Property Rights, Estates & Real-Estate Finance

Vocabulary flashcards covering key terms in property rights, estates, title assurance, mortgage instruments, defaults, foreclosure, and bankruptcy from the lecture notes.

Real Estate

Land and improvements permanently attached to it; immovable property.

Real Property

Ownership rights associated with real estate, contrasted with movable personal property.

Personal Property

Movable items such as autos, stocks, furniture; also called personalty.

Property Rights

Bundle of rights—including possession, use, enjoyment, and control—that a property owner can exercise.

Secured Interest

A creditor’s claim on property (e.g., via mortgage) used as collateral for a loan.

Mortgage

Legal instrument pledging real property as security for repayment of a debt.

Promissory Note

Written promise evidencing a borrower’s debt and repayment terms to a lender.

Estate in Possession

An estate that grants the immediate right to occupy and use property.

Future Estate

An estate that grants the right of possession and use at a future date.

Freehold Estate

Ownership interest of indefinite duration, e.g., fee simple or life estate.

Leasehold Estate

Right to possess and use property for a limited period under a lease.

Fee Simple Absolute

Complete ownership of land with maximum legal rights; transferable and inheritable.

Life Estate

Ownership interest lasting for the life of a specified person.

Reversion

Future interest that returns property to the grantor when a life estate ends.

Remainder

Future interest given to a third party to receive property after a life estate ends.

Estate for Years

Leasehold with a fixed, specified term; can be up to 99 years or more.

Periodic Tenancy

Estate from year to year (or month to month) that renews until proper notice is given.

Leasehold Value

Monetary value of a tenant’s leasehold interest, which can be sold or pledged.

Encumbrance

Claim or liability (e.g., lien, easement) that limits an owner’s rights in property.

Easement

Non-possessory right to use another’s land for a specific purpose, such as access.

Title Assurance

Methods (deeds, searches, insurance) used to confirm and protect ownership title.

Abstract of Title

Historical summary of all recorded documents affecting a property’s title.

General Warranty Deed

Deed offering the broadest assurances and covenants of clear title to the buyer.

Special Warranty Deed

Deed that warrants title only against defects arising during the grantor’s ownership.

Bargain and Sale Deed

Deed conveying property with no express warranties; buyer assumes risk of defects.

Sheriff’s/Trustee’s Deed

Bargain and sale deed issued after foreclosure or forced sale by court officer.

Quitclaim Deed

Deed transferring whatever interest the grantor holds, with no warranties.

Owner’s Policy (Title Insurance)

One-time premium insurance protecting a buyer against title defects.

Lender’s Policy (Title Insurance)

Title insurance safeguarding a mortgagee’s interest in the property.

Recording Acts

State statutes requiring public recording of deeds and liens to give notice of interests.

Mechanics’ Lien

Legal claim by contractors or suppliers for unpaid work or materials on real estate.

Escrow Account

Account holding monthly portions of taxes and insurance collected with mortgage payments.

Due-on-Sale Clause

Mortgage provision allowing lender to demand full repayment if property is transferred.

Right to Reinstate

Borrower’s right to cure default and restore original mortgage terms after acceleration.

Open-End Mortgage

Loan structure allowing future advances up to a stated maximum (common in construction).

Subordination Clause

Agreement making an existing claim junior to a new mortgage, often in seller financing.

Seller Financing

Transaction where the seller accepts a note or mortgage from the buyer for part of the price.

Purchase-Money Mortgage

Any mortgage given by a buyer to the seller as part of the purchase price.

Land Contract

Installment sale where seller retains title until buyer completes payment obligations.

Default

Failure to fulfill contractual or loan obligations, triggering lender remedies.

Deed in Lieu (Voluntary Conveyance)

Borrower voluntarily conveys property to lender to avoid foreclosure.

Friendly Foreclosure

Borrower cooperates with lender to expedite foreclosure and reduce litigation.

Short Sale

Sale of property for less than loan balance with lender’s approval to avoid foreclosure.

Foreclosure

Legal process by which lender seizes and sells collateral due to borrower default.

Statutory Redemption

Borrower’s legal right in some states to reclaim property after foreclosure within a set period.

Deed of Trust

Three-party instrument (borrower, trustee, lender) conveying title to trustee as security.

Deficiency Judgment

Court order holding borrower personally liable for loan balance remaining after foreclosure sale.

Tax Sale

Public sale of property for unpaid property taxes; purchaser receives tax deed if not redeemed.

Chapter 7 Bankruptcy

Liquidation bankruptcy allowing discharge of debts by selling non-exempt assets.

Chapter 11 Bankruptcy

Reorganization bankruptcy for businesses to restructure debts and continue operations.

Cramdown

Court confirmation of a bankruptcy plan over the objections of certain creditors.

Chapter 13 Bankruptcy

Wage-earner plan enabling individuals to repay debts over 3–5 years while keeping assets.