Intermediate terms

Essential Real Estate Closing Terms

This curated collection includes key terms that might be helpful when exploring the final steps of a real estate transaction. It covers the critical processes, documents, and roles involved in transferring property ownership. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min

Lien

A lien is a legal claim or right against a property, granted to a creditor, which serves as security for a debt or obligation until it is satisfied.

Intermediate18-20 min

Escrow

A legal arrangement where a neutral third party holds funds and documents until specific conditions of a contract are met, ensuring a secure and fair transaction, especially in real estate.

Intermediate15-18 min

Purchase Agreement

A Purchase Agreement is a legally binding contract that outlines the terms and conditions of a real estate transaction, formalizing the buyer's offer and the seller's acceptance.

Intermediate12-13 min

Closing Day

Closing Day is the official date when a real estate transaction is finalized, ownership is transferred, and all necessary documents are signed and funds exchanged between the buyer and seller.

Beginner2-3 min

Title Insurance

Title insurance protects real estate owners and lenders against financial loss from defects in a property's title, ensuring clear ownership and safeguarding against past claims.

Intermediate13-14 min

Title Search

A title search is a comprehensive examination of public records to confirm a property's legal ownership and identify any claims, liens, or encumbrances against it, ensuring a clear title for real estate transactions.

Intermediate11-12 min

Funding

The process of providing capital for a real estate investment or project, typically involving a mix of debt and equity to acquire, develop, or refinance properties.

Intermediate3 min

Closing Disclosure

The Closing Disclosure (CD) is a five-page document outlining the final terms of a mortgage loan, including the loan amount, interest rate, monthly payments, and all closing costs, provided to the borrower at least three business days before closing.

Intermediate14-17 min

Clear Title

A clear title signifies undisputed legal ownership of a property, free from any liens, claims, or other legal encumbrances, ensuring the seller has the full right to transfer ownership to a buyer.

Beginner15-18 min

Closing Costs

Closing costs are the various fees and expenses incurred by buyers and sellers at the end of a real estate transaction, covering services like loan origination, title insurance, appraisal, and legal fees.

Intermediate13-14 min

Closing Statement

A closing statement is a comprehensive financial document detailing all debits and credits for both the buyer and seller in a real estate transaction, providing a final accounting of funds at closing.

Intermediate5-6 min

Prorations

Prorations are the proportional division of expenses and income between a buyer and seller at a real estate closing, ensuring each party pays or receives their fair share for the period they owned the property.

Intermediate6 min

Loan Documents

The collection of legal agreements and disclosures that outline the terms, conditions, and obligations between a borrower and a lender for a real estate loan, formalizing the debt and collateral.

Intermediate5 min

Deed

A deed is a legal document that formally transfers ownership of real property from one party (grantor) to another (grantee), serving as tangible evidence of title transfer.

Intermediate14-15 min

Deed Recording

Deed recording is the official process of filing a legal document, such as a deed, with the county recorder's office to provide public notice of property ownership transfer and establish legal priority.

Intermediate13-14 min

Contingencies

Contingencies are conditions in a real estate contract that must be met for the agreement to be legally binding, protecting buyers and sellers from unforeseen issues.

Intermediate13-16 min

Title Company

A title company is an impartial third party that ensures clear legal ownership of a property, conducts title searches, issues title insurance, and facilitates the closing of real estate transactions.

Beginner14-15 min

Disbursement

Disbursement in real estate refers to the release or distribution of funds from an escrow account or a designated party to various recipients involved in a transaction or property operation, ensuring all financial obligations are met.

Intermediate2-3 min