Buyer Resources/Glossary of Terms
Real Estate Glossary
Key terms for Arizona buyers and sellers.
Plain-English definitions of 50 real estate terms you’ll see in Arizona contracts, disclosures and closings. Terms marked Arizona are specific to Arizona law, forms or practice.
A
Abstract of TitleA historical summary of the public records affecting ownership of a property. In Arizona, buyers more commonly review a title commitment and title insurance policy instead.
Affidavit of DisclosureArizonaAn Arizona disclosure required when selling five or fewer parcels of unsubdivided land in an unincorporated area. It covers access, utilities, flood zones and other land-use facts.
AmortizationPaying down a loan balance through scheduled, regular payments of principal and interest over the loan term.
AppraisalA licensed appraiser’s opinion of a property’s market value, usually ordered by the buyer’s lender and based on recent comparable sales.
Appraisal ContingencyArizonaA provision in the Arizona purchase contract that allows a financed buyer to cancel and recover earnest money if the appraisal comes in below the purchase price and notice is given within the contract’s time frame.
“As-Is” ConditionThe buyer accepts the property in its current condition. The buyer still has the right to inspect, and the seller must still disclose known material defects.
Assessed ValueArizonaThe value the County Assessor uses to calculate property taxes. Arizona uses a Limited Property Value (LPV), whose annual increase is capped by law, along with a Full Cash Value.
B
Beneficiary DeedArizonaAn Arizona deed that names who will receive real property at the owner’s death without probate. It must be recorded before the owner’s death to be effective.
BINSRArizonaBuyer’s Inspection Notice and Seller’s Response. The Arizona form a buyer uses to disapprove items after inspections and the seller uses to agree, refuse or propose repairs.
Buyer-Broker AgreementA written agreement between a buyer and their brokerage describing the services provided and how the broker will be compensated. Compensation is negotiable and not set by law.
C
CC&RsCovenants, Conditions & Restrictions. Recorded rules for a community or HOA that govern use, appearance and maintenance of properties.
Close of Escrow (COE)ArizonaThe date the transaction is complete. In Arizona, escrow closes when the deed is recorded with the county recorder and funds are disbursed; signing usually happens a few days earlier.
Closing CostsFees paid to complete the transaction in addition to the price, such as lender fees, escrow fees, title insurance, recording fees, prorated taxes and HOA charges.
Closing DisclosureThe federal form that replaced the HUD-1 for most loans. The lender must provide it to the buyer at least three business days before closing, itemizing loan terms and costs. Escrow prepares a settlement statement for each party.
CLUE ReportComprehensive Loss Underwriting Exchange report. A history of insurance claims on a property, typically covering the last five years.
Community PropertyArizonaArizona is a community property state. Both spouses generally must sign to sell or encumber community real property.
ContingencyA condition in the contract, such as inspections, appraisal or financing, that must be satisfied or waived before a party is obligated to close.
CounterofferA response to an offer that changes one or more terms. It rejects the original offer while keeping negotiations open.
Cure PeriodArizonaUnder the Arizona purchase contract, a party who receives written notice of a potential breach generally has three days to cure it before the other party may pursue remedies.
D
Debt-to-Income Ratio (DTI)Total monthly debt payments, including the new mortgage, divided by gross monthly income. Lenders use it to determine how much a buyer can borrow.
DeedThe written document that transfers ownership. Resale homes in Arizona commonly transfer by warranty deed; bank-owned homes often use a special warranty deed.
Deed of TrustArizonaThe security instrument used in Arizona in place of a mortgage. If the loan defaults, the trustee may sell the property through a non-judicial trustee’s sale.
Down PaymentThe buyer’s cash toward the purchase price at closing. Requirements vary by loan type; less than 20% down usually requires mortgage insurance.
Due Diligence / Inspection PeriodArizonaThe time the buyer has to inspect and investigate the property. The standard Arizona contract provides 10 days unless otherwise agreed.
E
Earnest MoneyThe buyer’s good-faith deposit, held by escrow and credited toward the purchase at closing. It may be at risk if the buyer fails to perform under the contract.
EquityThe property’s market value minus loan balances and other liens.
EscrowArizonaA neutral third party holds funds and documents until the contract’s conditions are met. In Arizona, escrow is typically handled by a title and escrow company rather than an attorney.
H
HOA Disclosure & Transfer FeesArizonaArizona law requires an HOA to provide resale disclosure documents and limits certain fees it may charge for them. Transfer and capital fees are set by the association.
Home WarrantyA service contract covering repair or replacement of specified home systems and appliances, often for one year from close of escrow.
I
Impound (Escrow) AccountAn account held by the lender to pay property taxes and homeowner’s insurance, funded through the monthly mortgage payment.
L
Lead-Based Paint DisclosureA federal disclosure required for homes built before 1978, along with an opportunity for the buyer to test for lead-based paint hazards.
LienA legal claim against a property as security for a debt, such as a loan, judgment, tax or HOA assessment. Liens are typically paid off at closing.
Loan Status Update (LSU)ArizonaAn Arizona form the buyer’s lender completes to report loan progress, generally due within 10 days after contract acceptance and updated as the loan advances.
M
Mortgage Insurance (MI)Insurance that protects the lender if the borrower defaults, usually required with less than 20% down. Provided by FHA (MIP) or private insurers (PMI).
Multiple Counter OfferArizonaAn Arizona form a seller can use to counter more than one buyer at the same time. The seller must still give final acceptance to only one.
P
Power of AttorneyA legal document authorizing another person to sign on your behalf. Title companies typically require a specific, notarized and recordable form approved in advance.
Pre-Qualification FormArizonaAn Arizona form completed by the buyer’s lender and submitted with an offer, summarizing the buyer’s loan type and qualification status.
Property TaxesArizonaArizona property taxes are paid in arrears in two installments: the first half is due October 1 (delinquent after November 1) and the second half March 1 (delinquent after May 1).
ProrationsThe division of ongoing costs, such as property taxes and HOA dues, between buyer and seller based on the closing date.
R
RecordingFiling the deed and loan documents with the County Recorder, which makes the transfer of ownership a matter of public record.
S
Short SaleA sale in which the lender agrees to accept less than the amount owed on the loan. Lender approval is required.
Solar Lease / Solar AddendumArizonaIf a home’s solar system is leased or financed, the agreement must be transferred to the buyer or paid off. The Arizona Solar Addendum documents those terms.
SPDSArizonaSeller’s Property Disclosure Statement (“SPUDS”). The Arizona form sellers use to disclose known information about the property’s condition, history and systems.
Statement of InformationA confidential form completed by buyers and sellers to help the title company distinguish them from people with similar names who may have liens or judgments.
T
TitleLegal ownership of a property. “Clear title” means ownership free of undisclosed defects, liens or claims.
Title CommitmentThe title company’s report of what it will insure, listing requirements to close and any exceptions such as easements, CC&Rs and liens.
Title InsuranceArizonaProtects against covered title defects. In Arizona, the seller customarily pays for the owner’s policy and the buyer pays for the lender’s policy, though this is negotiable.
Title SearchA review of public records to confirm ownership and identify liens, easements or other claims affecting the property.
Trustee’s SaleArizonaArizona’s non-judicial foreclosure process under a deed of trust. The sale may occur no sooner than about 90 days after the notice of sale is recorded.
W
Wood-Destroying Insect Inspection ReportArizonaOften called the termite report (WDIIR). An inspection for termites and other wood-destroying insects, common in Arizona and often required by VA and some other loans.
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Definitions are general information, not legal advice; contract time periods can be changed by agreement, so always refer to your actual contract.