Flash Cards

Flashcards

Research consistently supports the use of flashcards as an effective tool for learning and retaining vocabulary words, both for native language development and second language acquisition. Here are key findings from the research:

Retrieval Practice Boosts Memory

Flashcards promote active recall, which is a form of retrieval practice. This method is more effective than passive review (like rereading).
Studies show that repeated retrieval strengthens memory more than additional study time.

Takeaway: Testing yourself with flashcards helps lock the words into long-term memory.

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Acceleration Clause

Definition

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 obligation

Accretion

Definition

The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea

Acre

Definition

A measure of land equal to 43,560 square feet

abstract of title

Definition

The condensed history of the recorded wnership of 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.

accelerated cost recovery system (ACRS)

Definition

Method for claiming tax deductions for certain property purchased before 1987 in which it was possible to claim greater deductions in the early years of ownership, gradually reducing the amount deducted in each year of useful life.

acceleration clause

Definition

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 obligation.

accession

Definition

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

Definition

The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.

accrued depreciation

Definition

Loss in a property's value resulting from physical deterioration, external depreciation, and functional obsolescence.

accrued items

Definition

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.

acknowledgment

Definition

A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

acre

Definition

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.

action to quiet title

Definition

A court action that establishes ownership when ownership cannot be traced through an unbroken chain of title.

actual eviction

Definition

The legal process that results in a tenant's being physically removed from leased premises.

actual notice

Definition

Express information or fact; that which is known; direct knowledge.

ad valorem tax

Definition

A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.

addendum

Definition

Any provision added to an existing contract without altering the content of the original. Must be signed by all parties.

adjustable-rate mortgage (ARM)

Definition

A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.

adjusted basis

Definition

See basis.

administrative law judge (ALJ)

Definition

The official who presides over a hearing involving a government agency and someone affected by a decision of that agency. The ALJ hears evidence, including the testimony of witnesses, and renders a decision.

administrator

Definition

A court-selected person who assists with the settlement of an estate of a person who died without leaving a will. A woman might be called an administratrix, although administrator is the term used most often to refer to either a man or a woman.

adverse possession

Definition

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

Definition

A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which grantors (1) identify themselves and indicate marital status, (2) certify that since the examination of the title, on the date of the contract no defects have occurred in the title, and (3) certify that they are in possession of the property (if applicable).

affiliated business arrangement (ABA)

Definition

Practice of one company offering a package of services to consumers.

agency

Definition

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

agency by ratification

Definition

An agency relationship created after the fact.

agent

Definition

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. A prospective property buyer may authorize a real estate broker to act as the buyer's agent to find a suitable property.

air lots

Definition

Designated airspace over a piece of land. An air lot, like surface property, may be transferred.

air rights

Definition

The right to use the open space above a property, usually allowing the surface to be used for another purpose.

alienation

Definition

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

Definition

The clause in a mortgage or deed of trust stating 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

Definition

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.

amendment

Definition

A change to the existing content of a contract (i.e.. if words or provisions are added to or deleted from the body of the contract). Must be initialed by all parties.

American Land Title Association (ALTA) policy

Definition

A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.

Americans with Disabilities Act (ADA)

Definition

Act addresses rights of individuals with disabilities in employment and public accommodations.

amortized loan

Definition

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.

annexation

Definition

Process of converting personal property into real property.

annual percentage rate (APR)

Definition

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 (TILA).

anticipation

Definition

The appraisal principle holding that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.

antitrust laws

Definition

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 (real estate professionals conspiring to set fixed compensation rates) or allocation of customers or markets (real estate professionals agreeing to limit their areas of trade or dealing to certain areas or properties). 124

appointed agency

Definition

See designated agency.

appraisal

Definition

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.

appraisal report

Definition

An opinion of a property's market value given to a lender or client with detailed market information.

appraiser

Definition

An independent person trained to provide an unbiased estimate of value.

Appraiser Independence Requirements (AIR)

Definition

Regulations issued by Fannie Mae that must be followed by appraisers to ensure accurate and objective appraisals.

appreciation

Definition

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

Definition

A right, privilege, or improvement belonging to, and passing with, the land; "runs with the land."

area

Definition

A level surface or piece of ground; the size of a surface; the amount of a two-dimensional object.

area preference

Definition

People's desire for one area over another, based on a number of factors such as history, reputation, convenience, scenic beauty, and location.

asbestos

Definition

A mineral once used in insulation and other materials that can cause respiratory diseases.

assemblage

Definition

The combining of two or more adjoining lots into one larger tract to increase their total value.

assessed value

Definition

The value set on property for taxation purposes.

assessment

Definition

The imposition of a tax, charge, or levy, usually according to established rates.

assessment equalization factor

Definition

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. An equalization factor may be applied to raise or lower assessments in a particular district or county.

assigned agency

Definition

See designated agency.

assignment

Definition

The transfer in writing of interest in a bond, mortgage, lease, or other instrument.

associate licensee

Definition

A licensed real estate salesperson who is employed by or associated with the broker to perform brokerage activities on behalf of or for the broker.

assumption of mortgage

Definition

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

Definition

The act of taking a person's erson'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

Definition

An abstract of title that an attorney has examined and has certified to be, in the attorney's opinion, an accurate statement of the facts concerning the property's ownership.

automatic extension clause

Definition

A listing agreement clause stating 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

Definition

The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.

balance

Definition

The appraisal principle stating 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

Definition

A final payment of a mortgag loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

bargain and sale deed

Definition

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.

base line

Definition

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

Definition

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.

benchmarks

Definition

Permanent reference marks or points established for use by surveyors in measuring differences in elevation.

beneficiary

Definition

(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

Definition

See contract. 190

binder

Definition

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

Definition

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

Definition

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

Definition

Common name for those state and federal laws that regulate the registration and sale of investment securities.

boot

Definition

Money or property given to make up any difference in value or equity between two properties in an exchange.

boycott

Definition

When individuals or businesses withhold their patronage to a business as a protest or to reduce competition.

branch office

Definition

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 professional.

breach of contract

Definition

Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

bring down

Definition

A second title search that is made after the closing and before any new documents are filed.

broker

Definition

One who acts as an intermediary on behalf of others for a fee or commission.

broker protection

Definition

clause Clause in a contract that protects a broker from losing a commission in the event a transaction is not completed or is intentionally delayed until after the listing expires.

brokerage

Definition

The bringing together of parties interested in making a real estate transaction.

broker's price opinion (BPO)

Definition

An opinion of real estate value commissioned by a bank or an attorney and provided by a broker.

brownfields

Definition

Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes.

budget comparison statement

Definition

Compares actual results with the original budget, often giving either percentages or a numerical variance of actual versus projected income and expenses.

buffer zone

Definition

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

Definition

An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

building permit

Definition

Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances.

building-related illness (BRI)

Definition

An illness due to air quality problems, typically toxic substances or pathogens; a clinically diagnosed condition. Symptoms include asthma, allergies, and hypersensitivity.

bundle of legal rights

Definition

The concept of land ownership that includes ownership of all legal rights to the land-possession, control within the law, enjoyment, exclusion, and disposition.

buydown

Definition

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 the seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.

buyer representation agreement

Definition

A principal-agent relationship in which the real estate professional acts on behalf of the buyer, usually as an agent, with fiduciary responsibilities to the buyer.

buyer's agent

Definition

A real estate professional who is under contract to locate property for a buyer and represent the buyer's interests in a transaction.

buyer's broker

Definition

A residential real estate professional who represents prospective buyers exclusively.

buyer's representative

Definition

A residential real estate professional who represents the prospective purchaser in a transaction, often through a sales associate of the broker. The buyer's representative who acts as a buyer's agent owes the buyer-principal the common-law or statutory agency duties.

capital gain

Definition

Profit earned from the sale of an asset.

capitalization

Definition

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 follows: income rate value.

capitalization rate

Definition

The rate of return a property will produce on the owner's investment.

capping

Definition

The process of laying two to four feet of soil over the top of a landfill site and then planting grass on it to enhance the aesthetic value and prevent erosion.

carbon monoxide (CO)

Definition

A colorless, odorless gas that occurs as a by-product of fuel combustion that may result in death in poorly ventilated areas.

cash flow

Definition

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 flow report

Definition

A monthly statement that details the financial status of the property.caveat emptor A Latin phrase meaning "let the buyer beware."caveat emptor A Latin phrase meaning "let the buyer beware

CC&RS

Definition

See covenants, conditions, and restrictions.

certificate of occupancy

Definition

Permission by the municipal inspector to occupy a completed building structure after being inspected and having complied with building codes.

certificate of reasonable value (CRV)

Definition

A formind icating the appraised value of a property being financed with a VA loan

certficate of sale

Definition

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

Definition

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

Definition

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

change

Definition

The appraisal principle that holds that no physical or economic condition remains constant.

chattel

Definition

See personal property.

chlorofluorocarbons (CFCs)

Definition

Nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine, such as air conditioners and refrigerators. CFCs are safe in application but cause ozone depletion.

Civil Rights Act of 1866

Definition

An act that prohibits racial discrimination in the sale and rental of housing.

client

Definition

The principal in an agency relationship or other form of representation.

closing

Definition

An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.

Closing Disclosure

Definition

The CFPB form that itemizes all charges that are normally paid by a borrower and a seller in connection with settlement, whether required by the lender or another party, or paid by the lender or any other person.

closing escrow

Definition

Process of settlement in which the buyer and the seller never meet; the paperwork is handled by an escrow agent.

closing statement

Definition

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 the title

Definition

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.

code of ethics

Definition

A written system of standards for ethical conduct.

codicil

Definition

A supplement or an addition to a will, executed with the same formalities as a will, which normally does not revoke the entire will.

coinsurance clause

Definition

A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80% of the property's actual replacement cost.

collateral

Definition

Something having value that is given to secure repayment of a debt.

commingling

Definition

The illegal act by a real estate professional of placing client or customer funds with personal funds. By law, real estate professionals are required to maintain a separate trust of escrow account for other parties' funds held temporarily by the real estate professional.

commission

Definition

Payment to a real estate professional 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

Definition

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 the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.

common law

Definition

The body of law based on custom, usage, and court decisions.

community association management

Definition

Provides a team of property managers, accounting staff, office staff, and property consultants to manage property.

community property

Definition

A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in the western U.S. states; the system was unknown under English common law.

Community Reinvestment Act of 1977 (CRA)

Definition

Under the act, which was revised most recently in 2008, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.

comparables

Definition

Properties used in an appraisal report that are substantially equivalent to the subject property.

comparative market analysis (CMA)

Definition

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.

competent party

Definition

A person who has the capacity to be engaged in a legal contract; being of sound mind and body.

competition

Definition

The appraisal principle stating that excess profits generate competition.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

Definition

A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to clean up toxic sites, bringing legal action against responsible parties, and funding the abatement of toxic sites. See abo Superfund.

Comprehensive Loss Underwriting Exchange (CLUE)

Definition

A database of consumer claims history that allows insurance companies to access prior claims information in the underwriting and rating process.

comprehensive plan

Definition

A comprehensive government plan to guide the long-term physical development of a particular area.

computerized loan origination (CLO)

Definition

An electronic network for handling loan applications through remote computer terminals linked to various lenders' computers.

conciliation

Definition

A form of alternative dispute resolution in which a conciliator meets with each of the parties separately to help them settle their differences voluntarily, without the formality of a hearing or trial.

condemnation

Definition

A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

conditional-use permit

Definition

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

Definition

The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, or a separate dwelling unit in a multiunit development, plus an undivided interest in the ownership of the common elements in the building or development, which are owned jointly with the other condominium unit owners.

confession of judgment clause

Definition

Permits judgment to be entered against a debtor without the creditor's having to institute legal proceedings.

conformity

Definition

The appraisal principle holding that the greater the similarity among properties in an area, the better they will hold their value.

consent

Definition

Expressing or implying permission, approval, or agreement of an action or decision.

consideration

Definition

(1) That received by the grantor in exchange for the deed. (2) Something of value that induces a person to enter into a contract.

construction loan

Definition

A short-term loan usually made during the construction phases of a building project (also referred to as interim financing)

constructive annexation

Definition

The combination of items into real property that are not fixed or fastened to the property.

constructive eviction

Definition

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

Definition

Notice given to the world by recorded documents. All persons 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.

consumer

Definition

An individual who purchases goods or services that are not for resale.

contingencies

Definition

Provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding.

contract

Definition

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.

contract broker

Definition

See nonagent.

contribution

Definition

The appraisal principle stating 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.

controlled business arrangement

Definition

An arrangement that offers consumers a package of services (e.g., a real estate firm, title insurance company, mortgage broker, and home inspection company).

conventional loan

Definition

A loan that requires no federally sponsored insurance or guarantee.

conversion

Definition

The illegal use of money received on behalf of the principal.

conveyance

Definition

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

Definition

See listing broker.

cooperative

Definition

A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of people living within the building who are the beneficial owners of the trust or shareholders of the corporation, each possessing a proprietary lease to a property unit.

co-ownership

Definition

Title ownership held by two or more persons. 50

corporation

Definition

An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entiry has continuous existence until it is dissolved according to legal procedures.

corrective maintenance

Definition

Correction of problems after they have occurred.

cost

Definition

The total amount of money incurred for products or services.

cost approach

Definition

The process of estimating the value appraiser's estimate of the reproduction or replacement cost of a property by adding to the estimated land value the of the building, less depreciation.

cost recovery

Definition

An Internal Revenue Service term for depreciation.

counteroffer

Definition

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

Definition

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

Definition

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.

covenants, conditions, and restrictions(CC&RS)

Definition

Private agreements that affect land use. They may be enforced by an owner of real estate that benefits from them and can be included in the seller's deed to the buyer.

credit

Definition

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.

curtesy

Definition

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 recognized other marital property rights and abolished curtesy.

customer

Definition

The third party or nonrepresented consumer for whom some level of service is provided.

datum

Definition

A horizontal plane from which heights and depths are measured.

debit

Definition

On a closing statement, an amount charged; that is, an amount that the debited party must pay.

debt to income (DTI)

Definition

Information about an applicant's gross income and total debt that lenders generally look at as a percentage to determine qualification for a loan.

decedent

Definition

A person who has died.

deed

Definition

A written instrument that, when executed and delivered, conveys title to or an interest in real estate. 84

deed in lieu of foreclosuredeed in lieu of foreclosure

deed in lieu of foreclosure

Definition

A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. If accepted by the mortgagee, this is a way for the mortgagor to avoid foreclosure.

deed in trust

Definition

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 reconveyance

Definition

A document that a trustee uses to transfer the title back to the trustor (borrower) when the note is repaid.

deed of trust

Definition

See trust deed.

deed of trust lien

Definition

See trust deed lien.deed restrictions 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

Definition

The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

defeasance clause

Definition

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

Definition

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 judgment

Definition

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full. In some states, a deficiency judgment cannot be sought when the mortgage debt was used to purchase, and is secured by, the borrower's principal residence.

delinquent taxes

Definition

Taxes that are unpaid and past due.

delivery and acceptance

Definition

When the title to property is delivered by the grantor and accepted by the grantee.

demand

Definition

The amount of goods people are willing and able to buy at a given price, often coupled with supply.

demographics

Definition

The study and description of a population.

denominator

Definition

The number written below the line in a fraction.

density zoning

Definition

Zoning ordinances that restrict the maximum average number of housing units per acre that may be built within a particular area, generally a subdivision.

Department of Housing and Urban Development (HUD)

Definition

Federal agency that has established rules and regulations that further interpret the practices affected by federal law; for example, HUD distributes an equal housing opportunity poster.

depreciation

Definition

(1) 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, a deduction for tax purposes taken over the period of ownership of income property, based on the property's acquisition cost.

descent

Definition

Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.

designated agency

Definition

A process that accommodates an in-house sale in which two different agents are involved. The broker designates one agent to represent the seller and one agent to represent the buyer.

designated agent

Definition

A real estate professional authorized by a broker to act as the agent for a specific principal in a particular transaction; also may be called assigned agent or appointed agent.

determinable fee estate

Definition

A fee simple estate providing that the property returns to the original grantor or heirs when a specified condition occurs, indicating that the property is no longer being used for the purpose prescribed.

developer

Definition

One who attempts to put land to its most profitable use iluvugh the construction of improvements.

development

Definition

The construction of improvements that benefit land.

devise

Definition

A transfer of real property by will. The decedent is the devisor, and the recipient is the devisee.

discharge

Definition

The act of terminating a contract or agreement; this may be done when it has been completely performed for by another party's breach or default.

disclaimer

Definition

A statement indicating no legal responsibility for information; no warranties or representations have been made.

disclosure

Definition

Relevant information or facts that are known or should have been known.

discount point

Definition

A unit of measurement used for various loan charges; one point equals 1% of the amount of the loan.

discount rate

Definition

The interest rate set by the Federal Reserve that member banks are charged when they borrow money through the Fed.

divisor

Definition

A number or quantity divided into another.

Do Not Call Registry

Definition

A national registry, managed by the Federal Trade Commission, that lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.

dominant tenement

Definition

A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.

dower

Definition

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

Definition

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in some states.

due-on-sale clause

Definition

A provision in the mortgage stating that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.

duress

Definition

Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against her will. A contract entered into under duress is voidable.

dwelling

Definition

Any building or part of a building designed for occupancy as a residence by one or more families.

earnest money

Definition

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but to be applied to the purchase price if the sale is closed.

easement

Definition

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 because it does not include a right of possession.

easement appurtenant

Definition

An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.

easement by implication

Definition

An easement that occurs when a party's actions reflect the intention to create an easement.

easement by necessity

Definition

An easement allowed by law as necessary for the full enjoyment of a parcel of real estate (e.g., a right of ingress and egress over a grantor's land).

easement by prescription

Definition

An easement acquired by open, notorious, continuous, hostile and adverse use of the property for the period of time prescribed by state law.

easement in gross

Definition

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 a property owner to a friend to use a portion of the property for the rest of the friend's life would be an easement in gross.

economic life

Definition

The number of years during which an improvement will add value to land.

electronic contracting

Definition

A process of integrating information electronically in a real estate transaction berween clients, lender, and title and closing agents.

Electronic Signatures in Global and National Commerce Act (E-Sign)

Definition

An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created.

emblements

Definition

Growing crops, such as corn, that are fructus industriales. 19 produced annually through labor and industry; also called

eminent domain

Definition

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

Definition

For tax purposes, 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 agreement

Definition

Ser employment contract.

employment contract

Definition

A document evidencing formal employment between employer and employee or between principal and agent or representative. In the real estate business, this generally takes the form of the agreement between broker and sales associate, client representation agreement (including a listing agreement or buyer representation agreement), or property management agreement.

enabling acts

Definition

State legislation that confers zoning and other powers on municipal governments.

encapsulation

Definition

A method of controlling environmental contamination by sealing off a dangerous substance, such as asbestos.

encroachment

Definition

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 the land of an adjoining owner or a public street or alley.

encumbrance

Definition

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.

enforceable contract

Definition

A contract that meets all the elements of a valid contract, including compliance with any applicable statute of frauds or other law that requires it to be in writing and signed by the parties.

environmental impact statement (EIS)

Definition

A statement that details the impact a project will have on the environment.

environmental site assessment (ESA)

Definition

An evaluation of property to show that due care was exercised in the determination of environmental impairments.

Equal Credit Opportunity Act (ECOA)

Definition

The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, marital status, or receipt of public assistance.

equalization

Definition

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

Definition

equitable lien

Definition

See statutory lien.

equitable right of redemption

Definition

The right of a defaulted property owner to recover the property before its sale by paying the appropriate fees and charges.

equitable title

Definition

The interest held by a vendee (buyer) under a contract for deed or an installment contract in which title is not immediately transferred; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

equity

Definition

The interest or value that an owner has in property over and above any indebtedness.

equity buildup

Definition

That portion of the loan payment directed toward the principal rather than the interest, plus any gain in property value due to appreciation.

erosion

Definition

The gradual and sometimes imperceptible wearing away of the land by natural forces, such as wind, rain, and flowing water.

escheat

Definition

The reversion of property to the state or county, as provided by state law, in cases in which a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned.

escrow

Definition

The closing of a transaction through a third party called an escrow agent, or escrower, who receives certain funds and documents to be delivered upon the performance of conditions outlined in the escrow instructions.

escrow account

Definition

The trust account established by a real estate professional under the provisions of the license law for the purpose of holding funds on behalf of the real estate professional's principal or some other person until the consummation or termination of a transaction; trust account established by an escrow agent to hold funds pending distribution at the closing of a transaction.

escrow closing

Definition

Occurs when a disinterested third party is authorized to act as escrow agent (escrow holder) and to coordinate the closing activities on behalf of the buyer and the seller.

escrow contract

Definition

An agreement between a buyer, a seller, and an escrow holder setting forth rights and responsibilities of each.

escrow instructions

Definition

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 cscrow.

estate (tenancy) at sufferance

Definition

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 the lease rights have expired.

estate (tenancy) at will

Definition

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 for term

Definition

See estate for years.

estate (tenancy) for years

Definition

An interest for a certain, exact period of time in property leased for a specified consideration.

estate (tenancy) from period to period

Definition

An interest in leased property that continues from period to period-week to week, month to month, or year to year.

estate in land

Definition

The degree, quantity, nature, and extent of interest a person has in real property.

estate tax

Definition

Federal tax on a decedent's real and personal property.

estoppel

Definition

Method of creating an agency relationship in which someone states incorrectly that another person is his agent and a third person relies on that representation.

estoppel certificate

Definition

A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.

ethics

Definition

The system of moral principles and rules that becomes the standard for professional conduct.

eviction

Definition

A legal process to oust a person from possession of real estate.

evidence of title

Definition

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.

exception

Definition

The exclusion of a part of the property conveyed.

exchange

Definition

A transaction in which all or part of the consideration is the transfer of like-kind property (e.g., real estate for real estate).

exclusive agency listing

Definition

A listing contract under which the owner appoints a real estate professional as her exclusive agent for a designated period of of time t to sell the specified property, on the owner's stated terms, for a commission. The owner reserves the right to sell the property without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the real estate professional.

exclusive buyer representation agreement

Definition

Agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients.

exclusive right-to-sell listing

Definition

A listing contract under which the owner appoints a real estate professional as his exclusive agent for a designated period of time to sell the specified property on the owner's stated terms and agrees to pay the real estate professional a commission when the property is sold, whether by the real estate professional, the owner, or another real estate professional.

executed contract

Definition

A contract in which all parties have fulfilled their promises and thus performed the contract.

execution

Definition

The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.

executor

Definition

An appointed person who carries out the directions of a will. A woman might be referred to as executrix, although executor is the term most commonly used to refer to either a man or a woman.

executory contract

Definition

A contract under which something remains to be done by one or more of the parties.

express agency

Definition

An agency relationship based on a formal agreement between the parties.

express agreement

Definition

An oral or written contract in which the parties state the contract's terms and express their intentions in words.

express contract

Definition

See express agreement.

external depreciation

Definition

Reduction in a property's value caused by outside factors (i.e., those that are off the property).

external obsolescence

Definition

Incurable depreciation caused by factors not on the subject property, such as environmental or economic factors. Ser nonagent facilitator.

Fair Housing Act

Definition

The federal law that prohibits discrimination in housing based on race, color, religion, sex, disability, familial status, and national origin.

Fair Housing Amendments Act of 1988

Definition

Expansion of the Fair Housing Act to include families with children and those with physical or mental disabilities.

familial status

Definition

One or more individuals under age 18 living with a parent or guardian; also includes a woman who is pregnant and anyone who is in the process of assuming custody of a child under age 18.

Fannie Mae

Definition

A government-supervised enterprise established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.

Farmer Mac

Definition

The Federal Agricultural Mortgage Corporation-a privately owned and publicly traded company established by Congress to create a secondary market for agricultural mortgage and rural utilities loans and the portions of agricultural and rural development loans guaranteed by the U.S. Department of Agriculture (USDA).

Federal Deposit Insurance Corporation (FDIC)

Definition

An independent federal agency established by Congress to examine and supervise financial institutions, manage receiverships, and insure deposits (currently up to $250,000 per depositor per financial institution).

Federal Emergency Management Agency (FEMA)

Definition

A federal agency that is responsible for assisting the nation in preparing for, protecting against, responding to, and recovering from hazards.

federal funds rate

Definition

The rate recommended by the Federal Reserve for the member banks to charge each other on short-term loans. These rates form the basis on which the banks determine the percentage rate of interest they will charge their loan customers.

Federal Home Loan Mortgage Corporation

Definition

See Freddie Mac.

Federal National Mortgage Association

Definition

Ser Fannie Mae.

Federal Reserve System (Fed)

Definition

The country's central banking system, which establishes the nation's monetary policy by regulating the supply of money and interest rates.

fee-for-service

Definition

Arrangement by which a consumer asks a real estate professional to perform specific real estate services for an agreed-upon fee.

fee simple

Definition

The highest interest in real estate recognized by the law; the holder is entitled to all rights to property.

fee simple absolute

Definition

The maximum possible estate or right of ownership of real property, continuing forever.

fee simple defeasible

Definition

Ser defeasible fee estate.

fee simple determinable

Definition

A fee simple estate qualified by a special limitation. Language used to describe the limitation includes the words so long ar, sobile, ot during.

fee simple subject to a condition subsequent

Definition

An estate carrying the limitation that, if it is no longer used for the purpose conveyed, it reverts to the original grantor by the right of reentry.

feudal system

Definition

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-insured loan

Definition

A loan insured by the Federal Housing Administration and made by an approved lender in accordance with FHA regulations.

fiduciary

Definition

One in whom trust and confidence is placed; a reference to a real estate professional employed under the terms of a listing contract or buyer representation agreement.

fiduciary relationship

Definition

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)

Definition

This act restructured the savings and loan association regulatory system, enacted in response to the savings and loan crisis of the 1980s.

financing

Definition

The business of providing the funds that make real estate transactions possible.

first mortgage

Definition

A mortgage that has priority over all other mortgages.

fiscal policy

Definition

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

Definition

An item of personal property that has been converted to real property by being permanently affixed to the realty.

forcible detainer

Definition

Removal of a tenant from a rental property by the landlord if the tenant has breached one of the terms of the lease agreement, in compliance with statutory law.

foreclosure

Definition

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 the parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third hird party who may purchase the realty at the foreclosure sale. Depending on the priority of the foreclosed mortgage, the property may be sold free of all other encumbrances incurred prior to the sale.

formal will/witnessed will

Definition

A document having written instructions of property disbursements upon the death of the owner. The document must be signed and witnessed.

formaldehyde

Definition

An air pollutant that is a colorless chemical used to manufacture building materials and many household products, such as particleboard, hardwood plywood paneling, and urea-formaldehyde foam insulation.

fraud

Definition

Deception intended to cause a person to give up property or a lawful right.

Freddie Mac

Definition

A government-supervised enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market.

freehold estate

Definition

An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

front footage

Definition

The measurement of a parcel of land by the number of feet of street or road frontage.

frontage

Definition

The length of property along the street or waterfront.

fully amortized

Definition

loan A loan consisting of equal, regular payments satisfying the total payment of principal and interest by the due date.

functional obsolescence

Definition

A loss of value to an improvement to real estate arising from problems of design or utility.

future interest

Definition

A person's present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.

gap

Definition

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

Definition

One who is authorized by a principal to represent the principal in a specific range of matters.

general lien

Definition

The right of a creditor to have all of a debt. 294 debtor's property-both real and personal-sold to satisfy a debe.

general partnership

Definition

See partnership.

general real estate tax

Definition

A tax that is made up of the taxes levied on the real estate by government agencies and municipalities.

general warranty deed

Definition

A deed in which the grantoe 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

Definition

A government agency that plays an important role in the secondary mortgage market. It guarantees mortgage-backed securities using FHA-insured and VA-guaranteed loans as collateral.

good and indefeasible title

Definition

A title that cannot be annulled or rendered void.

Good Faith Estimate (GFE)

Definition

An estimate of all closing fees that was formerly provided to a borrower within three days of the loan application as was required by the Real Estate Settlement Procedures Act (RESPA).

Government National Mortgage Association

Definition

Ser Ginnie Mae.

government-sponsored enterprises (GSES)

Definition

Organizations created by the federal government (Fannie Mae, Freddie Mac, Farmer Mac, Ginnie Mae) to help increase loan opportunities for homebuyers.

government survey system

Definition

See rectangular (government) survey system.

graduated-payment mortgage (GPM)

Definition

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

Definition

A person who receives a transfer of real property from a grantor.

granting clause

Definition

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

Definition

The owner transferring title to or an interest in real property to a grantee.

gross income multiplier (GIM)

Definition

A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value; usually used for commercial property.

gross lease

Definition

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)

Definition

The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value; usually used for single-family residential property.

ground lease

Definition

A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default.

groundwater

Definition

Water that exists under the earth's surface within the tiny spaces or crevices in geological formations.

growing-equity mortgage

Definition

A loan in which the monthly payments increase annually, with the increased amount being used to directly reduce the principal balance outstanding and thus shorten the overall term of the loan.

habendum clause

Definition

That part of a deed beginning with the words "to have and to hold," following the granting clause and defining the extent of ownership the grantor is conveying.

habitability

Definition

A property that is suitable for living in or on.

heir

Definition

One who might inherit or succeed to an interest in land under the state law of descent when the owner dies without leaving a valid will.

highest and best use

Definition

The legally permitted and physically possible use of a property, that would produce the greatest net income and, thereby, develop the highest value.

holdover tenancy

Definition

A tenancy in which 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

Definition

A will that is written, dated, and signed in the testator's handwriting.

home equity loan

Definition

A loan under which a property owner uses the property as collateral and can then draw funds up to a prearranged amount against the property. Also called a home equity line of credit, or HELOC.

home inspection

Definition

A thorough visual survey of a property's structure, systems, and site conditions conducted by a professional.

Home Mortgage Disclosure Act

Definition

A federal law,implemente Bureau.d at its creation by Regulation C of the Federal Reserve, that requires lenders to annually disclose the number of loan applications and loans made in certain areas to avoid the practice of redlining. On July 21, 2011, the rule-making authority of the law was transferred to the Consumer Financial Protection

homeowners insurance

Definition

Insurance that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks

homestead

Definition

Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgments for debts other than those secured by the property

Housing for Older Persons Act of 1995 (HOPA)

Definition

Amended the Fair Housing Act to provide that housing intended for persons aged 55 or older no longer needs to have significant facilities and services designed for the elderly.

HUD-1

Definition

A form that was formerly used to itemize fees and services charged to a borrower and seller during a real estate transaction.

hydraulic fracturing (fracking)

Definition

The process used to extract natural gas from the deep layers of rock in which it is embedded.

hypothecation

Definition

To pledge property as security for an obligation or loan without giving up possession of it.

immobility

Definition

The fact that property cannot be relocated to satisfy demand where supply is low, nor can buyers always relocate to areas with greater supply.

Implied agency

Definition

If the actions of the parties imply that they have mutually consented to an agency relationship, an implied agency relationship is formed.

implied agreement

Definition

A contract under which the agreement of the parties is demonstrated by their acts and conduct

implied contract

Definition

See implied agreement.

implied warranty of habitability

Definition

A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use.

impound accounts

Definition

An account that the mortgage lender may require a borrower to have to accumulate funds to pay future real estate taxes and insurance premiums.

improvement

Definition

(1) Any structure, usually privately owned, erected on a site to enhance the value of the property (e.g., a building, fence, or driveway). (2) A publicly owned structure added to or benefiting land (e.g., a curb, sidewalk, street, or sewer).

income approach

Definition

The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.

income property

Definition

Property held for current income as well as a potential profit upon its sale.

Incorporeal right

Definition

A nonpossessory right in real estate (e.g., an easement or a right-of-way).

independent contractor

Definition

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 sales associates are independent contractors, meeting the Internal Revenue Service definition for a qualified real estate agent.

index

Definition

An objective economic indicator to which the interest rate for an adjustable-rate mortgage is tied.

inflation

Definition

The gradual reduction of the purchasing power of the dollar, usually related directly to increases in the money supply by the federal government.

inheritance taxes

Definition

State-imposed taxes on a decedent's real and personal property.

installment sale

Definition

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

Definition

A charge made by a lender for the use of money.

interest-only loan

Definition

A loan that only requires the payment of interest for a stated period of time with the principal due at the end of the term.

interim financing

Definition

A short-term loan usually made during the construction phase of a building project (often referred to as a construction loan).

intermediary

Definition

Ser nonagent.

Internal Revenue Service tax lien

Definition

A lien charged by the Internal Revenue Service for nonpayment of income taxes.

Internet Data Exchange (IDX) policy

Definition

Policy that allows all multiple listing service (MLS) members to restrict internet access to MLS property listings.

Interstate Land Sales Full Disclosure Act (ILSA)

Definition

A federal law that regulates the sale of certain real estate in interstate commerce.

intestate

Definition

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

Definition

An appraisal term referring to the value of a property unaffected by a person's personal preferences.

inverse condemnation

Definition

An action brought by a property owner seeking just compensation for diminished use and value of land because of an adjacent property's public use.

Investment

Definition

Money directed toward the purchase, improvement, and development of an asset in expectation of income or profits.

involuntary alienation

Definition

Ser alienation.

involuntary lien

Definition

A lien placed on property without the consent of the property owner.

judgment

Definition

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

Definition

In law, the requirements established by prior court decisions within the jurisdiction of the dispute.

joint tenancy

Definition

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 usually passes to the surviving joint tenant or tenants by the right of survivorship. 51

jumbo loan

Definition

See nonconforming loan.

junior lien

Definition

An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same property.

laches

Definition

An equitable doctrine used by courts to bar a legal claim or to prevent the assertion of a right because of undue delay or failure to assert the claim or right.

land

Definition

The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees.

land contract

Definition

Ser installment sale.

land trust

Definition

A trust in which property is conveyed, and in which real estate is the only asset.

latent defect

Definition

A hidden structural defect that could not be discovered by ordinary inspection and that threatens a property's soundness or the safety of its inhabitants. Some states impose on property sellers and real estate professionals a duty to inspect for and disclose latent defects.

law of agency

Definition

See agency.

law of diminishing returns

Definition

Point at which additional property improvements do not increase the property's income or value.

law of increasing returns

Definition

Applies as long as money being spent on property improvements produces an increase in the property's income or value.

lead

Definition

Used as a pigment and drying agent in alkyd oil-based paint in about 75% of housing built before 1978. An elevated level of lead in the body can cause serious damage to the brain, kidneys, nervous system, and red blood cells. Children younger than six are most vulnerable.

Lead-Based Paint Hazard Reduction Act (LBPHRA)

Definition

Federal legislation requiring disclosure of the presence of any known lead-based paint hazards to potential buyers or renters. The law does not require that anyone test for the presence of lead-based paint, however.

lease

Definition

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.

lease option

Definition

A lease under which the tenant has the right to purchase the property at an agreed-upon price either during the lease term or at its end.

lease purchase

Definition

The purchase of real property, the consummation of which is preceded by a lease, usually long term, that is typically done for tax or financing purposes.

leasehold estate

Definition

A tenant's right to occupy real estate during the term of a lease, generally considered a personal property interest, although a long-term lease may be eligible for treatment as real property for financing purposes.

legacy

Definition

A disposition of money or personal property by will.

legal description

Definition

A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

legal life estate

Definition

A form of life estate established by state law, rather than created voluntarily by an owner. It becomes effective when certain events occur. See dower, curtesy, and homestead for legal life estates used in some states.

legally competent parties

Definition

People who are recognized by law as being able to contract with others; those of legal age and sound mind.

lessee

Definition

Ser lease.

lessor

Definition

See lease.

leverage

Definition

The use of borrowed money to finance an investment.

levy

Definition

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.

liability coverage

Definition

Feature of homeowners insurance that covers injuries or losses sustained within the home.

license

Definition

(1) In real estate practice, the 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

Definition

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

Definition

Principle in which the mortgagor retains both legal and equitable title to property that serves as security for a debt. The mortgagee has a lien on the property, but the mortgage is nothing more than collateral for the loan.

life cycle costing

Definition

In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime.

life estate

Definition

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

Definition

A person in possession of a life estate.

limited agent

Definition

Sree special agent.

limited liability company (LLC)

Definition

A form of business organization that combines the most attractive features of limited partnerships and corporations.

limited partnership

See partnership.

linear measurement

Definition

Measurement in a straight line.

liquidated damages

Definition

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

Definition

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

Definition

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

Definition

A contract between an owner (as principal) and a real estate professional (as representative of the owner) by which the real estate professional is employed 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 or other form of compensation.

listing broker

Definition

The broker from whose office a listing agreement is initiated.

littoral rights

Definition

(1) A landowner's claim to use water in large navigable lakes and oceans adjacent to her property. (2) The ownership rights to land bordering these bodies of water up to the high-water mark.

living trust

Definition

A trust that is created during the trustor's lifetime.

Loan Estimate

Definition

A CFPB form that highlights the information that historically has been the most important to consumers. Interest rate, monthly payment, and total closing costs are clearly presented on the first page.

loan origination fee

Definition

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 (LTV)

Definition

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) method

Definition

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.

management agreement

Definition

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.

management plan

Definition

A highly detailed plan that lays out the owner's objectives for a property, as well as what the property manager wants to accomplish and how, including all budgetary information.

managing broker

Definition

The real estate professional who is responsible for supervision of the real estate professionals who act on behalf of the brokerage; may also be called a supervising broker.

manufactured home

Definition

A permanent installation built to federal specifications, providing a principal residence or a vacation home.

manufactured housing

Definition

Dwellings that are built off site and trucked to a building lot where they are installed or assembled.

margin

Definition

A premium added to the index rate representing the lender's cost of doing business.

market

Definition

A place where goods can be bought and sold and a price established.

market data approach

Definition

Also known as the sales comparison approach. An estimate of value obtained by comparing property being appraised with recently sold comparable properties.

market value

Definition

The most probable price that a property would bring in an arm's length transaction under normal conditions on the open market.

marketable title

Definition

Good or clear title, reasonably free from the risk of litigation over possible defects.

master plan

Definition

Ser comprehensive plan.

master-planned community

Definition

A planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision; also called a planned unit development (PUD).

mechanic's lien

Definition

A statutory lien created in favor of contractors, laborers, material suppliers, and others who have performed work or furnished materials in the erection or repair of a building.

Megan's Law

Definition

Federal legislation that promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes.

meridian

Definition

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 method

Definition

A method used to describe a parcel of land that begins at a well-marked point and follows the property's boundaries, using directions and distances around the tract, back to the place of beginning.

mill

Definition

One-tenth of one cent. Some states use a mill rate to compute real estate taxes; for example, a rate of 52 mills would indicate a tax of $0.052 for each dollar of assessed valuation of a property.

minimum level of services

Definition

The services that real estate professionals must provide to clients, as prescribed differently by certain states; for example, assisting clients in negotiation and answering questions from clients about offers, counteroffers, and contingencies.

ministerial acts

Definition

The necessary paperwork and formalities involved in transferring ownership of real property.

minor

Definition

A person who has not reached the age of majority and, therefore, does not have legal capacity to transfer title to real property.

mixed use

Definition

Property that accommodates more than one use, such as commercial use and residential use.

Model Real Estate Time-Share Act

Definition

An act that governs the management, use, and termination of time-share units.

modular home

Definition

A type of factory-built housing with components that are assembled at a building site on a prepared foundation.

mold

Definition

A form of fungus that can be found almost anywhere and can grow on almost any organic substance, so long as moisture and oxygen are present. Mold growth can gradually destroy what it is growing on, as well as cause serious health problems.

monetary policy

Definition

Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.

month-to-month tenancy

Definition

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

Definition

A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.

mortgage

Definition

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

Definition

A mortgage loan company that originates, services, and sell loans to investors.

mortgage broker

Definition

An agent of a lender who brings the lender and the borrower together. The broker receives a fee for this service.

Mortgage Disclosure Improvement Act (MDIA)

Definition

Enacted in July 2008 as an amendment to the Truth in Lending Act (TILA) to require mortgage loan cost disclosures to consumers. Early disclosure (a good-faith estimate) of mortgage loan cost must be provided within three business days of receiving a consumer's application for a mortgage loan; a creditor must wait seven business days after providing the early disclosures before closing the loan; and a creditor must provide new disclosures and wait an additional three business days before closing the loan, if a change occurs that makes the annual percentage rate quoted in the early disclosure inaccurate beyond a specified tolerance.

mortgage insurance premium (MIP)

Definition

The FHA insurance that is a percentage of the loan amount that the borrower is charged as a premium.

mortgage lien

Definition

A lien or charge on the property of a mortgagor that secures the underlying debt obligation.

mortgage servicing transfer statement

Definition

Disclosure required by the lender if the lender intends to sell or assign the right to service the loan to another loan servicer. The loan servicer must notify the borrower 15 days before the effective date of the loan transfer, including in the notice the name and address of the new servicer, toll-free telephone numbers, and the date the new servicer will begin accepting payments.

mortgagee

Definition

A lender in a mortgage loan transaction.

mortgagor

Definition

A borrower in a mortgage loan transaction.

multiperil policies

Definition

Insurance policies that offer protection from a range of potential perils, such as fire, hazard, public liability, and casualty.

multiple listing clause

Definition

A provision in an exclusive listing for the authority and obligation on the part of the listing agent to distribute the listing to other real estate professionals in a multiple listing organization.

multiple listing service (MLS)

Definition

A marketing organization composed of member real estate professionals 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 real estate professionals.

mutual assent

Definition

Requirement that there must be complete agreement between the parties about the purpose and terms of a contract.

National Association of REALTORS® (NAR)

Definition

The largest real estate organization in the world; NAR members subscribe to a strict code of ethics. Active members are allowed to use the trademarked designation, REALTORS®,

National Do Not Call Registry

Definition

Ste Do Not Call Registry.

negative amortization

Definition

Process by which the amount of the loan increases. The mortgagor sets a payment cap. or maximum amount for payments, but the difference between the payment made and the full payment amount is added to the remaining mortgage balance.

negligent misrepresentation

Definition

Occurs when the real estate professional should have known that a statement about a material fact was false.

negotiable instrument

Definition

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

Definition

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

Definition

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the real estate professional 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)

Definition

The income projected for an income-producing property after deducting anticipate vacancy and collection losses and operating expenses.

niche marketing

Definition

The target marketing of specific demographic populations, within the bounds of fair housing laws.

nonagent

Definition

An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, mansaction broker, transaction coordinator, and contract broker.

nonconforming loan

Definition

A loan that exceeds the Federal Housing Finance Agency (FHFA) loan limits; also called a jumbo loan.

nonconforming use

Definition

A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

nondisturbance clause

Definition

A mortgage clause stating that the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor's building.

nonhomogeneity

Definition

A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.

notarization

Definition

Certification by a notary or other authorized official of the validity of a signature on a document.

note

Definition

Ser promissory note.

novation

Definition

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

numerator

Definition

The number written above the line of a fraction representing the number to be divided by the denominator.

nuncupative will

Definition

An oral will declared by the testator in his final illness, made before witnesses and afterward reduced to writing: not permitted by all states.

obsolescence

Definition

The loss of value due to property features that are outmoded or less useful. Obsolescence may be functional or external.

occupancy permit

Definition

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

Definition

Two essential components of a valid contract; a "meeting of the minds." An offer is a promise made by the offeror, requesting something in exchange for that promise. Acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror.

offeror/offeree

Definition

The person who makes the offer is the offeror. The person to whom the offer is made is the offeree.

Office of the Comptroller of the Currency (OCC)

Definition

Government agency which sets standards and regulations for fiduciary lenders.

open-end loan

Definition

A mortgage loan that is expandable by increments up to a maximum dollar amount, with the full loan being secured by the same original mortgage.

open listing

Definition

A listing contract under which the real estate professional's compensation is contingent on the real estate professional producing a ready, willing, and able buyer before the property is sold by the seller or another real estate professional.

operating budget

Definition

A property's anticipated financial performance in the present and future. It gives the owner a sense of expected profit.

option

Definition

An agreement to keep open for a set period an offer to sell or purchase property.

ostensible agency

Definition

A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.

owelty lien

Definition

A lien created by the order of the court to make an equitable partition of property when otherwise an agreeable partition is impe impossible or impractical (i.e., in a divorce). The owelty lien allows the party acquiring the interest of a co-owner to place a lien on the entire property.

owner financing

Definition

The seller is the primary lender,securing the property by means of a deed, note and mortgage, deed of trust, or contract for deed. In its traditional form, the buyer takes possession of the property and the seller retains legal title until paid in full, but some states have softened this outcome to provide that the buyer is entitled to legal title after a specified period of successful loan payments.

P&l

Definition

Principal and interest.

package loan

Definition

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.

panic selling

Definition

The illegal practice of soliciting people in a neighborhood to sell their homes because of fear or alarm; also referred to as blockbusting.

participation mortgage

Definition

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

Definition

The division of cotenants' interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through a court procedure.

partnership

Definition

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 separate from the individual owners. A general 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

Definition

An exterior wall of a building that straddles the boundary line between two lots, or a commonly shared partition wall between two connected properties.

passing papers

Definition

When parties to a transaction sit around a table and exchange copies of documents as the documents are executed.

patent

Definition

A grant or franchise of land from the U.S. government.

payment cap

Definition

The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.

payoff statement

Definition

See reduction certificate.

percent

Defination

One part in a hundred.

percentage lease

Defination

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

Defination

A test of the soil to determine whether it will absorb and drain water adequately to use a septic system for sewage disposal.

periodic tenancy

Defination

Ser estate from period to period.

personal property

Defination

Items, called chatte, that do not fit into the definition of real property; movable objects.

personalty

Defination

Personal property.

physical deterioration

Defination

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

PITI

Defination

The basic costs of owning a home-mortgage principal and interest, real estate taxes, and hazard insurance.

PITT

Defination

The four unities of tenants in a joint tenancy: possession, interest, time, and title.

planned unit development (PUD)

Defination

A planned combination of diverse land uses, such as housing. recreation, and shopping, in one contained development or subdivision.

plat map

Defination

A map of a town, section, or subdivision indicating the location and boundaries of individual properties.

plottage

Defination

The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.

point

Defination

A term used for a percentage of the principal loan amount charged by the lender. Each point is equal to 1% of the loan amount.

point of beginning (POB)

Defination

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

Defination

The government's right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, and welfare.

polychlorinated biphenyls (PCBs)

Defination

Used as an imulating material in dielectric oil. It can linger in the environment for long periods of time and can cause health problems.

possession

Defination

Owning or occupying a property.

power of attorney

Defination

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

Defination

On a closing statement, items that have been paid in advance by the seller, such as fuel costs and some real estate taxes, for which the seller must be reimbursed by the buyer.

prepayment penalty

Defination

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.

preventive maintenance

Defination

Small repairs that help prevent bigger problems and expenses.

price

Defination

The amount of money paid for an item or service.

price-fixing

Defination

See antitrust laws.

primary mortgage market

Defination

The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings associations, and mutual savings banks.

principal

Defination

(1) 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 an agent works.

principal meridian

Defination

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

Defination

A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.

priority

Defination

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)

Defination

Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

probate

Definition

A legal process by which a court determines who will inherit a decedent's property and what the estate's assets are.

procuring cause

Definition

The effort that brings about the desired result. Under an open listing, the real estate professional who is the procuring cause of the sale receives the commission.

profit

Definition

Making a gain from an investment after subtracting expenses.

profit and loss statement

Definition

A general financial picture based on the monthly cash flow reports; does not include itemized information.

progression

Definition

An appraisal principle that the value of a lesser-quality property is favorably affected by the presence of a better-quality property.

promissory note

Definition

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 inspection waiver

Definition

An option to waive an appraisal for an eligible loan purchased by Fannie Mac.

property manager

Definition

Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property, and keeping up all accounting.

property reports

Definition

The mandatory federal and state documents compiled by subdividers and developers to provide potential purchasers with facts about a property prior to a purchase.

proprietary lease

Definition

A lease given by the corporation that owns a cooperative apartment building to a shareholder who has the right as a tenant to an individual unit.

prorations

Definition

Expenses, either prepaid or paid in arrears, that are divided or distributed between the buyer and the seller at the closing.

protected class

Definition

Any group of people designated as such by the the Department of Housing and Urban Development (HUD) in consideration of federal civil rights legislation. Individual states and local jurisdictions provide such designation to additional groups as well.

public ownership

Definition

Government-owned property.

puffing

Definition

Exaggerated or superlative comments or opinions.

pur autre vie

Definition

"For the life of another." A life estate pur autre vie is a life estate that is measured by the life of a person or persons other than the grantee.

purchase money mortgage

Definition

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.

purchase option

Definition

The right given by a lease to the tenant to purchase the property at a predetermined price within a certain period, possibly the lease term.

pyramiding

Definition

The process of acquiring additional property by refinancing property already owned and investing the loan proceeds in additional properties.

quiet title

Definition

A court action to remove a cloud on the title.

quitclaim deed

Definition

A conveyance that transfers whatever interest the grantor has in the specified real estate, without warranties or obligations.

quotient

Definition

The number resulting from dividing one number by another.

radon

Definition

A naturally occurring gas that is suspected of causing lung cancer.

range

Definition

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

Definition

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

Definition

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

Definition

Person who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

real estate

Definition

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. 17

real estate broker

Definition

A person licensed to arrange the buying, selling, leasing, or exchange of real property for a fee.

real estate investment syndicate

Definition

See syndicate.

real estate investment trust (REIT)

Defination

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

Defination

State law enacted to protect the public from fraud, dishonesty, and incompetence on the part of those they hire to represent them in the purchase and sale of real estate.

real estate licensee

Defination

In real estate practice, a person who has the skills and knowledge to be licensed as a real estate broker or salesperson.

real estate mortgage investment conduit (REMIC)

Defination

A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.

real estate recovery fund

Defination

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 professional.

Real Estate Settlement Procedures Act (RESPA)

Defination

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

Defination

The interests, benefits, and rights inherent in real estate ownership; often used as a synonym for real estate.

REALTOR®

Defination

A registered trademarked term reserved for the sole use of active members of state and local REALTOR® associations affiliated with the National Association of REALTORS®.

reconciliation

Defination

The final step in the appraisal process, in which the appraiser considers the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final opinion of market value for the subject property.

reconveyance deed

Defination

A deed used by a trustee under a deed of trust to return title to the trustor.

recorded plat

Defination

A map of a subdivision filed as a public record showing the location and boundaries of the individual parcels.

recording

Defination

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 a mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

rectangular (government) survey system

Defination

A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.

redemption

Defination

The right of a defaulted property owner to recover property by curing the default.

redemption period

Defination

A period of time established by state law during which property owners have the right to paying the sales price, interest, and costs. Many states do redeem their real estate from a foreclosure or tax sale by not have mortgage redemption laws.

redlining

Definition

The illegal practice by a lending institution of denying loans or restricting their number for certain areas of a community.

reduction certificate (payoff statement)

Defination

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

Defination

An appraisal principle that the value of a better-quality property is affected adversely by the presence of a lesser-quality property.

Regulation Z

Defination

Implements the Truth in Lending Act (TILA), requiring credit institutions to inform borrowers of the true cost of obtaining credit.

release deed

Defination

A document, also known as a deed of reconveyance, that transfers all rights given a trustee under been fully repaid. 219 a deed of trust loan back to the grantor after the loan has

release of lien

Defination

A lien on a property that is now free from a mortgage.

reliction

Defination

The increase of a landowner's property by the receding of an adjacent body of water.

remainder interest

Defination

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.

renewal option

Defination

A clause in a lease that grants the lessee the privilege of renewing the lease.

rent

Defination

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

Definition

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

Definition

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.

representation

Definition

The role of a real estate professional acting on behalf of a client in a real estate transaction.

reproduction cost

Definition

The construction cost at current prices of an exact duplicate of the subject property.

rescission

Definition

The practice of one party canceling or terminating a contract, which has the effect of returning the parties to their original positions before the contract was made.

reservation

Definition

Something that is retained by the seller (ie, a life estate or an access easement).

Resolution Trust Corporation (RTC)

Definition

Created in 1989 by the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) to liquidate the assets of failed savings and loan associations. In 1995, the responsibilities of RTC were transferred to the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation.

restrictive covenant

Definition

A clause in a deed that limits the way the real estate ownership may be used.

reverse mortgage

Definition

A loan by which a homeowner receives a lump sum, monthly payments, or a line of credit based on the homeowner's equity in the property secured by the mortgage. The loan must be repaid at a prearranged date, upon the death of the owner, or upon the sale of the property.

reversionary interest

Definition

The remnant of an estate that the grantor holds after granting a life estate to another person.

reversionary right

Definition

The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.

revocation

Definition

Canceling or annulling licensed privileges or rights.

right of first refusal

Definition

A clause allowing the tenant the opportunity to buy the property before the owner accepts an offer from another party.

right-of-way

Definition

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

Definition

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

Definition

Evaluation and selection of appropriate property and other insurance.

routine maintenance

Definition

Day-to-day duties such as cleaning common areas, performing minor carpentry and plumbing adjustments, and providing regularly scheduled upkeep of heating, air-conditioning, and landscaping,

rules and regulations

Definition

Real estate licensing authority orders that govern real estate professionals' activities, having the same force and effect as statutory law

Safe Drinking Water Act

Definition

An act to protect public health by authorizing the EPA to set national health-based standards for drinking water.

sale-and-leaseback

Definition

A transaction in which the owner sells improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.

sales associate

Definition

A person who performs real estate activities while employed by a licensed real estate booker.

sales comparison approach

Definition

The process of estimating the value of a property by examining and comparing sales and listings of comparable properties.

sales price

Definition

The amount of money paid to a seller for the product sold.

salesperson

Definition

See sales associate.

satisfaction

Definition

Release or discharge when a note has been fully paid, returning to the borrower all interest in the real estate originally conveyed to the lender. Entering this release in the public record shows that the debt has been removed from the property.

satisfaction of mortgage

Definition

A document acknowledging the payment of a mortgage debt.

secondary mortgage market

Definition

A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages. Mortgages are first originated in the primary mortgage market.

right of survivorship

Definition

See joint tenancy.

section

Definition

A portion of a township under the rectangular (government) survey system. A township is divided into 36 sections, numbered 1 through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.

security

Definition

See collateral.

security deposit

Definition

A payment by a tenant, held by the landlord during the lease term, and kept (wholly or partially) on default or on destruction of the premises by the tenant.

seller's broker

Definition

The real estate broker who represents only the seller in transactions.

seller's disclosure notice

Definition

Documents completed by the seller of a home listing any known issues of the property, including home improvements made.

separate property

Definition

Under community property law,property owned solely by either spouse before the marriage, acquired by gift or inheritance during the marriage, or purchased with separate funds after the marriage

servient tenement

Definition

Land on which an easement exists in favor of an adjacent property, called the dominant tenement.

setback

Definition

The amount of space local zoning regulations require berween a lot line and a building.

settlement and transfer

Definition

See closing.

Settlement Statement (HUD-1)

Definition

The special HUD form, recently replaced by a new form created by the Consumer Financial Protection Bureau, that itemized all charges to be paid by a borrower and a seller in connection with the settlement of a real estate transaction. Also called the HUD-1 form.

severalty

Definition

Ownership of real property by one person only; also called sole ownership.

severance

Definition

Changing an item of real estate to personal property by detaching it from the land (e.g., cutting down a tree).

shared appreciation mortgage (SAM)

Definition

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.

short sale

Definition

Sale of property in which the sales price is less than the remaining indebtedness.

sick building syndrome (SBS)

Definition

An illness caused by poor air quality, typically in large commercial buildings. Symptoms include fatigue, nausea, headache, and sensitivity to odors.

single agency

Definition

Agency relationship in which the agent represents only one party to a transaction.

situs

Definition

The location of land for legal purposes; the jurisdiction in which land is located.

Small Business Liability Relief and Brownfields Revitalization Act

Definition

Law that provides funds to assess and clean up brownfields, clarifies liability protections, and provides tax incentives toward enhancing state and tribal response programs (also known as Brownfields Law).

special agent

Definition

One who is authorized by a principal to perform a single act or transaction; a real estate professional is usually a special agent authorized to find a ready, willing, and able buyer for a particular property, when representing a seller, or a special agent authorized to find a suitable property, when representing a buyer.

special assessment

Definition

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

Definition

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of the grantor's 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

Definition

A lien affecting or attaching only to a certain, identified parcel of land or piece of property.

specific performance

Definition

A legal action to compel a party to carry out the terms of a contract.

spot survey

Definition

A survey that shows the location, size, and shape of buildings on the lot, in addition to the lot's legal description.

spot zoning

Definition

Granting a particular parcel a classification that differs from the classification of other land in the immediate area; may be considered illegal.

statute of frauds

Definition

That part of a state law that requires enforceable. 190 certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally

statute of limitations

Definition

That law pertaining to the period of time within which certain actions must be brought to court.

statutory lien

Definition

A lien imposed on property by statute-tax lien, for example-in contrast to an equitable lien, which arises out of common law.

statutory right of redemption

Definition

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.

statutory year

Definition

A year composed of 12 months, with each month consisting of 30 days, for a total of 360 days in the year. Also called a banker's year.

steering

Definition

The illegal practice of channeling home seekers to particular areas based on their race, national origin, religion, or other protected classification.

stigmatized property

Definition

A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness, or personal tragedy. Some states restrict the disclosure of information about stigmatized properties.

straight-line depreciation

Definition

Depreciation taken periodically in equal amounts over an asset's useful life.

straight loan

Definition

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

Definition

A cooperating agent working with the broker on behalf of the broker's client.

subdivider

Definition

One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users.

subdivision

Definition

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

Definition

Municipal ordinances that establish requirements for subdivisions and development.

subdivision plat

Definition

Ser plat map.

subject to

Definition

Buyer takes title of property and makes payments on the existing loan but is not personally obligated to pay the debt in full. Original seller might continue to be liable for debt.

"Subject to"

Definition

A clause in a contract specifying exceptions or contingencies of a purchase.

subjective value

Definition

'The perceived value of an item based on the benefits given to the owner.

sublease

Definition

Ser subletting.

subletting

Definition

The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.

subordination

Definition

Relegation to a lesser position, usually in respect to a right or security.

subordination agreement

Definition

A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

subrogation

Definition

The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.

substitution

Definition

An appraisal principle 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

Definition

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

Definition

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 for specific performance

Definition

Sre specific performance.

suit to quiet title

Definition

A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.

Superfund

Definition

Popular name of the hazardous-waste cleanup fund established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Superfund Amendments and Reauthorization Act (SARA)

Definition

An amendatory statute that contains stronger cleanup standards for contaminated sites, increased funding for Superfund, and clarifications of lender liability and innocent landowner immunity. Ser Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

supply

Definition

The amount of goods available for sale in the market. The term is often coupled with demand.

supply and demand

Definition

The appraisal principle that follows the interrelationship of the supply of and demand for real estate. Because appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace as with any other commodity.

surety bonds

Definition

An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations incurred by an insured party; in essence, a policy insuring one's personal and/or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.

surface rights

Definition

Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the space above it (air rights) or the substances below the surface (subsurface rights).

survey

Definition

The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

syndicate

Definition

A combination of people people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate, the parties own and/or develop property, with the main profit generally arising from the sale of the property.

tacking

Definition

Concept providing that successive periods of continuous occupation by different parties may be combined to reach the required total number of years needed to establish a claim for a prescriptive easement.

taking

Definition

Process of land being taken from a property owner for public use through eminent domain with the requirement that the owner be compensated fairly.

tax basis

Definition

43 The point from which gains and losses are figured for tax purposes.

tax credit

Definition

An amount by which tax owed is reduced directly.

tax deed

Definition

An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. See also certificate of sale.

tax levy

Definition

The formal action taken to impose a tax, usually by vote of a taxing district's governing body.

tax lien

Definition

A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

tax sale

Definition

A court-ordered sale of real property to raise money to cover delinquent taxes.

taxation

Definition

The process by which a government body raises monies to fund its operation.

tenancy by the entirety

Definition

The joint ownership,recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.

tenancy in common (TIC)

Definition

A form of co-ownership by which each owner holds an undivided interest in real property as if each were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.

tenant

Definition

One who holds or possesses lands or tenements by any kind of right or title.

tenant improvements

Definition

Alterations to the interior of a building to meet the functional demands of the tenant. Also known as build-outs.

tenant's insurance

Definition

Insurance on the personal belongings of tenants.

testamentary trust

Definition

A trust that is established by will after one's death,

testate

Definition

Having made and left a valid will.

testator

Definition

A person who has made a valid will. A woman might be referred to as a testatrix, although testator can be used for either a man or a woman.

tie-in agreement

Definition

Agreement to sell one product only if the buyer purchases another product as well; also called a tying agreement.

tiers

Definition

Strips of land that are six miles wide, extending east and west and numbered north and south according to their distance from the base line in the rectangular (government) survey system of legal description.

"Time is of the essence"

Definition

A phrase in a contract that requires the performance of a certain act within a stated period of time.

time-share

Definition

A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.

title

Definition

(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.

title insurance

Definition

A policy insuring a property owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.

title search

Definition

The examination of public records relating to real estate to determine the current state of the ownership.

title theory

Definition

Principle in which the mortgagor conveys legal title to the mortgagee (or some other designated individual) and retains equitable title and the right of possession. In effect, because the lender holds legal title, the lender has the right to immediate possession of the real estate and rents from the mortgaged property if the mortgagor defaults.

Title VIII of Civil Rights Act of 1968 (Fair Housing Act)

Definition

As since amended, the Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, familial status, or disability.

Torrens system

Definition

A method of evidencing title by registration with the proper public authority, generally called the registrar; named for its founder, Sir Robert Torrens.

town house

Definition

A type of residential dwelling with two floors that is connected to one or more dwellings by a common wall or walls. Title to the unit and lot vest in the owner who shares a fractional interest with other owners in any common areas.

township

Definition

The principal unit of the rectangular (government) survey system. A township is a 6-mile square of 36 square miles.

township lines

Definition

All the lines in a rectangular survey stem that run east and west, parallel to the base line and system six miles apart.

township strips

Definition

See tier.

trade fixture

Definition

An article installed by a tenant under the terms of a lease that is removable by the tenant before the lease expires.

transaction broker

Definition

Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party.

transaction coordinator

Definition

See nonagent.

transfer tax

Definition

Tax stamps required to be affixed to a deed by state and/or local law. 91

triggering terms

Definition

Specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan.

trust

Definition

A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.

trust deed

Definition

An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust.

trustee

Definition

One to whom something is entrusted and who holds legal title to property and administers the property for the benefit of a beneficiary. Can also be a member of a board entrusted with the administration of an institution or organization, such as a cooperative.

trustee's deed

Definition

A deed executed by a trustee conveying land held in a trust.

trustor

Definition

A borrower in a deed of trust loan transaction; one who places property in a trust. Also called a grantor or settler.

Truth in Lending Act (TILA)

Definition

Federal government regulates the lending practices of mortgage lenders through this act.

unbundling services

Definition

unbundling services

underground storage tanks (USTs)

Definition

Commonly found on sites where petroleum products are used or where gas stations and auto repair shops are located, and subject to federal and state regulations. In residential areas, tanks are used to store heating oil. Over time, neglected tanks may leak hazardous substances into the environment.

undivided interest

Definition

See tenancy in common.

unenforceable contract

Definition

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable.

Uniform Electronic Transactions Act (UETA)

Definition

Sets forth rules for entering into an enforceable contract using electronic means.

Uniform Partnership Act

Definition

Law that provides for the continuation of an existing business if a partner in a general partnership dies, withdraws, or goes bankrupt.

Uniform Residential Appraisal Report (URAR)

Definition

The appraisal form created by Fannie Mae and Freddie Mac that is required for most residential real estate transactions. Uniform Standards of Professional Appraisal Practice (USPAP) A set of standards developed by the Appraisal Foundation that details information required for a property appraisal.

unilateral contract

Definition

A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

uniqueness

Definition

The idea that no matter how identical they may appear, no two parcels of real estate are ever exactly alike.

unity of ownership

Definition

The four unities that are traditionally needed to create a joint tenancy-unity of title, time, interest, and possession.

unity of possession

Definition

Co-owners of a tenancy in common are each entitled to possession and use of the entire property, even though each hold only a fractional ownership interest.

universal agent

Definition

A person empowered to do anything the principal could do personally.

urea-formaldehyde foam insulation (UFFI)

Definition

Insulating foam that can release harmful formaldehyde gases. Formaldehyde causes some individuals to suffer respiratory problems, as well as eye and skin irritations.

usury

Definition

Charging interest at a higher rate than the maximum rate established by state law.

VA-guaranteed loan

Definition

A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the U.S. Department of Veterans Affairs in order to limit the lender's possible loss.

valid contract

Definition

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

value

Definition

The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities. (320)

variable rate mortgage

Definition

A mortgage loan in which the interest rate varies depending on market conditions.

variance

Definition

Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances. (404)

vendee

Definition

A buyer, usually under the terms of a land contract.

vendor

Definition

A seller, usually under the terms of a land contract.

vendor's lien

Definition

A lien that belongs to a vendor for the unpaid purchase price of land, where the vendor has not taken any other lien or security beyond the personal obligation of the purchaser.

void contract

Definition

A contract that has no legal force or effect because it does not meet the essential elements of a contract.

voidable contract

Definition

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.

volume

Definition

The amount of space of a three-dimensional object.

voluntary alienation

Definition

See alienation.

voluntary lien

Definition

A lien placed on property with the knowledge and consent of the property owner.

warranty clause

Definition

303 A part of the deed in which the seller warrants the title conveyed to the buyer.

waste

Definition

An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.

water rights

Definition

Common law rights held by owners of land adjacent to rivers, lakes, or oceans; includes restrictions on those rights and land ownership.

water table

Definition

The natural level at which the ground is saturated. The water table may be several hundred feet underground or near the surface.

will

Definition

A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the restator.

workers' compensation acts

Definition

State laws that require an employer to obtain insurance coverage to protect employees who are injured in the course of their employment.

wraparound loan

Definition

A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.

writ of attachment

Definition

A document ordered by the court to have a sheriff enter a leased property to give possession back to the owner.

x-bar method

Definition

A math tool used to solve percentage problems, indicating what values to multiply or divide to arrive at the unknown value.

zoning

Definition

A regulatory tool that helps communities regulate and control how land is used.

zoning board of appeals

Definition

A board that must be formed when the local legislature adopts a new zoning law, to provide for property owners to object to the application of the law to their property.

zoning ordinance

Definition

An exercise of police power by a municipality to regulate and control the character and use of property.