The Shulman Zale Legal Group is committed to helping clients have a better understanding of the law. The following terms are the most commonly used for the legal services we offer. If you have any additional questions, please contact us today!

Legal Terms

Real Estate Terms

Adjustable Rate Loans: Mortgage loans where the interest rate is periodically adjusted to reflect the current market rates. How the interest is calculated and when it is calculated are agreed to in the loan documents you sign. These can also be called a variable or flex rate loan.

Amortization Schedule: A rate schedule showing how each payment you will make on your loan is applied throughout the life of your loan.  Also good for a sleep aid.

"As Is" Condition: Agreement between a Purchaser and a Seller to purchase the property in the condition “as is” at the time of the contract including all defects that may exist.

Appraisal: The process in which a licensed or authorized person gives an estimate of property value.

Balloon Note: A Promissory Note that due to its structure will not pay off the balance of the indebtedness at the end of the loan term. Once the Note matures, a “Balloon Payment” will be due for the remainder.

Balloon Payment: The final remaining payment of a Balloon Note.

Bill of Sale: A document memorializing the transfer of personal property. At closing, you will receive or give a Bill of Sale for the personal property for the non-real estate property remaining at the property.

Broker, Real Estate: An individual licensed by the state to assist in the transaction and business of dealing in real estate.

By-Laws: Rules and regulations governing how certain associations, especially condominium associations and homeowner’s associations, conduct their business and relationships between themselves and the individual owners.

Cancellation Clause: A clause in a lease or other contract, setting forth the conditions under which each party may cancel or terminate the agreement.  The clause usually is also associated with certain notice provisions outlining how the cancellation notice must be provided.

CC&R's (Covenants, Conditions, and Restrictions): Usually a document that describes the limitations which may be placed on property.

Certificate of Occupancy: A municipal certificate issued by a municipality stating that the building is in proper condition to be occupied. A Certificate of Occupancy is typically seen in the rehabilitation of a home or for new construction. Oftentimes, the Buyer’s obligation to perform under a contract will be contingent upon the issuance of this Certificate.

Chain of Title: A chronology of conveyances of a parcel of land, from the original owner to the present owner. The chain should include any deeds issued as well as Mortgages or other security instruments.

Closing: The point in a real estate transaction where the parties sign and exchange the final documents including any financing documentation and deeds transferring title.  A Closing is typically the final step a Buyer or Seller will attend or partake in during a real estate transaction.

Closing Costs: Expenses related to the sale or purchase of property.  These costs include such things as loan charges, loan origination fees, title fees, taxes, and attorney’s fees.

Closing Protection Letter: is additional protection for the insured party (the lender/buyer) against loss of funds that occurred due to misconduct by the closing agent. Additionally, the closing protection letter explains the requirements for qualifying, conditions that must be met, and what situations are excluded from coverage.

Closing Statement: A document that lists the debits and credits between the Buyer and Seller and also lists costs that each must pay. This was sometimes referred to previously as the HUD-1.

Cloud on Title: This commonly describes an erroneous or fraudulent document appearing in the chain of title that if valid, could impact the current owner’s property rights.

Commercial PropertyTypically describes property, which is zoned "commercial" (for business use). Also refers to residential properties that are being leased out to tenants.

Commission: A payment to an agent, such as a real estate broker, for their services.  The commission is typically a percentage of the total purchase price of a real estate contract.

Comparable: Describes nearby properties used as comparisons to determine the value of a specified property.

Contingency: Typically used to describe a condition precedent to a binding contract. In other words, one party is not obligated to perform under the contract until a condition is satisfied such as obtaining a loan or selling a house.

Conventional Loan: A type of mortgage loan that is not insured or guaranteed by the government.

Deed: A Deed is typically the conveyance instrument that passes title from one owner to the next.

Down Payment: Usually a percentage of the purchase price of a property required by a lender to be paid by the Buyer.

Easement: A right which one has in the land of another that entitles its holder to a specific and limited use or enjoyment. Easements are often seen on properties from utility companies and they run with the land.

Equity: Home equity is the market value of a homeowner's unencumbered interest in their real property, that is, the difference between the home's fair market value and the outstanding balance of all liens on the property.

Encroachment: Generally, intrusion by a neighboring parcel onto another parcel.  These are typically seen by buildings, sheds, or fences crossing a lot line.

Escrow: A financial account that is funded by a homeowner’s mortgage payments, used to pay for homeowners insurance and property taxes.

Fee Simple: An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited.

Federal Housing Administration (FHA): A federally funded program that insures lenders against loss of default. An FHA loan will often have more favorable terms for a Borrower with poor credit.

First Refusal Right: A right, typically involved in leases, where the tenant has the option to purchase the property being leased if the owner decides to sell the property.

Flood Insurance: A type of insurance required by lenders for properties that are located in designated flood areas.

Gift Letter: Oftentimes, a Purchaser of a property requires a gift from a family member or friend to assist in the purchase of the property. This Letter defines the amount of the gift, who is giving it, and stating that the money is being given as a gift.

Grantee: A person to whom is receiving a grant or conveyance of property rights from another.

Grantor: One who grants property or property rights to another.

Hazard Insurance: This is the typical insurance an owner of property must purchase for a loan to be given.  It usually protects against damage from fire, natural disasters, or vandalism to name a few.

Homeowner's Association (HOA): An organization of individuals who own homes in a prescribed area, formed for the purpose of improving or maintaining the quality of that area. If there is an HOA, a homeowner will likely have to pay monthly or annual dues to the HOA. 

Homestead: The dwelling house and land of the head of a family. In Illinois, most counties offer an exemption against a property’s taxes.

Home Warranty: Insurance protecting the homeowner against unexpected repairs typically due to faulty appliances, plumbing, or electric. Different insurance policies insure against different things, so be sure to check your specific policy.

Lease: A property agreement where an owner of real property gives the right of possession to a tenant for a period of time in exchange for rent. 

Legal Description: A description of land based on the geographical area which defines its boundaries. Typically, the legal description controls in a court of law if there is a discrepancy between the common address, PIN, or legal description.

Listing: An agreement between the owner of a property and a real estate agent. The agreement should define the commission to the brokerage, the length of the listing, and other terms. 

Listing Agent: The agent “selling” the property.

Loan Origination Fee: A loan setup fee charged by the lender.

Loan Servicing: Typically the financial side of lending. A loan servicer is the entity responsible for the bookkeeping and record keeping of a loan. This is also typically who a homeowner pays their monthly mortgage payment to.

Mortgage Broker: A person typically retained by a borrower, who locates a lender for a borrower and typically will handle the initial paperwork for applying for a loan.

Mortgage: A debt instrument, secured by the collateral of a specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.

Note: A signed document containing a written promise to pay a stated sum to a specified person or the bearer at a specified date or on demand.

Offer: A proposal for a contract.

Owner's Policy: Title insurance for the owner of the property.

Pre-approval: A letter or document from a lender stating that the lender is tentatively willing to lend to you, up to a certain loan amount

Principal, Interest, Taxes and Insurance (PITI): The amount the homeowner will be required to pay in Principal, Interest, Taxes, and Insurance each month.

Power of Attorney: An authority by which one person enables another to act for him.  In Illinois, these are typically done for property and health.

Private Mortgage Insurance (PMI): Insurance sometimes required by a lender to protect against loss from a default by the borrower. Usually this is required when a borrower does not provide at least a 20% down payment for a purchase of a property.

Quitclaim Deed: A deed transferring ownership from one party to another excluding any warranties.

Real Estate Owned (REO): Bank owned property typically as a result of a foreclosure sale wherein the bank was the successful bidder at sale.

REALTOR®: A designation given to a real estate broker or sales-associate who is a member of a board associated with the National Association of Realtors® or with the National Association of Real Estate Boards.

Recording: The filing of documents with the county recorder. This is done to protect an owner of a property right and provide notice to other owners and lien holders of that right.

Recording Fee: The fee charged by the county recorder for the recording of documents.

Riparian: Associated with the land within the natural watershed of a river or stream.

Riparian Owner: The owner of property along the bank of a river or stream.

Riparian Rights: The rights of an owner to the riparian land and watershed of a river or stream.

Running with the Land: A property right of another that transfers with ownership in the land.  This typically applies to easements.

Selling Agent: In a real estate transaction, the agent of the Purchaser.

Title Insurance: Insurance against loss resulting from defects on title.

Title Insurance Company: A company which issues title insurance.

Title Search: A search performed on a parcel of land to determine ownership, liens, or other encumbrances on the parcel.

Transfer Tax: A tax on the transfer of land. State, counties, and some municipalities will have their own tax upon the sale of a parcel of land.

Foreclosure Terms

Assignment: The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).

Certificate of Sale: A document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.

Credit Bid: A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.

Deed: A signed document that transfers ownership of property from one party to another.

Deed-in-Lieu of Foreclosure: Deed-in-lieu is a deed instrument in which a mortgagor conveys all interest in a real property to the mortgagee to statisfy a loan that is in default and avoid foreclosure proceedings.

Default: A default occurs when a borrower does not make his or her required mortgage loan payments and falls behind on said payments.

Deficiency Judgment: A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.

Equitable Title: The present right to possession with the right to acquire legal title once a preceding condition has been met.

Forced Sale: A sale which is typically the result of a judicial order and not by the voluntary act of a property owner.

Foreclosure: The forced sale of property pledged as security for a debt that is in default.

Foreclosure Sale: A forced sale of a property following the entry of a judgment for foreclosure.

Lien: A charge upon real or personal property for the satisfaction of a debt.

Lis Pendens: A recorded notice recorded to put the world on notice of a pending court case involving real property.

Mechanic's Lien: A statutory lien that is filed for lack of payment for work or materials provided to real property that enhance the value of the property.

Notice of Default: A notice provided to a defaulting party under a contract. The notice typically contains the amount of default and the action required to cure the default. Failure to cure the default may result in the filing of a court action by the non-breaching party.

Notice of sale: A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.

Reinstatement: The payment of all amounts in arrears to bring a loan current.

Real Estate Settlement Procedures Act (RESPA): A federal statute that regulates real estate transactions.

Civil Litigation Terms

Acknowledgment: A statement of acceptance of responsibility. 

Action: A formal complaint or a suit brought in court.

Action to Quiet Title: A court action to establish ownership to real property.

Adjudication: A judgment or decision by a court.

Adversary Proceeding: Legal proceeding involving parties with opposing interests, with one party seeking legal relief and the other opposing it

Adverse Possession: A method of acquiring title by possession as opposed to grant.  Adverse possession is typically determined by statue and varies from state to state.

Allegation: The claim made in a pleading by a party to an action setting out what he or she expects to prove.

Affidavit: A written statement of facts confirmed by the oath of the party making it, before a notary or officer having authority to administer oaths. For example, in civil cases, affidavits of witnesses are often used to support motions for summary judgment.

Answer: In a civil case, the defendant's written response to the plaintiff's complaint. It must be filed within a specified period of time, and it either admits to or (more typically) denies the factual or legal basis for liability. Normally a defendant has 30 days in which to file an answer after being served with the plaintiff's complaint. In some courts, an answer is simply called a "response".

Appeal: Request to a superior or higher court to review and change the result in a case decided by an inferior or lower court or administrative agency.

Appearance: The formal proceeding by which a defendant submits to the jurisdiction of the court.

Bad Faith: Intention to mislead or deceive; conscious refusal to fulfill some duty. Implies active ill will, as opposed to negligence. Bad faith is not bad judgment; it requires conscious wrongdoing.

Breach of Contract: Failure, without legal excuse, to perform all or some of the promises made in a contract.

Brief: Written document, usually prepared by an attorney, submitted to the court about a case, containing summaries of the facts of the case, relevant laws, and an argument showing how the laws support that party's position.

Cause: A lawsuit, litigation, or action. Any question, civil or criminal, litigated or contested before a court of justice.

Certificate of Sale: A document provided to the successful bidder at a judicial sale (such as a tax sale), which will entitle the Buyer to a deed once the Court approves the sale.

Complainant: The party who complains or sues; one who applies to the court for legal redress. Also called the plaintiff.

Contract: A legally enforceable agreement between two or more competent parties made either orally or in writing.

Deed in Lieu: A deed from the owner of a property to its lender typically to avoid foreclosure once the loan is in default.

Default Judgment: A judgment entered against a party who fails to appear in court or respond to the charges.

Defendant: In civil law, the party defending a lawsuit ; the party against whom the plaintiff seeks to recover damages from.

Liquidated Damages: An agreed upon definite amount of damages provided for in a contract providing for relief in the event of a default.

Contract Legal Terms

Contract: An agreement between private parties creating mutual obligations enforceable by law.



Frequently Asked Questions

REAL ESTATE/CLOSING FAQs

How long does it take to close on a home?
On average, a closing can take up to 40 days.

How soon after my closing will I be able to enter my new home?
Once all paperwork is complete and the deed is delivered, you are now the new homeowner.

Why do I need Title Insurance?

Title insurance provides protection against loss or damage due to defects or issues with the property title.  When you close on your house, you take title to the property.  Title insurance protects your title interest against any loss or damage to defects in the title.  You and your lender will typically both receive title insurance policies to protect you and the lender.

What is a Title Search?
A title search provides an analysis of public records to confirm the property's current owner at the time of sale, and also determines if there are any liens or claims against the property that can impact your right to clean title. A clean title is required for all real estate transactions to be finalized.  Your attorney will review a title report prepared by the title company to determine if there are any potential issues with title. 

What should I know before signing a real estate contract?
Before signing a contract to purchase or sell real estate, you should think about some of the common issues related to home buying.  Most times, as attorneys, our clients contact us after they have signed a binding contract.  Here are some things to think about prior to signing a contract.Is the purchase contingent on financing or the sale of an existing home or property?  Most times a purchaser will need financing to purchase the property.  And often, a purchaser will need to sell a current property to afford the listed property.  As a Seller, you need to consider these contingencies along with the contract price when determining whether to accept an offer.  As a buyer, be sure to include these contingences in your contract if they apply.What is included in the purchase price?  As a buyer or seller, make sure you understand and have an agreement with respect to what is staying at the property when you sign a contract.  What furnishings, appliances, and other personal property are included in the purchase price?  Having to purchase new appliances, lighting, fans, or other items could change the price the parties are willing to agree upon.When can the buyer take possession?  Most agreements provide for possession at closing.  However, sometimes the purchaser will request post-closing possession.  This is something that should be considered and addressed in the contract. 

Who pays for title insurance?  
In Illinois, it is common for the seller to provide the owner with a title policy and the purchaser provides a title policy for its lender.

Who pays for the cost of the survey of the property and what is a survey?
It is common for the seller to pay the cost of a survey.  A survey is conducted by a licensed professional who will review the boundaries of the property and provide a plat map showing where the boundary lines are, where any easements are, and where any fences or encroachments exist.

Are there any restrictions on the use of the property? 
As a purchaser, you must make sure you consider the purpose of your purchase.  Different properties are zoned differently, and you should make sure the zoning will fit your needs. 

Are there Realtors® involved?  If so, who pays the commission? 
Most of the time, the Seller of the property will be responsible for paying the Realtors®’ commissions. Usually, the Seller contracts with a listing agent who receives a percentage of the purchase price as commission.  The listing agent and the selling agent will often share that percentage of the purchase price amongst themselves.  Thus, the buyer typically pays no commission.

What are the different ways I can hold title? 
In Illinois, title is typically held as a Sole Owner, Joint Tenancy with Right of Survivorship, Tenants by the Entirety, or Tenants in Common. Depending on who is purchasing the property, the pros and cons of each need to be weighed when determining how you want to hold the property.  An experienced attorney will be able to discuss the differences with you and help you determine which is most appropriate for your individual situation.

What is an easement?
An easement is an interest in land which is owned by a person who is not the owner of the whole piece of property.  For example, an easement owner has the right to use or control a portion of the parcel, or an area above or below it, for a specific limited purpose.  Most often a purchaser of land will see that a utility company has an easement across their land.  Typically, these easements are at the boundary lines of the property.  While the owner still owns the land, the easement owner owns a right to use that portion of the land pursuant to the easement agreement.  When purchasing a home, discuss with your attorney if there are any easements and how those easements impact your enjoyment of the land you are purchasing.  



FORECLOSURE FAQs

Are there alternatives to foreclosure?

When you are behind on your mortgage payments or if you already defaulted on your loan, you may be able to avoid a foreclosure. You may be able to keep your home by working with your servicer and lender with a modification, or qualifying for a foreclosure assistance program, short sale, or deed in lieu of foreclosure.

What are the elements of a valid contract?
The elements of a contract are an offer, acceptance, and consideration.