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Intermediate1.5 hours17 terms

Real Estate Escrow: Key Terms for Investors

This curated collection offers key terms related to escrow agents and their vital role in real estate transactions. It's designed as a quick reference to help you understand commonly encountered terminology and the escrow process in your investments.

Term Collection

1

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
2

Fiduciary Duty

Fiduciary duty is a legal and ethical obligation for a professional to act in the best interest of their client, prioritizing the client's needs above their own with utmost loyalty, care, and disclosure.

Intermediate14-17 min
3

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
4

Earnest Money

Earnest money is a deposit made by a buyer to a seller, held in escrow, demonstrating the buyer's serious intent to purchase a property and serving as security against buyer default.

Intermediate13-14 min
5

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
6

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
7

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
8

Encumbrance

A claim or liability against a real estate property that affects its title and may diminish its value or restrict its use, but does not prevent its transfer.

Intermediate11-12 min
9

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
10

Escrow Instructions

Escrow instructions are legally binding documents that outline the specific terms and conditions under which an escrow agent will hold and disburse funds and documents during a real estate transaction.

Intermediate5 min
11

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
12

Wire Fraud

Wire fraud in real estate involves deceptive schemes to trick individuals into electronically transferring funds to fraudulent accounts, often by impersonating legitimate parties in a transaction.

Intermediate5 min
13

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
14

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
15

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
16

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
17

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

Common Questions