Real Estate Legal Terms to Know

by Renee Marie Jordan 10/06/2019

Every industry has its specific vocabulary. Real estate is no exception. If you are new to the home-buying market, you may find yourself stumped by the abbreviations, lingo, acronyms, and unfamiliar jargon commonly used in real estate sales materials, online listings, contracts, and the like. Do not be confused. Learn the terms so you can read that paperwork with ease. Abatement is a real estate term with which you need to become familiar.

Abatement

In standard legal terms, abatement means the removal or diminishment of something. In residential real estate, this term usually refers to property tax in the form of a property tax abatement. Since property taxes become ongoing annual homeowner expenses even after you entirely pay off a mortgage, being able to access a property tax abatement is an asset. For example, if a municipality such as a city, county, state, or other property-tax entity offers you a tax reduction, it could reduce the monthly housing costs by up to five percent during the period of abatement.

Property tax abatement programs can make it easier to qualify for a larger mortgage by reducing your income/debt to housing cost ratio. Also, while the reduction is effective, it adds value to your home when you're ready to put it on the market. 

Certain tax abatements are for one-time improvements to an existing property. These could be for upgrades such as:

- Converting non-residential buildings to residential use
- Installing environmentally friendly additions
- Renovations that increase property value

Typically, these improvements must conform to the requirements, and follow building codes and permitting processes. If you've planned to purchase a home for renovation purposes, make sure that your agent knows so that you get advice on any reductions in effect for the houses you consider.

Along with state or local abatements, there are some federal tax incentives for restoration and preservation of homes designated as historical or with public value. Other abatements may be for qualified newly constructed homes.

Some municipalities have property tax abatements that are effective for several years. Most often these are in place to attract buyers to redeveloping neighborhoods or areas that are under renewal, in the process of revitalization, or are in lower demand. The specific qualification requirements for tax abatements differ, so be sure to talk with your agent about access to potential abatements when house-hunting.

Asbestos and Lead-Paint

Other uses for the term abatement relating to real estate include some expenses associated with buying an older property or a property's repurposing from commercial to residential. For example, when purchasing a home built prior to 1978, any renovations or improvements might need to conform to lead paint abatement requirements. A potential abatement cost is for asbestos removal. Before the 1970s, asbestos featured regularly as insulation in ducts and pipes, concrete exterior siding, floor tiles, as vermiculite attic insulation, in wall or ceiling acoustical tiles. The Environmental Protection Agency oversees asbestos removal, so if you plan to make changes to a property older than the 70s, your realtor can help you navigate all the requirements of asbestos abatement and may recommend qualified professional asbestos removal contractors. Certain older homes might be eligible for asbestos or lead paint removal grants. 

Your agent can help you determine for which programs the home you are considering buying might qualify. Be sure to ask them about both tax abatements and asbestos or lead paint abatement grant programs.

About the Author
Author

Renee Marie Jordan

Renee Marie Jordan is a Third Generation Realtor®, who started out her career in residential lending. Jordan Real Estate was established by her grandmother, Jean Kotwitz, who was one of the first female real estate brokers in Solano County! The company was then passed down to her mother, Diane Jordan, over 40 years ago. Renee Marie then took over the company 24 years ago and in 2015 joined forces with RE/MAX Gold. 

Regarded as one of Northern California’s most dependable brokers, Renee Marie has gained industry respect for creating a successful brokerage company. Renee Marie’s unique blend of negotiating expertise, innovative thinking and belief that the client always comes first, has resulted in an extensive client base with many satisfied homeowners. Renee Marie specializes in residential sales, first time buyers, short sale properties, luxury properties, investment properties, foreclosures, 1031 exchanges, and has been the HUD specialist for Solano County since 2009. 

Renee Marie gets to the heart of her clients wants and needs. She attributes a great deal of her success to the many referrals she receives from clients who appreciate the care and thoughtfulness she puts into every transaction. Friends and family members can count on the same excellent service when they are referred to Renee Marie.