CAP– A maximum allowable. For example, many adjustable rate mortgages have a maximum amount that the interest rate may increase over a certain time period.
CERTIFICATE OF TITLE– A statement verifying who has the rights and responsibilities of ownership in a property. This may be ascertained by a public record search but does not guarantee that any other parties may not stake a claim to the property. Title insurance protects against claims that may arise against the title.
CERTIFICATE OF OCCUPANCY – A document which must be obtained from the local government which states that the new construction has been inspected and is built in accordance with regulations. The property is therefore ready to be occupied.
CLEAR TITLE – Ownership that is free of liens, defects and encumbrances, beyond those which the the owner agrees to accept.
CLOSING – The transaction where title passes from seller to buyer and the seller is paid. A settlement statement shows all costs incurred and gained by both parties.
CLOSING COSTS – The expenses incurred in obtaining the property and transferring title to the new owner. This may include, but is not limited toattorney’s fees,points, title charges, credit report fee, document preparation fee, mortgage insurance premium, inspections, survey, appraisals, prepayments for property taxes, deed recording fee, and homeowners insurance.
CODE OF ETHICS– Set forth by the National Association of Realtors, these are written professional standards that all members are expected to uphold.
COMMITMENT LETTER, also known as a LOAN COMMITMENT – A written offer by a lender to make a loan by a particular date under certain conditions. A buyer has more clout with a seller if he submits a letter of loan commitment from his lender to the seller at the same time that he submits his offer to purchase to the seller than a buyer who has not even applied for the loan yet.
COMMON AREAS -The space that is shared among all property owners. In a condominium that may be the building corridors, elevators, parking areas, recreational facilities, etc. and in a planned unit development an example of this might be swimming pools or tennis courts.
CONDOMINIUM – Real estate ownership where several owners hold title to different individual units, or parts, of the building and have a shared interest in the common areas.
CONFORMING LOAN – A mortgage loan that meets underwriting guidelines for Fannie Mae and Freddie Mac
CONSTRUCTION LOAN– A short term loan made to a builder for the purpose of constructing the building. After completion, permanent financing is normally secured.
CONTINGENCY -A condition that must be met before a contract is legally binding, or before a sale is to be completed. The contingency provides an out or an escape from performing if the condition is not met.
CONVENTIONAL LOANor CONVENTIONAL MORTGAGE-A real estate loan, which is not insured by the government agency FHA nor guaranteed by the Veterans Administration. Typically subject to the terms of their particular institution, the conditions may be more flexible, as the lender is not required to follow federal guidelines. The lender looks to the credit of the borrower and the security of the property to insure payment of the debt.
CONVERTIBLE ARM -An adjustable-rate mortgage (ARM) that can be changed, or converted into a fixed rate mortgage during a specified period and under certain conditions of the loan.
CONVEYANCE – The passing or transfer of title from one party to another.
CO-OP – COOPERATIVE – also known as COOPERATIVE OWNERSHIP – Where several residents hold shares to a cooperative trust or corporation that owns the multi-unit building. Owning the shares of ownership grants the resident the privilege of occupying a specific unit of the property.
COUNTEROFFER -If the receiver of an offer makes any changes to the original offer, it is considered a rejection of the initial offer and becomes a counteroffer.
COVENANT – AS IN COVENANTS, CONDITIONS AND RESTRICTIONS, OR RESTRICTIVE COVENANTS – A clause in a written document, such as a mortgage or a deed, that the owner will abide by certain rules and conditions. These are not uncommon in subdivision and are usually intended to maintain the value and integrity of the property,
CREDIT RATING – Astandard of measure of a person’s credit worthiness.
CREDIT REPORT– The official credit history of any individual as complied by a credit bureau. This is used by lenders in determining the size loan a person may, or may not, qualify for.
CREDIT REPORT FEE – The amount that the person applying for a loan must pay to their lender in order to have the lender obtain their credit history directly from a credit reporting bureau.