Construction Terminology

Construction Terms

Earnest Money
A sum of money paid by a potential purchaser as proof of her intention to complete the purchase transaction. Held in
trust, usually by the Listing Agent, and credited to Purchaser off purchase price. May be forfeited if Purchaser fails to
complete transaction.

Equity
Equity is the amount of money value of a property or an interest in a property in excess of claims or liens against it.


Escrow is usually money held in trust by a third party to be turned over to the grantee only upon fulfillment of a
condition. This could be proceeds from a loan closing that would be held in escrow until a particular condition is met.

Easement
The right of the owner of one parcel of land to use all or part of the land of another for a specific purpose. Runs with
the land. Requires one property to be in dominant position (enjoys the benefit of the easement) and one property to
be in servient position (is subject to the right).

Electrical Permit
City or county permit taken out by an electrical subcontractor in order to perform electrical work on a particular project.

Encroachment
The intrusion across the property line and into one property of an improvement to a neighboring property. May result
in a claim for adverse possession if the encroachment is unchallenged for a long period of time.

Encumbrance
Any right, interest or other claim against land which is registered on title and affects the owner's ability to sell the
property.

Escrow
Escrow is usually money held in trust by a third party to be turned over to the grantee only upon fulfillment of a
condition. This could be proceeds from a loan closing that would be held in escrow until a particular condition is met.

Estimate
The amount of labor, materials, and other costs that a contractor anticipates for a project as summarized in the
contractor's bid proposal for the project.
Category Construction Glossary
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