Investment Glossary:

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E

Earnest Money:  A deposit made by a purchaser of real estate to show good faith.

Easement:  A right granted to another person to use your land for a specific purpose. Most commonly, easements are granted to pubic utility and telephone companies for the purpose of running lines on or under the property or to neighbors for the purpose of using a common driveway. 

Easement by Necessity:  The right of an owner to cross over another's property for a special necessary purpose.

Easement by Prescription:  Continued use of another's property for a special purpose can convert to permanent use if certain conditions are met.

Egress:  A means of access or exit.

Eminent Domain:  The right of the government, public utilities, and public service corporations to take private property for necessary public use upon payment of its fair market value.  This may occur, for example, if a state or locality wants to widen a highway.

Employer-Assisted Housing:  A special Fannie Mae housing initiative that offers several different ways for employers to work with local lenders to develop plans to assist their employees in purchasing homes.

Encroachment:  A building, part of a building, or obstruction that physically intrudes upon, overlaps, or trespasses upon the property of another.

Encumbrance:  Any right to or interest in land that affects or limits the fee simple title to property, such as mortgages, loans, unpaid taxes, leases, easements, junior liens, or deed restrictions.

Equal Credit Opportunity Act (ECOA):  A federal law that requires lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income from public assistance programs.

Equitable Conversion:  A legal doctrine in some states in which, under a contract of sale, buyers and sellers are treated as though the closing has taken place in that the seller in possession has an obligation to take care of the property.

Equitable Title:  The interest held by one who has agreed to purchase, but has not yet closed the transaction.

Equity:  The value of the unencumbered interest in real estate as determined by subtracting the total of the unpaid mortgage balances plus the sum of any current liens against the property from the property's fair market value.

Escalator Clause:  A provision in a lease whereby real estate tax increases imposed on the lessor are passed along to the lessee as additional rent.

Escheat:  The reversion of property to the state in the event that the owner dies without leaving a will and has no legal heirs.

Escrow:  An agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.

Escrow Account:  An account from which funds can be disbursed only for specified reasons; i.e. the money is held in trust for a specific use. In lending, these accounts are most often used to hold and disburse real estate taxes and hazard insurance premiums which have been paid in advance (usually on a monthly basis) by the borrower.

Escrow Analysis:  The periodic examination of escrow accounts to determine if current monthly deposits will provide sufficient funds to pay taxes, insurance, and other bills when due.

Escrow Collections:  Funds collected by the loan servicer and set aside in an escrow account to pay borrower expenses such as property taxes, mortgage insurance, and hazard homeowners insurance.

Escrow Disbursements:  The use of escrow funds to pay real estate taxes, homeowners insurance, mortgage insurance, and other property expenses as they become due.

Escrow Payment:  The portion of a borrower\'s monthly payment that is held by the loan servicer to pay for taxes, hazard homeowners insurance, mortgage insurance, lease payments, and other items as they become due. Known as \"impounds\" or \"reserves\" in some states.

Estate:  The degree, nature, and extent of interest that a person has in real property.

Estate at Sufferance:  The wrongful occupancy of property by a tenant after the lease has expired.

Estate for Life:  See Life Estate.

Estate Tax:   A tax on the value of property left by the deceased, subject to certain tax rules.

Estoppel:  A doctrine of law that stops one from later denying facts which that person once acknowledged were true and others accepted on good faith.

Estoppel Certificate:  A written statement setting forth certain facts about a piece of real estate, such as the precise amount of indebtedness remaining.

Eviction:  Legal proceeding by a lessor (landlord) to recover possession of property.

Exchange:  Like-kind property used in a trade or business or held as an investment can be exchanged tax-free, subject to certain conditions (See Section 1031 of the IRS Tax Code.)

Exclusive Listing:  A written contract that gives a licensed real estate agent the exclusive right to sell a property for a specified time, but reserving the owner\'s right to sell the property alone without the payment of a commission.

Exculpatory Clause:  A clause in contract holding one party harmless in the event of some default.  In a lease, the exculpatory clause relieves the landlord of liability for personal injury to tenants or damage to tenants' property.   In a mortgage, it allows the borrower to surrender the property to the lender without personal liability for the loan.