to ensure the provision and maintenance of community facilities and services for the common benefit of the residents.

Housing Expense Ratio:
The percentage of your gross monthly income that goes toward paying for your housing expenses.

Housing and Urban Development. A U.S. government agency established to implement federal housing, community development programs and oversee the Federal Housing Administration.

HUD-1 Settlement Statement:
A final listing of the costs of the mortgage transaction. It provides the sales price and down payment, as well as the total settlement costs required from the buyer and seller.

Implied warranty of habitability:
Requires landlords to maintain their rental units in a condition fit for human beings to live in. A rental unit must substantially comply with building and housing code standards that materially affect tenants’ health and safety.

Income Property:
Real estate developed or purchased to produce income, such as a rental unit.

The regular periodic payment that a borrower agrees to make to a lender.

Installment Debt:
A loan that is repaid in accordance with a schedule of payments for a specified term (such as an automobile loan).

The cost you pay to borrow money. It is the payment you make to a lender for the money it has loaned to you. Interest is usually expressed as a percentage of the amount borrowed.

Interest Accrual Rate:
The percentage rate at which interest accumulates or increases on a mortgage loan.

Interest Rate Cap:
For an adjustable-rate mortgage, a limitation on the amount the interest rate can change per adjustment or over the lifetime of the loan, as stated in the note.

Interest Rate Ceiling:
For an adjustable-rate mortgage (ARM), the maximum interest rate, as specified in the mortgage note.

Interest Rate Floor:
For an adjustable-rate mortgage (ARM), the minimum interest rate, as specified in the mortgage note.

Investment Property:
A property purchased to generate rental income, tax benefits, or profitable resale rather than to serve as the borrower’s primary residence. Contrast with “second home.”

Joint Tenancy:
A form of ownership of property giving each person equal interest in the property, including rights of survivorship.

Judgment Lien:
A lien on the property of a debtor resulting from the decree of a court.

Jumbo Loan/Non-Conforming Loan:
A loan that exceeds the mortgage amount eligible for purchase by Fannie Mae or Freddie Mac.

Junior Mortgage:
A loan that is subordinate to the primary loan or first-lien mortgage loan, such as a second or third mortgage.

A business or person who owns a rental unit, and who rents or leases the rental unit to another person, called a tenant.

A rental agreement, usually in writing, that establishes all the terms of the agreement and that lasts for a predetermined length of time (for example, six months or one year).

Lease-Purchase Option:
An option sometimes used by sellers to rent a property to a consumer, who has the option to buy the home within a specified period of time. Typically, part of each rental payment is put aside for the purpose of accumulating funds to pay the down payment and closing costs.

Liability Insurance:
Insurance coverage that protects property owners against claims of negligence, personal injury or property damage to another party.

A claim or charge on property for payment of a debt. With a mortgage, the lender has the right to take the title to your property if you don’t make the mortgage payments.

Lifetime Cap:
For an adjustable-rate mortgage (ARM), a limit on the amount that the interest rate or monthly payment can increase or decrease over the life of the loan.

Loan Origination:
The process by which a lender makes a loan which may include taking a loan application, processing and underwriting the application, and closing the loan.

Loan Origination Fees:
Fees paid to your mortgage lender for processing the mortgage application. This fee is usually in the form of points. One point equals 1% of the mortgage amount.

Loan-To-Value (LTV) Ratio:
The relationship between the loan amount and the value of the property (the lower of appraised value or sales price), expressed as a percentage of the property’s value. For example, a $100,000 home with an $80,000 mortgage has an LTV of 80%.

Lock-In Rate:
A written agreement guaranteeing a specific mortgage interest rate for a certain amount of time.

Market Value:
The current value of your home based on what a purchaser would pay. An appraisal is sometimes used to determine market value.

Maturity Date:
The date on which a mortgage loan is scheduled to be paid in full, as stated in the note.

Modification/Loan Modification:
Any change to the terms of a mortgage loan, including changes to the interest rate, loan balance, or loan term.

A loan using your home as collateral. The term can also be used to describe the document you sign in order to grant the lender a lien on your home. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage is usually the purchase price of the home minus your down payment.

Mortgage Broker:
An individual or firm that brings borrowers and lenders together for the purpose of loan origination. A mortgage broker typically takes loan applications and may process loans, but generally does not use its own funds to close the loan. Mortgage brokers often act as independent contractors and not as an agent of the borrower or lender.

Mortgage Insurance Premium (MIP):
The amount paid by a borrower for mortgage insurance, either to a government agency such as the Federal Housing Administration (FHA) or to a private mortgage insurance (PMI) company.

Mortgage Lender:
The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.

Mortgage Rate:
The cost or the interest rate you pay to borrow the money to buy your house.

The institution or individual to whom a mortgage is given; the lender.

The owner of real estate who pledges property as security for the repayment of a debt; the borrower.

Multiple Listing Service (MLS):
An online system through which member real estate brokerage firms regularly and systematically exchange information on listings of real estate properties and share commissions with members who locate purchasers.

Negative Amortization:
An increase in the balance of a loan caused by adding unpaid interest to the loan balance; this occurs when the payment does not cover the interest due.

A written promise to pay a specified amount under the agreed upon conditions.

Note Rate:
The interest rate stated on a mortgage note, or other loan agreement.

Order of Possession:
This is given to the landlord once the eviction process is over. In Cook County, this must be placed with the Sheriff who will then evict the tenant.

A formal bid from the homebuyer to the home seller to purchase a home. The offer should be in writing.

Original Principal Balance:
The total amount of principal owed on a mortgage before any payments are made.

Origination Fee:
A fee paid to a lender to cover the administrative costs of processing a loan application. The origination fee typically is stated in the form of points. One point is 1% of the mortgage amount.

Owner Financing:
A transaction in which the property seller provides all or part of the financing for the buyer’s purchase of the property.

Owner Occupied Property:
A property that serves as the borrower’s primary residence.

Payment Cap:
For an adjustable-rate mortgage (ARM) or other variable rate loan, a limit on the amount that payments can increase or decrease during any one adjustment period.

Personal Property:
Any property that is not real property. Example: A couch.

An acronym for the four primary components of a monthly mortgage payment: principle, interest, taxes, and insurance (PITI).

PITI Reserves:
A cash amount that a borrower has available after making a down payment and paying closing costs for the purchase of a home. The principal, interest, taxes, and insurance (PITI) reserves must equal the amount that the borrower would have to pay for PITI for a predefined number of months.

Planned Unit Development (PUD):
A real estate project in which individuals hold title to a residential lot and home while the common facilities are owned and maintained by a homeowners’ association for the benefit and use of the individual PUD unit owners.

1% of the amount of the mortgage loan. For example, if a loan is made for $100,000, one point equals $1000.

A process by which a lender provides a prospective borrower with an indication of how much money he or she will be eligible to borrow when applying for a mortgage loan. This process typically includes a review of the applicant’s credit history and may involve the review and verification of income and assets to close.

Pre-Approval Letter:
A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you’re a serious buyer.

A preliminary assessment by a lender of the amount it will lend to a potential homebuyer. The process of determining how much money a prospective home buyer may be eligible to borrow before he or she applies for a loan.

Pre-Qualification Letter:
A letter from a mortgage lender that states that you’re pre-qualified to buy a home, but does not commit the lender to a particular mortgage amount.

Predatory Lending:
Abusive lending practices that include making mortgage loans to people who do not have the income to repay them or repeatedly refinancing loans, charging high points and fees each time and “packing” credit insurance onto a loan.

Prepayment Penalty:
A fee that a borrower may be required to pay to the lender, in the early years of a mortgage loan, for repaying the loan in full or prepaying a substantial amount to reduce the unpaid principle balance.

The amount of money borrowed to buy your house or the amount of the loan that has not yet been repaid to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan minus the amount you’ve repaid.

Private Mortgage Insurance – “PMI”:
Insurance for conventional mortgage loans that protects the lender from loss in the event of default by the borrower. PMI is often needed when a borrower has a down payment less than 20% of the purchase price.

Promissory Note:
A written promise to repay a specified amount over a specified period of time.

Purchase and Sale Agreement:
A document that details the price and conditions for a transaction. In connection with the sale of a residential property, the agreement typically would include: information about the property to be sold, sale price, down payment, earnest money deposit, financing, closing date, occupancy date, length of time the offer is valid, and any special contingencies.

Purchase Money Mortgage:
A mortgage loan that enables a borrower to acquire a property.

A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.

Rate Cap:
The limit on the amount an interest rate on an ARM can increase or decrease during an adjustment period.

Rate Lock:
An agreement in which a lender “locks in” or guarantees an interest rate for a specified period of time prior to closing.

Ratified Sales Contract:
A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, getting an acceptable inspection, making repairs, closing by a certain date, etc.

Real Estate Settlement Procedures Act (RESPA):
A federal law that requires lenders to provide home mortgage borrowers with information about transaction-related costs prior to settlement, as well as information during the life of the loan regarding servicing and escrow accounts. RESPA also, prohibits kickbacks and unearned fees in the mortgage loan business.

Real Property:
Land and anything permanently affixed thereto – including buildings, fences, trees, and minerals.

The public official who keeps records of transactions that affect real property in the area.

The filing of a lien or other legal documents in the appropriate public record.

Getting a new mortgage with all or some portion of the proceeds used to pay off the original mortgage.

Rehabilitation Mortgage:
A mortgage loan made to cover the costs of repairing, improving, and sometimes acquiring an existing property.

Remaining Term:
The original number of payments due on the loan minus the number of payments that have been applied.

Repair and deduct remedy:
The tenant’s remedy of deducting from future rent the amount necessary to repair defects covered by the implied warranty of habitability. The amount deducted cannot be more than one month’s rent.

Replacement Cost:
The cost to replace damaged personal property without a deduction for depreciation.

The cancellation or annulment of a transaction or contract by operation of law or by mutual consent. Borrowers may have a right to cancel certain mortgage refinance transactions within three business days after closing, or for up to three years in certain instances.

Retaliatory eviction or action:
An act by a landlord, such as raising a tenant’s rent, seeking to evict a tenant, or otherwise punishing a tenant because the tenant has exercised their legal rights in some way.

Right of First Refusal:
A provision in an agreement that requires the owner of a property to give another party the first opportunity to purchase or lease the property before he or she offers it for sale or lease to others.

A transaction in which the buyer leases the property back to the seller for a specified period of time.

Second Mortgage:
A mortgage that has a lien position subordinate to the first mortgage.

Secondary Mortgage Market:
The market in which mortgage loan and mortgage-backed securities are bought and sold.

Secured Loan:
A loan that is backed by property such as a house or car.

The property that will be given or pledged as collateral for a loan. Securities: Financial forms that shows the holder owns a share or shares of a company (stocks) or has loaned money to a company or government organization (bonds).

Security deposit:
A deposit that the landlord requires the tenant to pay at the beginning of the tenancy. The landlord can then use the security deposit, to repair damage after the tenant moves out. Note: There are many rules regarding security deposits. Be sure to check your local ordinance. In Chicago, please read the Chicago Residential Landlord Tenant Ordinance.

Seller Take-Back:
An agreement in which the seller of a property provides financing to the buyer for the home purchase.

A firm that performs servicing functions, including collecting mortgage payments, paying the borrower’s taxes and insurance and generally managing borrower escrow accounts.

The process of completing a loan transaction at which time the mortgage documents are signed and then recorded, funds are disbursed, and the property is transferred to the buyer (if applicable).

Settlement Statement:
A document that lists all closing costs on a real estate purchase or refinance transaction.

Soft Second Loan:
A second mortgage whose payment is forgiven or is deferred until resale of the property.

A separate rental agreement between the original tenant and a new tenant to whom the original tenant rents all or part of the rental unit. The new tenant is called a “subtenant.” The agreement between the original tenant and the landlord remains in force, and the original tenant continues to be responsible for paying the rent to the landlord and for other tenant obligations.

Subordinate Financing:
Any mortgage or other lien with lower priority than the first mortgage.

A precise measurement of a property by a licensed surveyor, showing legal boundaries of a property and the dimensions and location of improvements.

The tenant’s exclusive right, created by a rental agreement between the landlord and the tenant, to use and possess the landlord’s rental unit.

A person who rents or leases a rental unit from a landlord. The tenant obtains the right to the exclusive use and possession of the rental unit during the lease or rental period.

Third-Party Origination:
A process by which a lender uses another party to completely or partially originate, process, underwrite, close, fund, or package a mortgage loan.

The right to, and the ownership of, property. A title or deed is sometimes used as proof of ownership of land.

Title Insurance:
Insurance that protects lenders and homeowners against legal problems with the title.

Title Search:
A check of the public records to ensure that the seller is the legal owner of the property and to identify any liens or claims against the property.

Transfer Tax:
State, County or local tax payable when title to property passes from one owner to another.

Truth-In-Lending Act (TILA):
Federal law that requires disclosure of a truth-in-lending statement for consumer loans. The statement includes a summary of the total cost of credit, such as the APR and other specifics of the loan.

The process a lender uses to determine loan approval. It involves evaluating the property and the borrower’s credit and ability to pay the mortgage.

Uniform Residential Loan Application:
A standard mortgage application your lender will ask you to complete. The form requests your income, assets, liabilities, and a description of the property you plan to buy, among other things.

Unsecured Loan:
A loan that is not backed by collateral.

VA Guaranteed Loan:
A mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs (VA).

Walk-through/Final walk-through:
A common clause in a sales contract that allows the buyer to examine the property being purchased at a specified time immediately before the closing, for example, within the 24 hours before closing.

Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.

Contact Bradford Miller Law, P.C.

To schedule a free initial consultation with an experienced Chicago real estate lawyer, contact our office online or call us toll free at 312-815-6637. Meetings can be set up for weekdays, between 8:30 a.m. and 5:00 p.m. We charge reasonable fees for all services.

Disclaimer: This website is for informational purposes only. It does not constitute legal advice and is not intended to create an Attorney-Client relationship. Please consult an Attorney before acting on any information.

Bradford Miller Law, P.C.
10 S. LaSalle
Suite 2920
Chicago, IL 60603 
Phone: 312-238-9298
Toll Free: 312-815-6637
Fax: 312-379-3163
Chicago Office