abatement
A reduction in some amount that is owed, usually granted by the person to whom the debt is owed. In estate law, the word may refer more specifically to a situation where property identified in a will cannot be given to the beneficiary because it had to be sold to pay off the deceased's debts. Debts are paid before gifts made in wills are distributed and where a specific gift has to be sold to pay off a debt, it is said to "abate."

abstract of title
A short history of a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages, or rights of way (also known as easements).

abstract of trust
A condensed version of a living trust document, which leaves out details of what is in the trust and the identity of the beneficiaries. One use for an abstract of trust is to prove to a financial organization or other institution that the grantor (person who sets up a trust) has established a living trust without revealing specifics.

acknowledgment
A sworn statement before a public official, usually a notary public. The statement declares that a legal document is signed freely and that any statements in the document are accurate. Advance directives such as living wills and durable powers of attorney may require acknowledgment.

actual damages
Actual damages are real damages to compensate for loss or injuries that have actually occurred. This is in contract to "nominal" damages (a small amount paid where there is no real loss) or "punitive damages" (intended to punish the party who must pay damages). When damages that have been suffered by someone as a result of another's wrongdoing can be precisely measured, they are called actual damages.

administrator
A person who administers the estate of a person deceased. The administrator is appointed by a court and is the person who would then have power to deal with the debts and assets of a person who died intestate. Female administrators are called "administratrix." An administrator is a personal representative.

affidavit
A statement which a person signs only after first taking an oath professing that the contents are, to the best of their knowledge, true. It is also signed by a notary or some other judicial officer that can administer oaths, to the effect that the person signing the affidavit was under oath when doing so. These documents carry great weight in courts to the extent that judges frequently accept an affidavit instead of the testimony of the witness.

agent
A person who performs services for another person under an express or implied agreement and who is subject to the other's control or right to control the manner and means of performing the services. The other person is called a principal. An agent may or may not get paid. The agency agreement may be oral or written.

alimony
Also called maintenance or spousal support. In a divorce or separation, the money paid by one spouse to the other in order to fulfill the financial obligation that comes with marriage. This amount is usually set by a judge with some jurisdictions having a statutory formula to follow and others not.

amortization: The changing value of your home due to the repayment of a mortgage loan through monthly installments of principal plus interest.

appraisal: an estimate of a property's fair market value which is generally required before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

appraiser: a qualified person who prepares the appraisal estimate.

arrears
A debt that is not paid on the due date accumulates as "arrears." For example, if the rent is not paid, the debt still exists and is referred to as "arrears". The same word is used to describe child or spousal maintenance or support that is not paid by the due date.

asset(s)
Property, including real property (land or buildings) and personal property (for example, cash, stocks, or vehicles) that belong to a person, corporation, estate, or other entity; a resource that has economic value to its owner such as cash, accounts receivable, inventory, real estate and/or securities.

attorney-in-fact
The person or organization designated in a power of attorney to act for the principal. This person or organization is also referred to as an agent. The agent has whatever power the principal authorizes, and can act to benefit or bind the principal to the extent of that authority. The agent owes a fiduciary duty to the principal and could be liable to the principal or a third party for a breach of that duty.

bankruptcy
A legal proceeding that relieves the responsibility of paying debts or provides protection while attempting to repay debts. There are two types of bankruptcies — liquidation, in which debts are wiped out, and reorganization, in which the court is provided with a plan for how the debts will be repaid. For both consumers and business, liquidation bankruptcy is called Chapter 7. For consumers, reorganization bankruptcy is called Chapter 13. Reorganization bankruptcy for consumers with an extraordinary amount of debt and for businesses is called Chapter 11. Reorganization bankruptcy for family farmers is called Chapter 12.

basis
For income and capital gains tax purposes, the value that is used to determine profit or loss when property is sold. Often the basis is the price paid for the property. If a house is purchased at $200,000, the tax basis is $200,000. If it is later sold at $350,000, the taxable profit is $150,000.

beneficiary
Person who is entitled to receive the benefits under a will or a trust, also called the lender under a Deed of Trust.

beneficiary deed
A relatively recent creature of Arizona law is the beneficiary deed.  This form of deed transfers no present interest to the beneficiary named in the deed.  Instead, the beneficiary receives and interest upon the death of the grantor.  The beneficiary deed allows a person to transfer a future interest in the property while maintaining control over the property.  The beneficiary deed avoids the need for probate.  A grantor may revoke a beneficiary deed at any time.

There are advantages and disadvantages to using a beneficiary deed.  Problems can arise when the beneficiary is a minor or when there are multiple beneficiaries.  Joint tenant situations also create potential problems involving the use of a beneficiary deed.

building code: a regulation that determines the design, construction, and materials used in building.

capital gains
The profit on the sale of a capital asset, such as stock or real estate.

charitable trust
Any trust designed to make a substantial gift to a charity and also achieve income and estate tax savings for the person who creates the trust (the grantor).

claim
A demand for money or other relief.

closing: the time at which the property is formally sold and transferred from the seller to the buyer. The buyer takes on the loan obligation, pays all closing costs, and receives title from the seller.

co-tenants
Two or more tenants who rent the same property under the same lease or rental agreement. Each co-tenant is 100% responsible for carrying out the rental agreement, which includes the rent for, or damage caused by, the other tenant.

codicil
A supplement or addition to a will. A codicil may explain, modify, add to, subtract from, qualify, alter or revoke existing provisions in a will. Because a codicil changes a will, it must be signed in front of witnesses, and possibly notarized, in most states.

common-law marriage
A marriage by mutual consent without the formality of application for a license or issuance of a certificate. A common-law marriage requires that both parties agree to the marriage and that they agree to assume the same marital duties and obligations as formal marriages. Not all states recognize common-law marriages.

community property
A method for defining the ownership of property acquired, and the responsibility for debts incurred during marriage. In states that follow community property principles, all earnings during marriage and all property acquired with those earnings are considered community property.

conservator:
A court-appointed surrogate decision-maker with the authority to make decisions about property only. In some jurisdictions the term is used synonymously with the term guardian.

contingent beneficiary
An alternate beneficiary named in a will, trust or other document.

contingency fee
Also called a contingent fee. A fee arrangement in which the lawyer is paid out of any damages that are awarded. Typically, the lawyer gets between one-fourth and one-third. If no damages are awarded, there is no fee.

contract
An agreement between two or more competent parties in which an offer is made and accepted, and each party benefits.

credit report: a record that lists all past and present debts and the timeliness of payment for the last seven years.

damages
A cash compensation ordered by a court to offset losses or suffering caused by another's fault or negligence. Damages are given either for breaches of contracts or for tortious actions.

death taxes
Taxes levied at death, based on the value of property left behind. Federal death taxes are called estate taxes. Some states levy inheritance taxes on people who inherit property and some have estate taxes.

declaration
A declaration is a written statement submitted to a court in which the writer swears "under penalty of perjury" that the contents are true, meaning that the writer acknowledges that if he or she is lying, he may be prosecuted for perjury. Some states allow declarations to be used in the place of affidavits, thus avoiding a trip to the notary.

deed: the document that transfers ownership of a property.

deed of trust
In Arizona, deeds of trust are creatures of statute.  Deeds of trust are used in place of mortgages and are favored by lenders because no "foreclosure" is required, no lawsuit is usually required and the property can be transferred to the lender in the event of a default much faster and at less expense than if a mortgage was used.

The owner of the property, called the "trustor" transfers ownership to a "trustee" (usually an attorney or a title company) who holds title for the benefit of the a "beneficiary" (lender).  When the trustor pays the debt secured by the deed of trust the trustee reconveys the property to the trustor.  If the trustor defaults, the trustee schedules a trustee's sale and sells the property to the highest bidder.  The trustee then issues a trustee's deed to the successful bidder.

default: the inability to pay monthly mortgage payments in a timely manner or to meet the mortgage terms.

down payment: the first portion of a home's purchase price that is paid in cash and is not part of the mortgage loan.

durable power of attorney
A written instrument authorizing another to act as one's agent or attorney-in-fact that survives the subsequent incapacity or disability of the principal. An individual can have a financial durable power of attorney or a health care durable power of attorney, or both.

encumber To place a claim, lien, charge or liability on property (e.g., mortgage, judgment lien, mechanic's lien, security interest).

equity: an owner's financial interest in the property which is calculated by subtracting the amount still owed on the mortgage loan from the fair market value of the property.

estate
A term commonly used to denote the sum total of all types of property owned by a person at a particular time, usually upon his or her death.

estate tax A tax assessed against the net assets of an estate which must be paid by the administrator from the estate's assets.

executor
The person or entity named in a will who has the responsibility of carrying out the terms of the will (that is, collecting the will maker's assets, paying the debts, and distributing the remaining assets to the beneficiaries).

fair Housing Act: a law that prohibits discrimination on the basis of race, color, national origin, religion, sex, familial status, or disability.

fair market value: the hypothetical price that a buyer and seller agree on.

FHA: Federal Housing Administration assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults and encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.

fiduciary
Normally, a fiduciary is synonymous to a trustee, which is the classic form of a fiduciary relationship. A fiduciary has rights and powers which would normally belong to another person. The fiduciary holds those rights which he or she must exercise to the benefit of the beneficiary. Fiduciary responsibilities exist for persons other than trustees such as between solicitor and client.

fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

full faith and credit act A legal principle requiring judges to recognize and enforce valid decrees and judgments issued by courts in other states.

general guardian
A court-appointed decision-maker who has powers to make decisions concerning the personal affairs of an incapacitated individual.

general power of attorney
An unlimited agency. The agent is authorized to act in whatever capacity the principal actually has. In some jurisdictions, such an agency would be ineffective for some transactions such as land conveyances.

general warranty deed
A general warranty deed warrants the title to the grantee as against all persons.  This is the best form of warranty deed for a grantee to obtain and offers the most protection of any form of deed.  A general warranty deed conveys all of the grantor's interests in and title to the property.  It also warrants that if the title contains a defect, known as a "cloud," (such as a mortgage, a tax liens a judgment, or a mechanic's lien) the grantee may hold the grantor liable.

grantor
A person who grants another person or entity (an agent) the authority and power to act on behalf of the grantor in accordance with the powers set forth in a power of attorney document; or the powers set forth in a trust document.

guarantor
A secondary party who agrees to become obligated to repay a debt for the party primarily responsible if the party responsible fails to repay the obligation.

health care power of attorney
A durable power of attorney by which the principal may choose an agent to make health-care decisions after the principal has become incapacitated and is unable to make those decisions.

holographic will
An unwitnessed handwritten will. A few states allow such documents to be admitted to probate, but most courts are very reluctant to accept them.

home inspection: a thorough examination of the building's structure and mechanical systems to determine a home's safety which makes the homebuyer aware of any repairs that may be needed.

homeowner's insurance: an insurance policy that combines protection against damage to a dwelling and all its contents by protecting against claims of negligence or inappropriate actions in which results in injury or property damage.

incapacitated
A term used to describe a person lacking the ability to make decisions concerning health care or, more generally, personal matters. The incapacity may be mental (i.e., Alzheimer's disease) or physical (i.e., the effects of a stroke). When a person has a guardian appointed, the person is often referred to as "incapacitated." Incapacity also describes a legal disability to perform a specific act or acts.

independent contractor
A person or business who performs services for another person under an express or implied agreement and who is not subject to the other's control, or right to control, the manner and means of performing services; not as an employee. One who engages an independent contractor is not liable to others for the acts or omissions of the independent contractor.

inheritance tax
A tax assessed against the beneficiaries of an estate based on the amount received by each beneficiary and that beneficiary's relationship to the decedent.

inter vivos
"Between the living." This term is used in a transfer of property, or other transaction, which occurs between living persons.

intestacy
The state or condition of dying without having made a valid will, or without having disposed of a part of property by will.

irrevocable trust
When the settlor (the person creating a trust) transfers title of the trust proceeds to the trustee and reserves no right to cancel, alter or abolish the trust.

joint account
An account with two or more parties named on it. The account may provide equal or unrestricted access to the funds by all parties, or may impose certain conditions on access to the funds.

joint property
Sometimes called joint tenancy. Property that names a co-owner on its deed or title. Co-owners retain ownership of the property upon the death of a co-owner. A co-owner in a joint property arrangement cannot give away his or her share of the property.

joint tenancy
A method by which one person mutually holds legal title to property with other persons in such a way that when one of the joint owners dies, his or her share automatically passes on to the surviving joint owners by operation of law.

joint trustees
Two or more persons who are entrusted with property for the benefit of one or more others. Unlike joint executors, joint trustees cannot act separately, but must both join in conveyances and receipts, for one cannot sell without the others, or receive more of the consideration money, or be more a trustee than his or her partner.

judgment
A court's official decision on the matters before it. The declaration, by a court, of the rights and duties of the parties to a lawsuit which has been submitted to it for decision.

lease
A special kind of contract between a property owner and a person wanting temporary enjoyment and use of the property, in exchange for rent paid to the property owner. Where the property is land, a building, or parts of either, the property owner is called a landlord and the person that contracts to receive the temporary enjoyment and use is called a tenant.

legatee
Also known as a beneficiary. Person named in a will to receive property. A legatee is a person to whom a legacy is given by a last will and testament.

lessee
A person or entity who receives the use and possession of leased property (e.g., real estate or equipment) from a lessor in exchange for a payment of funds. The person to whom a lease is made.

lessor
A person or entity who owns property (for example, real estate or equipment) to which a lessee receives use and possession in exchange for a payment of funds.

lien
The right to retain the lawful possession of the property of another until the owner fulfills a legal duty to the person holding the property, such as the payment of lawful charges for work done on the property. A mortgage is a common lien.

litigation
A case, controversy, or lawsuit. A contest authorized by law, in a court of justice, for the purpose of enforcing a right. Participants (plaintiffs and defendants) in lawsuits are called litigants.

living trust
A trust created during the maker's lifetime. Some living trusts are set up so that they can be changed during the maker's lifetime. These are called "revocable" trusts. Others known as "irrevocable," are set up so that they can't be touched.

living will
A declaration that states an individual's decisions about artificial-life support. Also known as a medical directive or advance directive. This written document states a person's wishes regarding life-support or other medical treatment in certain circumstances, usually when death is imminent.

lock-in: an interest rate lock-in guarantees a specific interest rate if the loan is closed within a specific time.

long-term care facility
Generally synonymous with a nursing home, but could also describe any residential facility which is considered a permanent home (such as a board and care home), and in which some degree of medical attention is provided.

maintenance
In a divorce or separation, the money paid by one spouse to the other in order to fulfill the financial obligation that comes with marriage. The support which one person, bound by law, gives to another for his or her living; for example, a father is bound to find maintenance for his children; and a child is required by law to maintain his father or mother when they cannot support themselves, and he has ability to maintain them. Sometimes referred to as alimony.

mortgage
An interest given on a piece of land, in writing, to guarantee the payment of a debt or the execution of some action. It automatically becomes void when the debt is paid or the action is executed. In some jurisdictions, it entails a conveyance of the land until the debt is paid in full. The person lending the money and receiving the mortgage is called the mortgagee; the person who concedes a mortgage as security upon their property is called a mortgagor.

mortgage insurance: a policy that protects lenders against losses that can occur when a borrower defaults on a mortgage loan. This is required mostly for borrowers with a down payment of less than 20% of the home's purchase price.

negligence
People are responsible for the intentional harm they cause. They are also responsible for their failure to act as a reasonable person would be expected to act in similar circumstances (i.e. "negligence"). Negligence, if it causes injury to another, can give rise to a liability suit under tort. Negligence is always assessed having regards to the circumstances and to the standard of care that would reasonably be expected of a person in similar circumstances. Between negligence and the intentional act there lies yet another, more serious type of negligence which is called gross negligence. Gross negligence is any action or an omission in reckless disregard of the consequences to the safety or property of another.

notary public
An official authorized by the state to certify documents.

Offer: indication by a potential buyer of a willingness to purchase a home at a specific price.

personal property
Generally refers to movable property—anything other than land or houses.

personal representative
A person who manages the legal affairs of another, such as a power of attorney or executor.

P.O.D. account
(See Totten trust).

post-nuptial agreement
Post-nuptial agreements are made after marriage between couples still married; they take the form of separation agreements, property settlements in contemplation of a separation or divorce, or property settlements where there is no intention of the parties to separate.

power of attorney
A written document in which a mentally competent adult (called the "principal") appoints another mentally competent adult or a corporation (called the "agent" or "attorney-in-fact") to act on the principal's behalf. The attorney-in-fact may perform any legal function or task which the principal has a legal right to do for him or herself.

pre-approved: commitment to lend to a potential borrower a said amount. This commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.

Premium: an amount paid on a regular schedule by a policyholder that maintains insurance coverage.

pre-nuptial agreement
An agreement entered into by prospective spouses prior to marriage but in contemplation and consideration thereof; by it, the property rights of one or both of the prospective spouses are determined or are secured to one or both of them or their children.

principal
The individual authorizing another individual or organization to act in his or her place in a power of attorney.

Principal: the amount borrowed from a lender which does not include interest or additional fees.

probate
The court process in which a will is determined to be valid and a deceased person's estate is distributed in accordance with the terms of the will or the state's law of intestate succession.

property
In addition to money and other tangible things of value, property also includes any intangible right considered as a source or element of income or wealth. Property is divided into real property, and personal property.

proxy
A person, appointed in the place of another, to represent him. The instrument by which a person is appointed, is also called a proxy.

quiet title action
When there are conflicting claims to real property a lawsuit can be filed to obtain a judicial declaration of the ownership and interests in the property.  This is known as a quiet title action. 

quit claim deed
A quit claim deed transfers whatever interest the grantor may have, without warranty of any kind.  Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has, if any.

real property
Land and all of the things attached to it. Anything that is not real property is personal property and personal property is anything that isn't nailed down, dug into, or built onto the land. A house is real property, but a dining room set is not.

refinancing: paying off one loan by obtaining another. Generally done to secure better loan terms like a lower interest rate.

remainderman
The person who inherits property when someone passes away, and has executed a "life estate deed." For example, John owns a house. He deeds it to himself for life, and then to Jane upon his death. Jane is the remainderman.

renunciation
The act of giving up a right.

revocable trust
A trust in which the settlor retains the power to cancel, alter, or change the terms.

right of survivorship
A method of joint ownership where the surviving joint owner(s) gets title to the deceased's interest.

self-proving will
A will having an attached affidavit signed by a notary public that shows the will was properly signed and witnessed and that it is the will of the person who signed it. Many states accept such wills in order to avoid the cumbersome process of requiring an executor to track down the witnesses.

Settlement: same as closing.

settlor
The person who establishes and funds a trust. Also known as trustor or grantor.

simple will
A will that does not include complex trusts or other provisions designed to minimize federal or state estate taxes that might be assessed against a large estate.

special warranty deed
A special warranty deed, instead of warranting the title as against all persons, merely warrants the title against claims that arose during the period the grantor held title to the property.  A special warranty deed guarantees that the grantor has done nothing during the time he held title to the property which has, or which might in the future, affect the grantee's title.

springing durable power of attorney
A durable power of attorney which becomes effective only upon the principal's incapacity.

SSA
Social Security Administration which administers Social Security retirement, disability, and survivors benefits, as well as the SSI program.

SSI
Supplemental Security Income, a federal cash payment program which provides monthly payments on the basis of need to poor persons who are aged, blind, or disabled.

strict liability
Liability even when there is no proof of negligence. Often applicable in product liability cases against manufacturers, who may be legally responsible for injuries caused by defects in their products, even if they were not negligent.

tangible property
Property that has physical substance and can be touched. Anything other than real estate or money, including furniture, cars, jewelry and china. Intangible property (example: a checking account) lacks this physical quality.

testamentary
Providing for the disposition of property after death by a will and therefore in accordance with the personal desires of decedent. Formalities in the state statute must be complied with in order for the disposition to be approved and not subject to challenge.

testator
One who makes or has made a will.

testamentary trust
A trust created by the provisions in a will. Typically comes into existence after the writer of the will dies.

totten trust
A bank account with a named death beneficiary. Upon the death of the named holder of the account, the money transfers automatically to the beneficiary. Also referred to as P.O.D., (payable on death accounts).

trust
Property given to a trustee to manage for the benefit of a third person. Generally, the beneficiary gets interest and dividends on the trust assets for a set number of years. An agreement under which one person transfers title to specific property to another who agrees to hold or manage it for the benefit of a third person.

trustee
Person or institution that oversees and manages a trust. One to whom an estate has been conveyed in trust. The trust estate is not subject to the debts of the trustee.

trustee sale - beneficiary under a deed of trust has a choice of two alternatives and mutually exclusive remedies after a default on the payments - non-judicial sale and judicial foreclosure.

trustor - one who creates a trust; also known as the owner of real property.

will
A written and signed statement, made by an individual, which provides for the disposition of their property when they die. (See also codicil and probate).