Real Estate Law Terms You Should Know
Published on:August 12, 2016

When people who are not lawyers go through with a real estate transaction, they are usually exposed to a series of terms that they don’t understand. That is normal, but it can be frustrating for the client. There are also terms that get thrown around by lawyer who assume that people know what those terms mean when, in reality, most people are clueless.

To help with the legal aspect of buying real estate, we offer a very short glossary of legal terms you should know that are associated with real estate, and terms you thought you knew but you probably didn’t.

Abstract of Title

In simplest terms, the abstract of the title is just a summary of all of the actions that have occurred on the property’s title over the years. It is used by lawyers to determine property ownership, or confirm historical activity.


If you hear your lender mention this term, then contact your lawyer immediately. Acceleration is your lender’s legal right to ask that you pay the balance of your loan at any point in time. Most lenders do not use this, but there are circumstances where the lender may want its money right now and you have to pay.

Appraised Value

The appraised value of a property is not tied to the tax valuation of the property by the city or town where it is located. The appraised value is the value of the property as determined by a certified and professional appraiser.

Back To Back Escrow

If you own a home but are buying another, then you may hear your lawyer talk about the need for back to back escrow. This is simply the term applied to the need for an escrow account for your current property and an account for the property you are buying.

Capital Improvements

When you make improvements to your home for the purpose of raising its value on the market, then you are making capital improvements.

Cloud On The Title

If there is anything on the property’s title that may become an obstacle to closing on that property, then there is said to be a cloud on the title.


The deed is an instrument that indicates actual ownership of the property where a home is located.

Discount Point (also known simply as Points)

The lender may offer the borrower the chance to pay extra money to lower the interest rate on the mortgage at closing. This process lowers the overall cost of the loan, and it also lowers the monthly payments. This is referred to as buying discount points, or buying points.


An encroachment is any structure that crosses a property line from one property to another. It is normally applied to structures and not to landscape items such as trees or bushed.

The next time your lawyer tells you there is a cloud on the title that is holding up closing, now you know what they mean. A good real estate attorney is always careful to explain terms and processes to their client, but sometimes attorneys tend to gloss over things that they deal with every day. It is always in the best interests of the client to learn as much of the real estate law lingo as possible so that they know what is going on in their transaction.