Real Estate Contract Glossary

A summarized history of all recorded documents and proceedings related to a property, including deeds, mortgages, liens, and court actions.

The formal agreement by the seller to the terms of the buyer's offer, creating a binding contract. In Vermont, acceptance must be communicated to the buyer before the offer expires.

Vermont's land use and development law that regulates major subdivisions and developments to protect the environment, historic sites, and natural resources. Projects meeting certain criteria require Act 250 permits.

A document that adds or modifies terms to an existing purchase agreement. Addendums become part of the contract and must be signed by all parties.

A written change or modification to an existing contract after it has been signed by all parties. Unlike an addendum, which adds new terms, an amendment changes existing terms.

The process of paying off a loan through regular payments over time. Each payment includes both principal and interest, with the proportion changing over the loan term.

A professional assessment of a property's market value conducted by a licensed appraiser. Lenders require appraisals to ensure the property is worth the loan amount.

The total cost of borrowing expressed as a yearly rate, including interest and fees. APR provides a more complete picture of loan costs than the interest rate alone.

A sale where the seller makes no repairs and the buyer accepts the property in its current condition. However, buyers can still conduct inspections and may be able to negotiate or walk away based on findings.

The sequence of historical transfers of title to a property, showing the progression of ownership from the original owner to the current owner.

A title free of liens, encumbrances, or legal questions about property ownership. Clear title is required to complete a real estate transaction.

All fees and expenses paid at closing, beyond the down payment. These include loan origination fees, title insurance, attorney fees, recording fees, and transfer taxes.

The date when the property sale is finalized, ownership is transferred, and the buyer receives the keys. The closing date is specified in the purchase agreement.

A standardized five-page form that provides final details about the mortgage loan, including terms, projected monthly payments, and all closing costs. Buyers must receive this at least three business days before closing.

A detailed accounting of all financial transactions in the real estate sale, showing all credits, debits, and prorations for both buyer and seller.

A condition in the purchase agreement that must be satisfied before the sale can proceed. Common contingencies include financing, inspection, and appraisal contingencies.

A mortgage that is not insured or guaranteed by the federal government. Conventional loans typically require higher credit scores and larger down payments than government-backed loans.

A response to an offer that proposes different terms, effectively rejecting the original offer and creating a new offer. The original offer is no longer valid once a counteroffer is made.

A Vermont property tax program that reduces property taxes for landowners who keep their land in agricultural, forest, or conservation use. If the land is developed, significant penalties may apply.

The legal document that transfers ownership of property from seller to buyer. In Vermont, the most common type is a warranty deed, which guarantees clear title.

The upfront cash payment made by the buyer, typically expressed as a percentage of the purchase price. Larger down payments often result in better loan terms and lower monthly payments.

The time frame specified in the contract during which the buyer can conduct inspections, review documents, and investigate the property. The buyer can typically cancel the contract during this period.

A deposit made by the buyer to demonstrate serious interest in purchasing the property. This money is typically held in escrow and applied toward the down payment at closing.

The date when the purchase agreement becomes a binding contract, typically when the seller accepts the buyer's offer and all parties have signed.

A neutral third-party account where funds are held during the transaction. Escrow accounts are also used by lenders to collect and pay property taxes and insurance.

A mortgage insured by the Federal Housing Administration, designed to help buyers with lower credit scores or smaller down payments. FHA loans require mortgage insurance premiums.

The buyer's last inspection of the property before closing, typically conducted 24 hours before closing. This ensures the property is in the agreed-upon condition and any negotiated repairs have been completed.

A loan where the interest rate remains constant throughout the entire loan term, providing predictable monthly payments. Common terms are 15, 20, or 30 years.

A professional examination of a property's condition, including structural components, systems, and major appliances. The inspection helps buyers identify potential issues before completing the purchase.

A standard form that itemizes all charges imposed on borrower and seller in a real estate transaction. For most residential purchases, this has been replaced by the Closing Disclosure.

The ratio of the loan amount to the appraised value or purchase price of the property, whichever is lower. A lower LTV typically results in better loan terms.

A formal proposal by a buyer to purchase a property at a specified price and terms. The offer includes the purchase price, contingencies, closing date, and other terms.

A lender's conditional commitment to loan a specific amount based on verification of the buyer's financial information. Pre-approval is stronger than pre-qualification and demonstrates serious buyer intent.

An informal estimate of how much a buyer can borrow based on self-reported financial information. Pre-qualification is less rigorous than pre-approval.

Insurance required by lenders when the down payment is less than 20% of the home's value. PMI protects the lender if the borrower defaults on the loan.

The legally binding contract between buyer and seller that outlines all terms and conditions of the real estate transaction, including price, contingencies, and closing date.

Another term for the purchase agreement; the comprehensive contract that governs the entire real estate transaction from offer acceptance through closing.

Testing for radon gas, a naturally occurring radioactive gas that can accumulate in homes and pose health risks. Radon testing is particularly important in Vermont due to geological conditions.

Fees charged by the county clerk's office to record the deed and mortgage in public records. Recording establishes public notice of property ownership.

An inspection of the septic system to assess its condition, capacity, and compliance with local regulations. Essential for properties not connected to municipal sewer systems.

Insurance that protects the buyer and lender against financial loss from defects in the title that were not discovered during the title search.

An examination of public records to confirm a property's legal ownership and identify any liens, encumbrances, or title defects that could affect the sale.

A tax imposed by state or local governments when property ownership is transferred from seller to buyer. The tax is calculated as a percentage of the sale price.

A mortgage guaranteed by the Department of Veterans Affairs, available to eligible veterans, active-duty service members, and surviving spouses. VA loans often require no down payment.

Vermont law requires sellers to complete a property disclosure form revealing known defects and conditions. This includes information about water source, septic, hazards, and environmental issues.

A tax of 1.45% of the property sale price, paid at closing. This includes a 1.25% state property transfer tax and a 0.2% state property transfer tax for the Vermont Housing and Conservation Trust Fund.

Laboratory testing of well water to check for contaminants, bacteria, and water quality. Critical for properties that rely on private wells rather than municipal water.