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ABSTRACT OF TITLE
The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.
ACCELERATION CLAUSE
The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.
ACCESSION
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams.
ACCRETION
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea.
ACCRUED ITEMS
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
ACKNOWLEDGEMENT
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.
ACRE
A measure of land equal to 43,560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares.
ACTUAL EVICTION
The legal process that results in the tenant's being physically removed from the leased premises.
ACTUAL NOTICE
Express information or fact; that which is known; direct knowledge.
ADJUSTABLE-RATE MORTGAGE (ARM)
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
AD VALOREM TAX
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
ADVERSE POSSESSION
The actual, open, notorious, hostile and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title.
AFFIDAVIT OF TITLE
A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor
(I) identifies himself or herself and indicates marital status,
(2) certifies that since the examination of the title on the date of the contracts no defects have occurred in the title and
(3) certifies that he or she is in possession of the property (if applicable).
AGENCY
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
AGENCY COUPLED WITH AN INTEREST
An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).
AGENT
One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.
AIR LOT
A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
AIR RIGHTS
The right to use the open space above a property, usually allowing the surface to be used for another purpose.
ALIENATION
The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.
ALIENATION CLAUSE
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect this clause prevents the borrower from assigning the debt without the lender's approval.
ALLODIAL SYSTEM
A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States.
AMERICAN LAND TITLE ASSOCIATION (ALTA) POLICY
A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.
AMORTIZED LOAN
A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.
ANNUAL PERCENTAGE RATE (APR)
The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.
ANTICIPATION
The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.
ANTITRUST LAWS
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).
APPRAISAL
An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
APPRECIATION
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
APPURTENANCE
A right, privilege or improvement belonging to, and passing with, the land.
APPURTENANT EASEMENT
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.
ASSEMBLAGE
The combining of two or more adjoining lots into one larger tract to increase their total value.
ASSESSMENT
The imposition of a tax, charge or levy, usually according to established rates.
ASSIGNMENT
The transfer in writing of interest in a bond, mortgage, lease or other instrument.
ASSUMPTION OF MORTGAGE
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
ATTACHMENT
The act of taking a person's property into legal custody by writ or other judicial order to hold it available for application to that person's debt to a creditor.
ATTORNEY'S OPINION OF TITLE
An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership.
AUTOMATIC EXTENSION
A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
AVULSION
The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream.
B
BALANCE
The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.
BALLOON PAYMENT
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
BARGAIN AND SALE DEED
A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.
BASE LINE
The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
BASIS
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
BENCH MARK
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
BENEFICIARY
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn.
(2) A lender in a deed of trust loan transaction.
BILATERAL CONTRACT
See contract
BINDER
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction.
BLANKET LOAN
A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien upon repayment of a definite portion of the debt.
BLOCKBUSTING
The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.
BLUE-SKY LAWS
Common name for those state and federal laws that regulate the registration and sale of investment securities.
BOOT
Money or property given to make up any difference in value or equity between two properties in an exchange.
BRANCH OFFICE
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
BREACH OF CONTRACT
Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.
BROKER
One who acts as an intermediary on behalf of others for a fee or commission.
BROKERAGE
The bringing together of parties interested in making a real estate transaction.
BUFFER ZONE
A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use (e.g., residential from commercial).
BUILDING CODE
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
BUILDING PERMIT
Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.
BULK TRANSFER
See Uniform Commercial Code
BUNDLE OF LEGAL RIGHTS
The concept of land ownership that includes ownership of all legal rights to the land--for example, possession, control within the law and enjoyment.
BUYDOWN
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
BUYER-AGENCY AGREEMENT
A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
C
CAPITAL GAIN
Profit earned from the sale of an asset.
CAPITALIZATION
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as
Income -------- = Value Rate
CAPITALIZATION RATE
The rate of return a property will produce on the owner's investment.
CASH FLOW
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results .
CASH RENT
In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to sharecropping.
CAVEAT EMPTOR
A Latin phrase meaning "Let the buyer beware."
CERTIFICATE OF REASONABLE VALUE (CRV)
A form indicating the appraised value of a property being financed with a VA loan.
CERTIFICATE OF SALE
The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.
CERTIFICATE OF TITLE
A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
CHAIN OF TITLE
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
CHANGE
The appraisal principle that holds that no physical or economic condition remains constant.
CHATTEL
See personal property
CIVIL RIGHTS ACT OF 1866
An act that prohibits racial discrimination in the sale and rental of housing.
CLOSING STATEMENT
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
CLOUD ON TITLE
Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
CLUSTERING
The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.
CODE OF ETHICS
A written system of standards for ethical conduct.
CODICIL
A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will.
COINSURANCE CLAUSE
A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
COMMINGLING
The illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.
COMMISSION
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
COMMON ELEMENTS
Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
COMMON LAW
An unwritten body of law based on general custom in England and used to an extent in the United States.
COMMUNITY
PROPERTY
In some western and southwestern states, a form of ownership under which property acquired during a marriage is presumed to be owned jointly unless acquired as separate property of either spouse.
COMPARABLES
An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.
COMPETITION
The appraisal principle that states that excess profits generate competition.
COMPETITIVE MARKET ANALYSIS (CMA)
A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location, style and amenities.
COMPREHENSIVE PLAN
See master plan
CONDEMNATION
The determination that a building is not fit for use or is dangerous and must be destroyed; the taking of private property for a public purpose through an exercise of the right of eminent domain.
CONDITIONAL-USE PERMIT
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
CONDOMINIUM
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.
CONFESSION OF JUDGEMENT CLAUSE
Permits judgment to be entered against a debtor without the creditor's having to institute legal proceedings.
CONFORMITY
The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
CONSIDERATION
(1) That received by the grantor in exchange for his or her deed.
(2) Something of value that induces a person to enter into a contract.
CONSTRUCTION LOAN
See interim financing
CONSTRUCTIVE EVICTION
Actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
CONSTRUCTIVE NOTICE
Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
CONTINGENCY
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
CONTRACT
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed.
CONTRIBUTION
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
CONVENTIONAL LOAN
A loan that requires no insurance or guarantee.
CONVEYANCE
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.
COOPERATING BROKER
See listing broker
COOPERATIVE
A residential multi-unit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease.
CO-OWNERSHIP
Title ownership held by two or more persons.
CORPORATION
An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
CORRECTION LINES
Provisions in the rectangular survey (government survey) system made to compensate for the curvature of the earth's surface. Every fourth township line (at 24-mile intervals) is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full six miles.
COST APPROACH
The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation.
COST RECOVERY
An Internal Revenue Service term for depreciation.
COUNTEROFFER
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
COVENANT
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed.
COVENANT OF QUIET ENJOYMENT
The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant's possession or use of the property.
CREDIT
On a closing statement, an amount entered in a person's favor--either an amount the party has paid or an amount for which the party must be reimbursed.
CURTEST
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.
D
DATUM
A horizontal plane from which heights and depths are measured.
DEBIT
On a closing statement, an amount charged; that is, an amount that the debited party must pay.
DECEDENT
A person who has died.
DEDICATION
The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.
DEED
A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
DEED IN LIEU OF FORECLOSURE
A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.
DEED IN TRUST
An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement.
DEED OF TRUST
See trust deed
DEED OF TRUST LIEN
See trust deed lien
DEED RESTRICTION
Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions, for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent buildings from being used for specific purposes or even from being used at all.
DEFAULT
The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.
DEFEASANCE CLAUSE
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
DEFEASIBLE FEE ESTATE
An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event. There are two categories of defeasible fee estates: fee simple on condition precedent (fee simple determinable) and fee simple on condition subsequent.
DEFICIENCY JUDGEMENT
Point levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
DEMAND
The amount of goods people are willing and able to buy at a given price; often coupled with supply.
DENSITY ZONING
Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.
DEPRECIATION
(I) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence.
(2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.
DESCENT
Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.
DEVELOPER
One who attempts to put land to its most profitable use through the construction of improvements.
DEVISE
A gift of real property by will. The donor is the devisor, and the recipient is the devisee.
DISCOUNT POINT
A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan.
DOMINANT TENEMENT
A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.
DOWER
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime the right is only a possibility of an interest; upon his death it can become an interest in land.
DUAL AGENCY
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.
DUE-ON-SALE CLAUSE
A provision in the mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.
DURESS
Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.
E
EARNEST MONEY
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
EASEMENT
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.
EASEMENT BY CONDEMNATION
An easement created by the government or government agency that has exercised its right under eminent domain.
EASEMENT BY NECESSITY
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.
EASEMENT BY PRESCRIPTION
An easement acquired by continuous, open and hostile use of the property for the period of time prescribed by state law.
EASEMENT IN GROSS
An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an easement in gross.
ECONOMIC LIFE
The number of years during which an improvement will add value to the land.
EMBLEMENTS
Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales.
EMINENT DOMAIN
The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.
EMPLOYEE
Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of employees. See also independent contractor.
EMPLOYMENT CONTRACT
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement.
ENABLING ACTS
State legislation that confers zoning powers on municipal governments.
ENCROACHMENT
A building--or some portion of it--a wall or fence for instance, that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
ENCUMBRANCE
Anything, such as a mortgage, tax, or judgment lien, an easement, a restriction on the use of the land or an outstanding dower right that may diminish the value or use and enjoyment of a property.
EQUAL CREDIT OPPORTUNITY ACT (ECOA)
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.
EQUALIZATION
The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.
EQUALIZATION FACTOR
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.
EQUITABLE LIEN
See statutory lien
EQUITABLE RIGHT OF REDEMPTION
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
EQUITABLE TITLE
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
EQUITY
The interest or value that an owner has in property over and above any indebtedness.
EROSION
The gradual wearing away of land by water, wind and general weather conditions; the diminishing of property by the elements.
ESCHEAT
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned.
ESCROW
The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.
ESCROW ACCOUNT
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction.
ESCROW INSTRUCTIONS
A document that sets forth the duties of the escrow agent, as well as the requirements and obligations of the parties, when a transaction is closed through an escrow.
ESTATE (TENANCY) AT SUFFERANCE
The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
ESTATE (TENANCY) AT WILL
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
ESTATE (TENANCY) FOR YEARS
An interest for a certain, exact period of time in property leased for a specified consideration.
ESTATE (TENANCY) FROM PERIOD TO PERIOD
An interest in leased property that continues from period to period, week to week, month to month or year to year.
ESTATE IN LAND
The degree, quantity, nature and extent of interest a person has in real property.
ESTATE TAXES
Federal taxes on a decedent's real and personal property.
ESTOPPEL
Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent, and a third person relies on that representation.
ESTOPPEL CERTIFICATE
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
ETHICS
The system of moral principles and rules that becomes standards for professional conduct.
EVICTION
A legal process to oust a person from possession of real estate.
EVIDENCE OF TITLE
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
EXCHANGE
A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate).
EXCLUSIVE-AGENCY LISTING
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.
EXCLUSIVE RIGHT-TO-SELL LISTING
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner or another broker.
EXECUTED CONTRACT
A contract in which all parties have fulfilled their promises and thus performed the contract.
EXECUTION
The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.
EXECUTORY CONTRACT
A contract under which something remains to be done by one or more of the parties.
EXPRESS AGREEMENT
An oral or written contract in which the parties state the contract's terms and express their intentions in words.
EXPRESS CONTRACT
See express agreement
EXTERNAL DEPRECIATION
Reduction in a property's value caused by outside factors (those that are off the property).
F
FAIR HOUSING ACT
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status and national origin.
FANNIE MAE
See Federal National Mortgage Association (FNMA)
FARMER'S HOME ADMINISTRATION (FmHA)
An agency of the federal government that provides credit assistance to farmers and other individuals who live in rural areas.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)
An independent federal agency that insures the deposits in commercial banks.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
FEDERAL RESERVE SYSTEM
The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates.
FEE SIMPLE ABSOLUTE
The maximum possible estate or right of ownership of real property, continuing forever.
FEE SIMPLE DEFEASIBLE
See defeasible fee estate
FEUDAL SYSTEM
A system of ownership usually associated with precolonial England, in which the king or other sovereign is the source of all rights. The right to possess real property was granted by the sovereign to an individual as a life estate only.
UPON THE DEATH OF THE INDIVIDUAL
Title passed back to the sovereign, not to the decedent's heirs.
FHA LOAN
A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA's regulations.
FIDUCIARY
One in whom trust and confidence is placed; a reference to a broker employed under the terms of a listing contract or buyer agency agreement.
FIDUCIARY RELATIONSHIP
A relationship of trust and confidence, as between trustee and beneficiary, attorney and client or principal and agent.
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT
(FIRREA)
This act restructured the savings and loan association regulatory system; enacted in response to the savings and loan crisis of the 1980s.
FINANCING STATEMENT
See Uniform Commercial Code
FISCAL POLICY
The government's policy in regard to taxation and spending programs. The balance between these two areas determines the amount of money the government will withdraw from or feed into the economy, which can counter economic peaks and slumps.
FIXTURE
An item of personal property that has been converted to real property by being permanently affixed to the realty.
FORECLOSURE
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.
FRACTIONAL SECTION
A parcel of land less than 160 acres, usually found at the edge of a rectangular survey.
FRAUD
Deception intended to cause a person to give up property or a lawful right.
FREDDIE MAC
See Federal Home Loan Mortgage Corporation (FHLMC)
FREEHOLD ESTATE
An interest in land which permits the owner to enjoy possession of real estate during his life without interference from others.
FRONT FOOTAGE
The measurement of a parcel of land by the number of feet of street or road frontage.
FUNCTIONAL OBSOLESCENCE
A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.
FUTURE INTEREST
A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of reentry.
G
GAP
A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.
GENERAL AGENT
One who is authorized by a principal to represent the principal in a specific range of matters.
GENERAL LIEN
The right of a creditor to have all of a debtor's property-both real and personal-sold to satisfy a debt.
GENERAL
PARTNERSHIP
In a general partnership, all the partners participate in the operation and management of the business and share full liability for business losses and obligations.
GENERAL WARRANTY DEED
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
GINNIE MAE
See Government National Mortgage Association (GNMA)
GOVERNMENT CHECK
The 24-mile-square parcels composed of 16 townships in the rectangular (government) survey system of legal description.
GOVERNMENT LOT
Fractional sections in the rectangular (government) survey system that are less than one quarter-section in area.
GOVERNMENT NATIONAL MORTGAGE ASSOCAITION (GNMA)
A government agency that plays an important role in the secondary mortgage market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans.
GOVERNMENT SURVEY SYSTEM
See rectangular (government) survey system.
GRADUATED-PAYMENT
MORTGAGE (GPM)
A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term.
GRANTEE
A person who receives a conveyance of real property from a grantor.
GRANTING CLAUSE
Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant," "grant," "grant, bargain and sell" or the like.
GRANTOR
The person transferring title to or an interest in real property to a grantee.
GROSS
INCOME MULTIPLIER
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value.
GROSS
LEASE
A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases.
GROSS
RENT MULTIPLIER (GRM)
The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.
GROUND
LEASE
A lease of land alone, sometimes secured by improvements placed on the land. Also called a land lease, the ground lease is a means used to separate the ownership of the land from the ownership of the buildings and improvements constructed on the land.
GROWING-EQUITY
MORTGAGE (GEM)
A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan.
H
HABENDUM CLAUSE
That part of a deed beginning with the words "to have and to hold," following the grantor is conveying.
HEIR
A person who inherits under a will or a person who succeeds to property by the state laws of descent if the decedent dies intestate.
HIGHEST
AND BEST USE
The possible use of a property that would produce the greatest net income and thereby develop the highest value.
HOLDOVER
TENANCY
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law.
HOLOGRAPHIC
WILL
A will that is written, dated and signed in the testator's handwriting, but not witnessed. Some states consider a holographic will to be valid even though it was not witnessed, presumably on the theory that the handwriting can be analyzed to verify authenticity and demonstrate competency.
HOME
EQUITY LOAN
A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.
HOMEOWNER'S
INSURANCE POLICY
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks.
HOMESTEAD
A statutory exemption of real property used as a home from the claims of certain creditors and judgments up to a specified amount; requires a declaration of homestead be completed and filed with the county recorder's office.
HYPOTHECATE
To pledge real or personal property as security for a loan or other obligation without surrendering possession of the property. The borrower retains the rights of control and possession, and the lender secures an underlying equitable right in the pledged property.
I
IMPLIED
AGREEMENT
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
IMPLIED CONTRACT
An implied contract is one in which some of the terms are not expressed in writing.
IMPLIED WARRANTY OF HABITABILITY
Implied warranty of habitability is a legal doctrine that requires landlords to offer and maintain livable premises for their tenants.
IMPROVEMENT
(1) Any structure, usually privately owned, erected on a site to enhance the value of the property for example, building a fence or a driveway.
(2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.
INCOME APPROACH
The income approach is one of three methods appraisers use to establish property values.
INCORPOREAL RIGHT
A nonpossessory right in real estate; for example, an easement or a right-of-way.
INDEPENDENT CONTRACTOR
Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and social security and income taxes and receives no employee benefits. Most real estate salespeople are independent contractors.
INDEX METHOD
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs.
INFLATION
The gradual reduction of the purchasing power of the dollar, usually related directly to the increases in the money supply by the federal government.
INHERITANCE TAXES
State-imposed taxes on a decedent's real and personal property.
INSTALLMENT CONTRACT
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may be not until final payment. Also called a contract for deed or articles of agreement for warranty deed.
INSTALLMENT SALE
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.
INTEREST
A charge made by a lender for the use of money.
INTERIM FINANCING
A short-term loan usually made during the construction phase of a building project (in this case often referred to as a construction loan).
INTERSTATE LAND SALES FULL DISCLOSURE ACT
A federal law that regulates the sale of certain real estate in interstate commerce.
INTESTATE
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of descent.
INTRINSIC VALUE
An appraisal term referring to the value created by a person's personal preferences for a particular type of property.
INVESTMENT
Money directed toward the purchase, improvement and development of an asset in expectation of income or profits.
INVOLUNTARY ALIENATION
See alienation
INVOLUNTARY LIEN
A lien placed on property without the consent of the property owner.
J
JOINT TENANCY
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the decedent's interest passes to the surviving joint tenant or tenants by the right of survivorship.
JOINT VENTURE
A joint venture is a legal organization drafted to provide for the sharing of risks and rewards in an enterprise or project co-owned and operated for mutual benefit by two or more business partners.
JUDGEMENT
The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
JUDICIAL PRECEDENT
In law, the requirements established by prior court decisions.
JUNIOR LIEN
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.
L
LATCHES
Latches is a Common Law term involving the passage of time vs the timely right for a plaintiff to bring a damage action before a court of competent jurisdiction.
LAND
Land is real estate property to which improvements such as buildings can be added
LAND CONTRACT
Land contract is an Agreement made and entered into by parties for the disposition of land and shall be binding upon each of the parties.
LEASE
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state law leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
LEASEHOLD ESTATE
A leasehold estate is an ownership interest in land in which a lessee or a tenant holds real property by some form of title (usually a lease accompanied by the payment of reny) from a lessor or landlord.
LEASE OPTION
A lease under which the tenant has the right to purchase the property either during the lease term or at its end.
LEASE PURCHASE
The purchase of real property, the consummation of which is preceded by a lease, usually long-term. Typically done for tax or financing purposes.
LEGACY
A disposition of money or personal property by will.
LEGAL DESCRIPTION
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.
LEGALLY COMPETENT PARTIES
People who are recognized by law as being able to contract with others; those of legal age and sound mind.
LEVERAGE
The use of borrowed money to finance an investment.
LEVY
To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To Levy An Execution is to officially seize the property of a person in order to satisfy an obligation.
LICENSE
(I) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson.
(2) The revocable permission for a temporary use of land--a personal right that cannot be sold.
LIEN
A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
LIEN THEORY
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
LIFE
Cycle costing In property management, comparing one type of equipment to another based on both purchase cost and operating cost over its expected useful lifetime.
LIFE ESTATE
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
LIFE TENANT
A person in possession of a life estate.
LIMITED PARTNERSHIP
See partnership
LIQUIDATED DAMAGES
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
LIQUIDITY
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.
LIS PENDENS
A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
LISTING AGREEMENT
A contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.
LISTING BROKER
The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
LITTORAL RIGHTS
(I) A landowner's claim to use water in large navigable lakes and oceans adjacent to his or her property.
(2) The ownership rights to land bordering these bodies of water up to the highwater mark.
LOAN ORIGINATION FEE
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
LOAN-TO-VALUE RATIO
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
LOT-AND-BLOCK (RECORDED PLAT) SYSTEM
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision. as specified on a recorded subdivision plat.
M
MANAGEMENT AGREEMENT
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority.
MARKET
A place where goods can be bought and sold and a price established.
MARKETABLE TITLE
Good or clear title, reasonably free from the risk of litigation over possible defects.
MARKET VALUE
The most probable price property would bring in an arm's-length transaction under normal conditions on the open market.
MASTER PLAN
A comprehensive plan to guide the long-term physical development of a particular area.
MECHANIC'S LIEN
A statutory lien created in favor of contractors, laborers and materialmen who have performed work or furnished materials in the erection or repair of a building.
MERIDIAN
One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (government) survey system of property description.
METES-AND-BOUNDS DESCRIPTION
A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.
MILL
One-tenth of one cent. Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would be $0.052 tax for each dollar of assessed valuation of a property.
MINOR
Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.
MONETARY POLICY
Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.
MONTH-TO-MONTH TENANCY
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month.
MONUMENT
A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.
MORTGAGE
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
MORTGAGE BANKER
Mortgage loan companies that originate, service and sell loans to investors.
MORTGAGE BROKER
An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.
MORTGAGEE
A lender in a mortgage loan transaction.
MORTGAGE LIEN
A lien or charge on the property of a mortgagor that secures the underlying debt obligations.
MORTGAGOR
A borrower in a mortgage loan transaction.
MULTIPERIL POLICIES
Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability and casualty.
MULTIPLE-LISTING CLAUSE
A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.
MULTIPLE LISTING SERVICE (MLS)
A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most multiple-listing services accept exclusive-right-to-sell or exclusive agency listings from their member brokers.
N
NEGOTIABLE INSTRUMENT
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
NET LEASE
A lease requiring the tenant to pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.
NET LISTING
A listing based on the net price the seller will receive if the property is sold. Under a net listing the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.
NET OPERATING INCOME (NOI)
The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.
NONCONFORMING USE
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
NON-HOMOGENEITY
A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.
NOVATION
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
NUNCUPATIVE WILL
An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing.
O
OBSOLESCENCE
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
OCCUPANCY PERMIT
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
OFFER AND ACCEPTANCE
Two essential components of a valid contract; a "meeting of the minds."
OFFICE OF THRIFT SUPERVISION (OTS)
Monitors and regulates the savings and loan industry. OTS was created by FIRREA.
OPEN-END LOAN
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
OPEN LISTING
A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing and able buyer before the property is sold by the seller or another broker.
OPTION
An agreement to keep open for a set period an offer to sell or purchase property.
OPTION LISTING
Listing with a provision that gives the listing broker the right to purchase the listed property.
OSTENSIBLE AGENCY
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.
P
PACKAGE LOAN
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.
PAROL EVIDENCE RULE
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.
PARTICIPATION MORTGAGE
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.
PARTITION
The division of covenants' interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.
PARTNERSHIP
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity. A genera/ partnership is a typical form of joint venture in which each general partner shares in the administration, profits and losses of the operation. A limited partnership is a business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments.
PARTY WALL
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.
PATENT
A grant or franchise of land from the United States government.
PAYMENT CAP
The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.
PAYOFF STATEMENT
See reduction certificate
PERCENTAGE LEASE
A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
PERCOLATION TEST
A test of the soil to determine if it will absorb and drain water adequately to use aseptic system for sewage disposal.
PERIODIC ESTATE (TENANCY)
See estate from period to period
PERSONAL PROPERTY
Items, called chattels, that do not fit into the definition of real property; movable objects.
PHYSICAL DETERIORATION
A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
PLANNED UNIT DEVELOPMENT (PUD)
A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision.
PLAT MAP
A map of a town, section or subdivision indicating the location and boundaries of individual properties.
PLOTTAGE
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
POINT OF BEGINNING (POB)
In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel; all metes-and- bounds descriptions must follow the boundaries of the parcel back to the point of beginning.
POLICE POWER
The government's right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare.
POWER OF ATTORNEY
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.
PREPAID ITEMS
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which he or she must be reimbursed by the buyer.
PREPAYMENT PENALTY
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
PRICE-FIXING
See antitrust laws
PRIMARY MORTGAGE MARKET
The mortgage market in which loans are originated and consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.
PRINCIPAL
(I) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits.
(2) The original amount (as in a loan) of the total due and payable at a certain date.
(3) A main party to a transaction--the person for whom the agent works.
PRINCIPAL MERIDIAN
The main imaginary line running north and south and crossing a base line at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
PRIOR APPROPRIATION
A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.
PRIORITY
The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.
PRIVATE MORTGAGE INSURANCE (PMI)
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
PROBATE
A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are.
PROCURING CAUSE
The effort that brings about the desired result. Under an open listing the broker who is the procuring cause of the sale receives the commission.
PROGRESSION
An appraisal principle that states that, between dissimilar properties. the value of the lesser-quality property is favorably affected by the presence of the better-quality property.
PROMISSORY NOTE
A financing instrument that states the terms of the underlying obligation, is signed by its maker and is negotiable (transferable to a third party).
PROPERTY MANAGER
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting.
PROPERTY REPORTS
The mandatory federal and state documents compiled by subdividers and developers to provide potential purchasers with facts about a property prior to their purchase.
PROPRIETARY LEASE
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.
PRORATIONS
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
PROTECTED CLASS
Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation. Currently includes ethnic minorities, women, religious groups, the handicapped and others.
PUFFING
Exaggerated or superlative comments or opinions .
PUR AUTRE VIE "FOR THE LIFE OF ANOTHER."
A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
PURCHASE-MONEY MORTGAGE (PMM)
A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.
PYRAMIDING
The process of acquiring additional properties by refinancing properties already owned and investing the loan proceeds in additional properties.
Q
QUANTITY-SURVEY METHOD
The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction.
QUIET TITLE
Court action to remove a cloud on the title.
QUITCLAIM DEED
A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.
R
RANGE
A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description.
RATE CAP
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.
RATIFICATION
Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.
READY, WILLING AND ABLE BUYER
One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.
REAL ESTATE LAND
A portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
REAL ESTATE INVESTMENT SYNDICATE
See syndicate
REAL ESTATE INVESTMENT TRUST (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
REAL ESTATE LICENSE LAW
State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate.
REAL ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC)
A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.
REAL ESTATE RECOVERY FUND
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
REAL PROPERTY
The interests, benefits and rights inherent in real estate ownership.
REALTOR(R)
A registered trademark term reserved for the sole use of active members of local REALTOR(r) boards affiliated with the National Association of REALTORS(r).
RECONCILIATION
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost and income approaches to arrive at a final estimate of market value for the subject property.
RECONVEYANCE DEED
A deed used by a trustee under a deed of trust to return title to the trustor.
RECORDING
The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
RECTANGULAR (GOVERNMENT) SURVEY SYSTEM
A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.
REDEMPTION
The right of a defaulted property owner to recover his or her property by curing the default.
REDEMPTION PERIOD
A period of time established by state law during which a property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sales price, interest and costs. Many states do not have mortgage redemption laws.
REDLINING
The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.
REDUCTION CERTIFICATE (PAYOFF STATEMENT)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interests.
REGRESSION
An appraisal principle that states that, between dissimilar properties, the value of the better quality property is affected adversely by the presence of the lesser-quality property.
REGULATION Z
Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.
RELEASE DEED
A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
REMAINDER INTEREST
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
RENT
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
RENT SCHEDULE
A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.
REPLACEMENT COST
The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.
REPRODUCTION COST
The construction cost at current prices of an exact duplicate of the subject property.
RESOLUTION TRUST CORPORATION
The organization created by FIRREA to liquidate the assets of failed savings and loan associations.
RESTRICTIVE COVENANTS
A clause in a deed that limits the way the real estate ownership may be used.
REVERSE-ANNUITY MORTGAGE (RAM)
A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.
REVERSIONARY INTEREST
The remnant of an estate that the grantor holds after granting a life estate to another person.
REVERSIONARY RIGHT
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
RIGHT OF FIRST REFUSAL
Clause in a lease which gives the lesee (tenant) the right to purchase the rented property if during the term of the lease the lessor (landlord) receives an offer to purchase from a buyer. Usually the lessee must purchase on the terms and conditions of the buyer's offer.
RIGHT OF SURVIVORSHIP
See joint tenancy
RIGHT-OF-WAY
The right given by one landowner to another to pass over the land, construct a roadway or use as a pathway, without actually transferring ownership.
RIPARIAN RIGHTS
An owner's rights in land that borders on or includes a stream, river or lake. These rights include access to and use of the water.
RISK MANAGEMENT
Evaluation and selection of appropriate property and other insurance.
RULES AND REGULATIONS
Real estate licensing authority orders that govern licensees' activities; they usually have the same force and effect as statutory law.
S
SALE AND LEASEBACK
A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.
SALES COMPARISON APPROACH
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
SALESPERSON
A person who performs real estate activities while employed by or associated with a licensed real estate broker.
SATISFACTION OF MORTGAGE
A document acknowledging the payment of a mortgage debt.
SECONDARY MORTGAGE MARKET
A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.
SECTION
A portion of township under the rectangular (government) survey system. A township is divided into 36 sections, numbered one through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.
SECURITY AGREEMENT
See Uniform Commercial Code
SECURITY DEPOSIT
A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.
SEPARATE PROPERTY
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage.
SERVIENT TENEMENT
Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a servient estate.
SETBACK
The amount of space local zoning regulations require between a lot line and a building line.
SEVERALTY
Ownership of real property by one person only, also called sole ownership.
SEVERANCE
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
SHARECROPPING
In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop.
SHARED-APPRECIATION MORTGAGE (SAM)
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the borrower receives when the property is eventually sold.
SITUS
The personal preference of people for one area over another, not necessarily based on objective facts and knowledge.
SPECIAL AGENT
One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing and able buyer for a particular property.
SPECIAL ASSESSMENT
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.
SPECIAL WARRANTY DEED
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through or under the grantor but not otherwise."
SPECIFIC LIEN
A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
SPECIFIC PERFORMANCE
A legal action to compel a party to carry out the terms of a contract.
SQUARE-FOOT METHOD
The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.
STATUTE OF FRAUDS
That part of a state law that requires certain instruments, such as deeds, real estate sales contracts and certain leases, to be in writing to be legally enforceable.
STATUTE OF LIMITATIONS
That law pertaining to the period of time within which certain actions must be brought to court.
STATUTORY LIEN
A lien imposed on property by statute, a tax lien, for example--in contrast to an equitable lien, which arises out of common law.
STATUTORY REDEMPTION
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
STEERING
The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.
STRAIGHT-LINE METHOD
A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years of remaining useful life.
STRAIGHT (TERM) LOAN
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.
SUBAGENT
One who is employed by a person already acting as an agent. Typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement.
SUBDIVIDER
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.
SUBDIVISION
A tract of land divided by the owner, known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.
SUBDIVISION AND DEVELOPMENT ORDINANCES
Municipal ordinances that establish requirements for sub- divisions and development.
SUBDIVISION PLAT
See plat map
SUBLETTING
The leasing of premises by a lessee to a third party for part of the lessee's remaining term.
See also assignment.
SUBORDINATION
Relegation to a lesser position, usually in respect to a right or security.
SUBORDINATION AGREEMENT
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment and other liens under certain circumstances.
SUBROGATION
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue in order to re- cover any claims they have paid.
SUBSTITUTION
An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
SUBSURFACE RIGHTS
Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property.
SUIT FOR POSSESSION
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.
SUIT TO QUIET TITLE
A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.
SURETY BOND
A legal document issued to assure the completion of an act by another person.
SURFACE RIGHTS
A legal interest in the use or occupation of the top of land as opposed to subsurface or mineral rights.
SURVEY
A pictorial depiction of land and the improvements on it and shows boundary lines with measurements and bearings, buildings, easements, etc.
T
TACKING
Adding an extra period of time to the term of a contract.
TAXATION
To levy an assessment against, usually by government powers. Unpaid taxes usually form a special lien on property owned by the taxpayer, ahead of registered mortgages.
TAX DEED
The instrument of conveyance when a property is sold by a government body to pay for arrears of taxes.
TAX LIEN
A claim registered against a property by a government authority for non-payment of assessed taxes.
TAX SALE
Sale of property by a government body for non-payment of taxes, either by tender or auction.
TENANCY IN COMMON
Ownership of property in which several owners each own a stated portion of the property (a percentage). Each owner may deal with her portion of the property as she wishes (giving it away, mortgaging it, bequeathing it, etc.) and, upon her death, her share becomes part of her estate.
TESTATE
To die leaving a valid will: opposite meaning is to die intestate.
TESTATOR
The person who makes a will.
TIME IS OF THE ESSENCE
A standard statement in a contract which ensures that all dates and times of day noted in the contract are important and cannot be ignored by any of the parties without the consent of the others except in breach of the contract.
TIME SHARE
A form of joint ownership of property where numerous owners share title and enjoy use or occupation of the property according to a specific schedule.
TITLE
The legal term for one's ownership interest in land.
TITLE INSURANCE
A form of insurance contract which guarantees to indemnify an owner or mortgagee of property for damages suffered as a result of undiscovered title defects which arise later.
TITLE SEARCH
The act of examining in detail the public records relating to ownership of a parcel of land to ensure that the current owner has clear title, free of any liens, claims, mortgage or competing and adverse interests. Usually performed by a lawyer, qualified title searcher, or title isurance company on behalf of a proposed purchaser or mortgagee.
TITLE THEORY
Jurisdictions in which ownership of land is divided into two interests--legal title and equitable title When an owner registers a mortgage in favor of a lender, legal title is transferred to the lender while the owner retains equitable (or beneficial ) title. Once the mortgage is paid out, legal title is transferred back to the owner.
TORRENS SYSTEM
Developed in Australia, a system of the registration of interests in land in which documents are closely regulated, monitored, and examined by the recording authority to ensure that they are correct and that title is transferred without flaw. Property may not be transferred if uncorrected title defects exist.
TRUST DEED
An instrument of conveyance of title to property wherein the transferre will be holding the title to the property on behalf on another person.
TRUSTEE
A person who holds title to property on behalf of another.
U
UNILATERAL CONTRACT
An agreement to exchange payment for services, where payment becomes due only once the service has been successfully performed. A listing agreement for the sale of real property may be a unilateral contract.
USURY
The illegal act of charging extremely high interest rates on a loan.
V
VALID CONTACT
Legally binding; authorized
VARIANCE
An indulgence granted by a local zoning commission or authority to allow a non-conforming use of a property to continue.
VOIDABLE CONTRACT
A contract that may be treated as legally unenforceable at the option of a party (usually the injured party) but remains enforceable until that party exercises her option.
VOLUNTARY ALIENATION
Transfer of title to an asset with the consent of the owner.
VOLUNTARY LIEN
A cliam that is recorded/registered with the consent of the owner.
W
WASTE
Allowing or causing a property to suffer damage or undue wear and tear to the detriment of another person who has an interest in or claim to the property.
WILL
A written statement of a person's wishes for the disposition of that person's estate after their death.
WRAPAROUND LOAN
A secondary financing option in which new money borrowed is blended with money already owed and registered on title to the property. A second mortgage is registered as security for the new money but the old mortgage remains in existence and the rate of interest is a blend of the rate chargeable on the old mortgage and the rate chargeable on the newly borrowed money.
Z
ZONING ORDINANCE
A set of rules passed by local government which regulates the use of property according to its location within the municipality, placement of structures on the property, maximum floor area, mnimum lot area, minimim floor-to-lot area ratios, etc.
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