A real estate glossary explains the language used in purchase contracts, financing, disclosure packets and inspection reports. The definitions below cover terms you may encounter when buying a home in Oakland, Berkeley, San Francisco or elsewhere in the Bay Area.
These are general educational definitions, not legal, lending, tax, insurance or property-condition advice. Your signed agreements, loan documents, inspection scope and applicable law govern the transaction. A glossary definition cannot diagnose a property's condition.
A–Z term index
Contracts and offers
Addendum
A document that adds terms or information to an offer or agreement. It may appear with the purchase paperwork or another transaction document. Its wording and incorporation into the agreement determine its effect; the label alone does not make a proposed term binding.
Amendment
A change to an existing agreement. In purchase paperwork, an amendment may revise an agreed date or another contract term. A proposed amendment and an accepted amendment have different status; the required agreement and acceptance procedures matter.
Appraisal contingency
A purchase-contract condition tied to the property's appraised value. The agreement defines the value requirement and related rights. It is distinct from a loan contingency.
Arbitration
A dispute-resolution proceeding in which a neutral arbitrator hears the parties' positions and makes a decision. Unlike mediation, it does not depend on the parties reaching their own settlement. Whether arbitration is required and whether its decision is binding depend on the applicable agreement and law.
Contingency
A condition in a purchase contract on which an obligation depends. A contingency may provide rights to review a matter or cancel under specified circumstances. Its scope, deadlines and procedures come from the agreement; the term does not mean an unrestricted right to cancel.
Contingency removal
The release of a contractual condition and its associated protection. The agreement and applicable law govern the form, effect and consequences of removal.
Counteroffer
A response to an offer that proposes different terms. A proposed change is not an agreed change until the required acceptance occurs.
Earnest-money deposit (EMD)
EMD stands for earnest-money deposit: money the buyer deposits under the purchase agreement as a sign of commitment to the transaction. If the purchase closes, the deposit is credited toward the buyer's amount due. Whether it is refundable if the transaction ends depends on the agreement, the circumstances and applicable law.
Extension of time (ETA)
A proposed written change to a contractual deadline, such as the closing date or an identified contingency deadline. You may hear it called an Extension of Time Addendum; C.A.R. renamed its ETA form Extension of Time Amendment. Requesting or sending an extension does not itself change the deadline. The accepted document determines which dates change.
Inspection contingency
A purchase-contract condition concerning the buyer's inspection or investigation of the property. The agreement defines what it covers and the associated rights and deadlines. An inspection report records findings; the contingency is the contractual provision.
Liquidated damages
An amount specified or determined under a contract provision as compensation for a covered breach. In a home purchase, the provision may concern the buyer's deposit. It does not automatically entitle the seller to keep the deposit whenever a sale fails; enforceability and entitlement depend on the agreement, circumstances and applicable law.
Loan contingency
A purchase-contract condition relating to the buyer obtaining specified financing. Its contractual protection is separate from the lender's approval process.
Mediation
A process in which a neutral mediator helps parties try to resolve a dispute. The mediator does not impose a decision. A settlement the parties agree to can become binding; the agreement and applicable law determine any obligation to participate in mediation.
Notice to Perform
A formal written notice calling for a party to fulfill specified purchase-contract obligations. C.A.R. forms include Notice to Buyer to Perform (NBP) and Notice to Seller to Perform (NSP). It is not itself a cancellation notice. Its validity, response period and consequences depend on the agreement, delivery and circumstances; this glossary does not supply a universal deadline.
Ratified
In everyday real estate conversation, a “ratified contract” usually means the buyer and seller have reached an accepted purchase agreement. It does not mean contingencies have been removed or the purchase has closed. The agreement's acceptance requirements determine when it becomes binding. In formal legal usage, ratification can also mean later approval of an agent's previously unauthorized act.
Request for Repair (RR)
A buyer's written proposal asking the seller to address specified property conditions, sometimes through repairs or a credit. C.A.R. provides a Request for Repair form, abbreviated RR. The request alone does not create a seller obligation or change a contractual deadline; an accepted agreement has a different effect.
Seller credit
An amount the seller agrees to contribute toward the buyer's transaction costs, reflected in the closing figures. It is different from a price reduction or a lender credit. The purchase agreement and applicable loan rules determine the permitted amount and use; it is not automatically cash paid directly to the buyer.
Financing and closing
Appraisal
An appraisal is a professional opinion of a property's value. A mortgage lender commonly uses it in evaluating the property securing the loan. It is different from a home inspection, which examines condition rather than establishing a value opinion.
Cash to close
The amount the buyer still needs to pay at closing. On a Closing Disclosure, it reflects the down payment, closing costs, deposit already paid and applicable credits or adjustments. It is not simply another name for the down payment.
Close of escrow (COE)
Completion of the escrow transaction under its instructions. In a typical California home sale, this involves recording the transfer documents and handling the funds as instructed. COE also appears beside the agreed closing date in purchase paperwork. Signing documents alone does not establish that escrow has closed, and possession may occur at a different time.
Closing costs
Charges associated with the loan and property transaction, apart from the down payment. Examples include loan-origination charges, title services and recording fees. The amounts and who pays them depend on the transaction.
Closing Disclosure
A standardized five-page form provided for most consumer mortgages that shows the final loan terms, projected payments and closing costs. It also includes the cash-to-close calculation. The Closing Disclosure and the earlier Loan Estimate serve different stages of the loan process.
Conditional loan approval
A lender's approval subject to specified outstanding requirements, such as additional documentation or satisfactory property information. The lender's notice identifies the conditions. It is not a guarantee that the loan will fund, and its requirements are separate from any loan contingency in the purchase agreement.
Discount points
Upfront charges paid to obtain a lower mortgage interest rate. One point equals one percent of the loan amount, not one percentage point off the interest rate. The rate reduction varies by loan and lender; paying points does not guarantee overall savings for a particular borrower.
Down payment
The portion of the purchase price not financed by the purchase mortgage. It is separate from closing costs. A deposit credited toward the purchase contributes to the buyer's funds; it is not an additional purchase price.
Escrow
In a property purchase, escrow is an arrangement in which a neutral third party holds funds and documents and carries out written instructions for the transaction.
A mortgage escrow account, also called an impound account, has a different purpose: the lender or servicer collects money for expenses such as property taxes and homeowners insurance and pays those bills from the account.
Funding
In a mortgage closing, the lender providing the loan money for the transaction. A funding update is different from loan approval or signing the loan documents. It also does not, by itself, confirm that the deed has recorded or that the buyer is entitled to possession.
Interest rate and APR
The interest rate is the rate charged for borrowing money. Annual percentage rate, or APR, expresses borrowing cost as a yearly rate that also accounts for certain fees and charges. APR and the interest rate describe different measures of cost.
Lender credits
Amounts the lender provides to offset closing costs. They are often associated with a higher interest rate, though some credits have another basis, such as a lender adjustment. They differ from seller credits and do not mean the loan has no costs; the loan disclosures identify the terms.
Loan Estimate
A standardized three-page form provided for most consumer mortgages after application. It outlines proposed loan terms, projected payments and estimated closing costs. Receiving a Loan Estimate does not mean the lender has approved the loan.
Mortgage insurance
Coverage that protects the lender against certain losses if the borrower does not repay the loan. Requirements and charges vary by loan program. It is different from homeowners insurance, which covers specified property damage and other risks under its policy.
On record
In a closing update, “on record” usually means the deed has been recorded with the county recorder, becoming part of the public property records. Signing the closing documents or sending loan funds is not the same as confirmation of recording. Possession and key delivery depend on the purchase agreement and any separate occupancy terms.
Possession
The right to occupy or use the property. In a purchase, the agreed possession date and terms can differ from the closing or recording date. Ownership and immediate access are not interchangeable, particularly when a seller or tenant remains in occupancy.
Preapproval
A lender's preliminary statement that it may lend a specified amount, based on its review and assumptions. Review practices vary among lenders. A preapproval is not a guaranteed loan offer or final approval of a particular property purchase.
Rate lock
A lender's agreement to hold a specified mortgage interest rate for a defined period, subject to its terms. Changes to the application or expiration of the lock can affect the rate. A rate lock is not loan approval or a guarantee that the purchase will close.
Rent-back / seller-in-possession agreement
An agreement allowing the seller to remain in the property after the sale closes. It addresses occupancy terms, which may include duration, payment and responsibilities. It is not an automatic right to stay; the actual agreement and applicable law govern, including any insurance or tenancy issues.
Title insurance
Insurance covering specified title-related risks, subject to the policy's terms and exceptions. An owner's policy protects the owner's insured interest; a lender's policy protects the lender's. Neither is homeowners insurance or a guarantee of the building's physical condition.
Underwriting
The lender's evaluation of the borrower, property and proposed loan against its lending requirements. It includes review of financial information and the property securing the mortgage. Underwriting is the evaluation, not a promise of approval, and it does not replace the buyer's property inspections.
Disclosures and property records
AVID (Agent Visual Inspection Disclosure)
A C.A.R. form recording an agent's observations from a visual inspection of accessible property areas. It may be included in the disclosure packet. It is different from the seller's own disclosures and from a professional home or specialist inspection; it does not establish the cause or repair cost of an observed condition.
Disclosures
Information provided about a property or transaction, including required notices and statements about known conditions. A disclosure is different from an inspection report. Receiving disclosures does not mean every condition has been investigated or that the property has a warranty.
Easement
A right to use another person's land for a particular purpose, such as access or utilities. An easement may benefit or burden a property. Its scope depends on the documents and law that establish it; the word alone does not identify its location or allow every use of the affected land.
Encroachment
A physical improvement, such as a fence, wall or part of a building, extending beyond a property boundary onto other land. It differs from an easement, which is a legal right. An apparent encroachment does not by itself establish the boundary, the parties' rights or the remedy.
Lien
A legal claim against property securing payment of a debt or obligation. Examples include mortgage, tax and certain judgment or construction-related liens. A lien is not necessarily evidence of a dispute, and a title report entry alone does not establish its current payoff amount or release status.
NHD (Natural Hazard Disclosure)
Disclosure of whether a property falls within specified mapped natural-hazard areas, such as certain flood, fire or earthquake zones. A commercial NHD report may contain additional information beyond the statutory statement. Neither an outside-zone designation nor receipt of the report guarantees that the property is free from hazards.
Preliminary title report
Often called the “prelim,” a title company's report describing the title and the conditions or exceptions under which it is prepared to issue title insurance. It may identify recorded liens, easements and other matters. It is not the insurance policy or a guarantee that every possible title or boundary issue has been identified.
SPQ (Seller Property Questionnaire)
A C.A.R. questionnaire in which a seller provides information based on actual knowledge of the property's condition and history. It supplements the TDS rather than replacing it. The SPQ is not a property-condition warranty or a substitute for inspections; its delivery requirements depend on the applicable agreement and transaction.
TDS (Transfer Disclosure Statement)
The Real Estate Transfer Disclosure Statement is a California statutory disclosure form used in covered residential transfers, with exemptions for certain transactions. It addresses property features and known conditions and includes agent disclosure sections. It is a disclosure document, not a professional inspection or a warranty of condition.
Inspections and property conditions
Crawl space
A low space beneath a building's lowest floor, often containing exposed framing, plumbing or other systems. It differs from a full-height basement. Its presence does not establish that it is dry, ventilated, insulated or fully accessible for inspection; those are separate observations.
Delamination
Separation within a material or between layers that should remain bonded. In a concrete report, it can describe a separation below and roughly parallel to the surface. It differs from spalling, where surface material has broken away; the term alone does not establish the cause.
Drainage
The movement or collection and removal of water from a site or building area. Reports may refer to surface runoff, gutters, drains or subsurface systems. The presence of a drain does not establish that the system works, where it discharges or whether it adequately serves the property.
Efflorescence
Salt deposits left on concrete or masonry as moisture moves through the material and evaporates. They often appear as a pale or white residue. Efflorescence is not the same as spalling, and its presence alone does not explain the source or extent of a moisture problem.
Flashing
Material installed at vulnerable building joints and openings to help direct water away, such as around windows, doors and roof intersections. Inspection reports may refer to missing or damaged flashing. Flashing is a building detail, not another name for caulk or a general waterproof coating.
Galvanized plumbing
Plumbing made from iron or steel pipe with a protective zinc coating, often encountered in older water-supply systems. Internal corrosion and deposits can affect its condition, and some galvanized piping can retain and release lead from an upstream source. The material name alone does not establish water quality or remaining service life.
Grading
The shaping and slope of the ground around a property. It influences where surface water flows and is distinct from a constructed drainage system. An observation about grading does not by itself establish soil stability, a permit history or the appropriate correction.
Home inspection
An examination of a home's condition within the inspector's agreed scope. The resulting report describes findings and limitations. It is not an appraisal, and a general inspection does not necessarily cover every system, concealed area or specialist issue.
Knob-and-tube wiring
An older electrical wiring method with separate insulated conductors supported by ceramic knobs and passed through ceramic tubes at framing. Finding it does not establish whether the wiring is active, altered or safe. Condition and any work involving it require evaluation by a qualified electrician; the label alone is not an insurance-coverage determination.
Moisture intrusion
Water entering a building or assembly where it is not intended to enter. The phrase may appear in inspection reports about roofs, walls, windows or foundations. It describes a condition; it does not by itself identify the source, concealed damage or the repair required.
Rebar (reinforcing steel)
Steel bars embedded in concrete to reinforce it. Reports may mention exposed or corroded rebar. Corrosion can contribute to concrete cracking and spalling; those observations need property-specific evaluation and do not, by themselves, determine structural capacity.
Retaining wall
A structure that holds back soil where ground levels differ. It may be separate from the building or form part of another structure. Its appearance alone does not establish stability, drainage performance, ownership or maintenance responsibility; those questions require property-specific information and qualified evaluation.
Settlement / differential settlement
Settlement is downward movement of the ground or the foundation it supports. Differential settlement means that movement is uneven across a foundation. These terms may appear in foundation or engineering reports; they do not establish the cause, whether movement is continuing or what repair is appropriate.
Spalling
Flaking, chipping or breaking away of surface material, often used to describe concrete or masonry. It can have several causes, including corrosion of embedded steel in concrete. The word describes deterioration, not a diagnosis of structural safety or a repair specification.
Unpermitted work
Construction or alterations carried out without a required permit, or beyond the scope of the permit obtained. Permit requirements depend on the work and jurisdiction. Missing records do not alone prove work was unpermitted, and an issued permit is different from completed inspections or final approval. Legal status and physical condition are separate questions.
Verification of Property Condition (VP)
A pre-closing check of whether the property's condition meets the purchase agreement, including agreed repairs or other condition obligations. Often called the final walk-through, it can be documented on C.A.R. form VP. This verification is not a replacement for a professional home inspection or, under the C.A.R. purchase agreement, a new contingency. Other contractual rights and obligations still apply.
Pest reports and wood damage
Dry rot / wood decay
Deterioration of wood caused by decay fungi. “Dry rot” is often used broadly in property reports, although it also has a more specific technical meaning. Despite the name, fungal wood decay requires moisture. The wording alone does not identify the fungus, the extent of damage or whether the moisture source remains active.
Drywood termites
Wood-destroying termites that live within wood and do not require contact with soil. They may be identified in a structural pest report. Their name distinguishes them from subterranean termites; it does not establish the extent of an infestation or the treatment needed.
Earth-to-wood contact
Wood touching soil. A pest report may identify it as a condition that can support moisture exposure or termite access. The condition alone is not proof of an active infestation.
Further inspection
In a separated structural pest report, a recommendation to inspect an area that could not be adequately accessed during the original inspection. The inspector cannot yet classify that area as Section I or Section II. It means the assessment is incomplete, not that the area is clear.
Pest report / WDO report
A wood-destroying pests and organisms inspection report, often called a termite or structural pest report. It records findings and inspection limitations within its scope. It is separate from a general home inspection and does not certify the condition of every building system.
Section 1 (Section I)
In a separated structural pest report, items with visible evidence of active infestation or infection, or conditions resulting in or from it. The category does not itself establish repair cost, structural severity or who is responsible for payment.
Section 2 (Section II)
In a separated structural pest report, conditions considered likely to lead to infestation or infection, without visible evidence of either at the inspection. This is not a blanket “minor issue” or “safe to ignore” designation.
Subterranean termites
Wood-destroying termites commonly associated with soil and moisture; they often travel through shelter tubes to reach wood. They may be identified in a structural pest report. They differ from drywood termites, and the label alone does not establish the extent of damage or an appropriate treatment.
HOA and common-interest ownership
CC&Rs
Covenants, conditions and restrictions: recorded provisions governing property within a development. They can address permitted uses, maintenance responsibilities and other ownership obligations. For a property in a homeowners association, they are part of the governing documents; bylaws and operating rules are separate documents.
Homeowners association (HOA)
An association that manages shared responsibilities within a common-interest development. Owners pay assessments, often called dues, to fund association expenses. The governing documents define the association's responsibilities and those of individual owners.
Reserve study
An association's assessment of major components it is responsible for maintaining, their expected remaining useful lives and estimated repair or replacement costs, together with reserve-funding information. Reserve funds are money set aside for future association needs, separate from an owner's personal savings.
Special assessment
An association charge beyond its regular assessments, sometimes used to fund a major project or expense. The governing documents and applicable law control authorization and allocation. A proposed special assessment and an approved one have different status.
Terms that sound similar but mean different things
| Terms | The distinction |
|---|---|
| Appraisal / inspection | A value opinion / a condition examination |
| Deposit / down payment | An advance payment under the contract / the portion of the price not financed by the purchase mortgage |
| Closing costs / cash to close | Transaction charges / the buyer's remaining amount due at closing |
| Preapproval / final loan approval | Preliminary lending assessment / approval after the lender's required review and conditions |
| Inspection report / inspection contingency | A document describing findings / a condition in the purchase contract |
| Mortgage insurance / homeowners insurance | Coverage protecting the lender against certain loan losses / coverage for specified property and other risks |
Professional boundary
This glossary explains vocabulary. It does not recommend offer terms, contingency decisions, notices to send, loan products, repairs or an approach to a particular property. Westin can explain how the terminology relates to your transaction. Legal interpretation belongs with a qualified attorney; lending, insurance, pest and building-condition conclusions require the appropriate qualified professionals.