The real estate industry has its own unique language and, without some knowledge of this language, you may find yourself a bit confused if you become involved in a real estate transaction. With this in mind, the experts at Monroe Title Insurance Corporation have compiled the following glossary of terms commonly used in the Real Estate industry.
Balloon Note - A form of promissory note that calls for the minimum payment of principal and the payment of interest at regular intervals. This type of note requires a substantial final payment, which represents all the principal.
Bankruptcy- A proceeding in U.S. District Court wherein assets of an insolvent debtor are protected and distributed in an equitable manner.
Binder - Sometimes called "preliminary certificate" or "commitment." (1) A preliminary report as to the condition of a title and a commitment to issue a title insurance policy in a certain manner when certain conditions are met. (2) A deposit in escrow of a small part of the purchase price of real estate as evidence of good faith and to bind an agreement to purchase.
NOTE: The following terms are defined only in their real estate or title insurance contexts and may have completely different meanings in other contexts. For more precise definitions, you are advised to seek legal counsel.