GLOSSARY OF REAL ESTATE TERMS

EARNEST MONEY
A cash deposit paid by a prospective buyer of property as evidence of good faith and to bind the sale of the property. Earnest money constitutes consideration under a contract.

EASEMENT
The right of an owner of a parcel of real property to make lawful and beneficial use of a parcel of real property belonging to another. The right may be created by an express or implied agreement. The “used” property is referred to as the servient estate, in contrast to the dominant estate. Among other types, easements may be (1) of necessity, as when the owner of landlocked property needs to cross another’s property to access his or her own; (2) negative, as when the servient estate owner is restricted from doing certain acts; or (3) public, as when the beneficial use is enjoyed not by a dominant estate owner, but rather, by everyone.

EGRESS
A place or means of going out or exiting. Also, the act of going or coming out. Compare ingress.

EMINENT DOMAIN
The right of a state or sovereign to take a parcel of real property for public use without the consent of the owner of the property. Under state and federal laws, just compensation must be paid to the owner. See condemn.

ENCROACHMENT
Generally, the intrusion of part of a building or other structure or improvement, over or upon a parcel of real property belonging to another.

ENCUMBRANCE
Any impediment to clear title. For example, a lien, lease or easement.

ENDORSEMENT
A written change to, or a modification of, a title insurance commitment or a title insurance policy.

EQUITY
The fair market value of property less the debt that encumbers it.

ESCHEAT
The reversion of a person’s property to the state or sovereign when the person dies without a valid will or heir.

ESCROW
A procedure whereby documents, money and other things or value are deposited with a neutral third party (the escrow agent) pursuant to a contract or other agreement. Upon completion of the mutual obligations arising under the agreement, the escrow agent distributes each of the items held in escrow to the appropriate party as set forth in the agreement. The sale and purchase of a parcel of real property is typically handled through escrow.

ESTATE
In a narrow sense, the degree, quantity, nature and extent of a person’s interest in a parcel of real property. As used in this sense, an estate is either freehold or leasehold. In a broader sense, all of the property (real and personal) that a person owns.

EXCEPTIONS (B2’s)
With regard to a title insurance commitment, a list of items that, absent removal by discharge, extinguishment or endorsement, will be limitations on coverage under the title insurance policy. The list includes standard exceptions related to unpaid taxes, parties in possession, easements, boundary line conflicts, encroachments and mechanic’s liens, as well as any additional defects or encumbrances discovered upon an examination of the record title of the subject parcel of real property.