GLOSSARY OF REAL ESTATE TERMS

SEAL
An impression made to attest the execution of an instrument, for example, a notary seal or a corporate seal.

SECURED PARTY
The owner and holder of evidence of debt (e.g., a promissory note), which debt is secured by a lien against the debtor’s property. In the event of non-payment, the property can be foreclosed to satisfy the debt, pursuant to rights created by the lien instrument. With regard to real estate, the most common secured party is a lender, whose loan is secured by a mortgagee (or a deed of trust).

SECTION
With regard to real estate, a parcel of property approximately one mile square in size (640 acres). Thirty-six contiguous sections defining a 6x6 square constitute a township.

SEISIN
In early English property law, seisin described the interest in land of one who held a freehold estate. One did not “own” real property – the sovereign (king) was the owner of all English lands. However, seisin was more than mere possession. Today the term is synonymous with ownership.

SETTLEMENT STATEMENT
With regard to real estate sales, a document, usually prepared by a title company and signed by the buyer and seller, that sets forth charges against, credits to and adjustments between the parties. Settlement statements are prepared and signed as a part of refinance transactions as well. For some transactions (generally, those involving residential real estate), RESPA requires the use of a standardized form known as the HUD-1 Settlement Statement.

SHORT SALE
With regard to real estate, a sale transaction in which the seller’s lender receives from closing proceeds an amount less than the full amount that is owed according to the terms of the seller’s loan. A short sale is predicated on the fact that secured debt exceeds the property’s value and that the seller has some hardship that makes repayment of the full amount of the debt impossible.

SPECIAL ASSESSMENT
A charge against a parcel of real property imposed by a public authority to pay the cost of public improvements such as street lights, sidewalks or curbs and gutters.

SPECIFIC PERFORMANCE
A remedy available to an aggrieved party to a contract compelling the defaulting party to fulfill the exact terms of his or her promise or obligation. Compare liquidated damages.

STATUTE OF FRAUDS
A state law (in Colorado and elsewhere), patterned after an old English law and providing that certain contracts must be in writing in order to be enforceable. Contracts for the sale and purchase of a parcel of real property and long term (more than one year) lease agreements are covered by the statute of frauds.

SUBJECT-TO MORTGAGE
A purchase arrangement whereby the buyer of a parcel of real property agrees that a mortgage against the property to be purchased shall be permitted to remain a lien upon sale. Unlike a loan assumption, the subject-to buyer does not become personally liable on the underlying debt. However, the buyer does assume the risk of the consequence of non-payment of the debt (foreclosure) by the seller. Compare loan assumption and wrap-around financing.

SUBORDINATE
To assign a lower priority. With regard to real estate, the holder of a lien accorded higher priority by virtue of time of recording may agree to a lower priority relative to another lien. Such an agreement (a subordination agreement) is made and entered into between the respective lien holders and is recorded so as to provide notice of the changed order of priority.

SUBROGATION
An equitable doctrine holding that when a third party pays a creditor on behalf of their debtor, the third party succeeds to the creditor’s rights against the debtor.

SUB-SURFACE RIGHTS
Ownership or rights of use of the earth (generally the minerals) below the surface of a parcel of real property. Compare air rights. See real property.

SURETY (GUARANTOR)
One who agrees to pay money or perform other acts in the event that his or her principal fails to do so.