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California Real Estate Principles 7-11


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A relationship in which one party(principal) authorizes another party(agent) to act as the principal's representative in dealing with third parties
A person who acts for and in the place of another, called a principal, for the purpose of effecting the principals
legal relationship with third persons
A transaction, such as a sale of property, in which all parties involved are acting in their own self-interest and are under no undue influence or pressure from the other parties
Arm's Length Transaction
The person who employs an agent to perform a service for a fee
To deposit client funds in the broker's personal account
A selling agent who is not the listing agent
Cooperating Agent
The appropriation of property belonging to another
A prospective buyer of real estate
An agent who represents both parties in a transaction
Dual Agent
A legal doctrine which prevents a person form denying something to be true or a fact which is contrary to previous statements made by the same person
A relationship that implies a position of trust or confidence
The real estate agent who actually wrote the offer and presented it to the seller for acceptance
Procuring Cause
A person who authorizes another to act in his or her place in regard to relations with third persons.
Exaggerated comments or opinions not made as representations of fact, thus not grounds for misrepresentation
The approval of a previously authorized act, performed on behalf of a person which makes the act valid and legally binding
Something that would warn a reasonably observant person of a potential problem, thus requiring further investigation
Red Flag
An agent of a person who is already acting as an agent for a principal
A person who may be affected by the terms of an agreement but who is not a party to the agreement
Third Party
A negligent or intentional wrongful act arising from breach of duty created by law and not contract
A clause in a loan document describing certain events that would cause the entire loan to be due
Acceleration Clause
A note whose interest rate is tied to a flexible index
Adjustable Rate Mortgage (ARM)
A contract for the sale of real property where the seller gives up possession, but retains the title until the purchase price is paid in full
Agreement of Sale
A clause in a loan document that would allow the lender to call the entire loan due upon the sale of the property
Alienation Clause
A purchase money deed of trust subordinate to-but still including-the original loan
All-Inclusive Trust Deed
The relationship of the total finance charge to the total amount to be financed as required under the Truth-in-Lending Act
Annual Percentage Rate (APR)
An agreement between a property owner and the holder of trust deed or mortgage by which the holder receives, as security, the right to collect rents from tenants of the property in the event of a default by the borrower
Assignment of Rents
A buyer takes over the existing loan and agrees to be liable for the repayment of the loan
Assumption Clause
Under an installment loan, a final payment that is substantially larger than any other payment and repays the debt in full
Balloon Payment
The lender under a deed of trust
A loan secured by several properties
Blanket Loan
Failure to pay a debt or on a contract
Something of value given as security for a debt
A personal judgment against a borrower for the balance of a debt owed when the sale of the security for the loan is not sufficient enough to pay the debt
Deficiency Judgment
A federal law that requires lenders to assure that credit is available with fairness, impartiality and without discrimination
Equal Credit Opportunity Act
The interest held by the trustor or vendee
Equitable Title
Also known as the right of redemption; the right of a debtor, before a foreclosure sale, to reclaim property that had been given up due to mortgage default
Equity of Redemption
The value where property is sold to satisfy a debt
A legal procedure by which mortgaged property in which there has been default on the part of the borrower is sold to satisfy the debt
A sale where property is sold to satisfy a debt
Foreclosure Sale
A note that is fully repaid at maturity by periodic reduction of the principal
Fully Amortized Note
An agreed-upon time after the payment of a debt is past due, during which a party can perform without being considered in default
Grace Period
The evidence of a debt that is given in exchange for cash
Hard Money Loan
The party to whom a promissory note is made payable
A person who has obtained a negotiable instrument (promissory note, check) in the ordinary course of business before it is due, in good faith and for value, without knowledge that it has been previously dishonored
Holder in Due Course
A cash loan made against the equity in the borrower's home
Home Equity Loan
A process which allows a borrower to remain in possession of the property while using it to secure a loan
The cost of borrowing money
Foreclosure by court action
Judicial Foreclosure
Any trust deed that is recored after a first trust deed, whose priority is less than the first trust deed
Junior Trust Deed
A contract for the sale of real property where the seller gives up possession, but retains the title until the purchase price is paid in full; also known as a contract of sale or agreement of sale
Land Contract
Title that is complete and perfect regarding right of ownership; may be held by a trustee under a deed of trust
Legal Title
The borrower who executes a promissory note and becomes primarily liable for payment to the lender
A legal document used as security for a debt
The lender under a mortgage
The borrower under a mortgage
Title lacking the rights and privileges commonly associated with ownership
Naked Legal Title
Any written instrument that may be transfered by endorsement or delivery
Negotiable Instrument
A notice to a defaulting party that their has been a nonpayment of a debt
Notice of Default
Notice given, and published, that a trustee's sale will be held to sell a property to satisfy a debt
Notice of Trustee's Sale
A loan where the borrower is given a limit up to which may be borrowed, with each advance secured by the same trust deed
Open End Loan
A clause in a promissory note that allows a borrower to pay it off early with no penalty
"Or More" Clause
A loan on real property that can be secured by land , structure, fixtures and other personal property
Package Loan
A promissory note with a repayment schedule that is not sufficient to amortize the loan over its term
Partially Amortized Installment Note
A transfer of property to a lender to be held as security for repayment of a debt;lender takes possession of property
A clause in a trust deed or mortgage that gives the holder the right to sell the property in the event of default by the borrower
Power of Sale
A clause in a trust deed that allows a lender to collect a certain percentage of a loan as a penalty for an early payoff
Prepayment Clause
Someone who directs or authorizes another to act in his or her place regarding relations with a third person, buyer or seller.The original amount borrowed
A written promise or order to pay, evidence of a debt
Promissory Note
A trust deed created as evidence of a debt at the time of the sale of real property
Purchase Money Loan
Bring current and restore
A provision found in many blanket loans enabling the borrower to obtain partial release from the loan of specific parcels
Release Clause
A notice that is sent, upon request, to any parties interested in a trust deed informing them of a default
Request for Notice
A loan that enables elderly homeowners to borrow against the equity in their homes by receiving monthly payments from a lender, that are needed to help meet living costs
Reverse Annuity Mortgage
A loan that allows the rewriting of a new loan at the termination of a prior loan
Rollover Mortgage
The evidence of a debt that is recorded after a first trust deed; a junior trust deed
Second Trust Deed
Evidence of obligations to pay money
Lender and borrower agree to share a certain percentage of the appreciation in market value of the property
Shared Appreciation Mortgage (SAM)
A federal law designed to protect persons in the military service from loss of property when their ability to make the payment has been affected by their entering military service
Soldier's and Sailor's Relief Act
A deed given by a court; a proof of a sale to satisfy a judgment
Sheriff's Deed
A federal law designed to protect persons in a military service from loss of property when their ability to make the payment has been affected by their entering military service
Soldier's and Sailor's Relief Act
Regarding laws created by the enactment of legislation as opposed to law created by court decisions
a promissory note in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity; may also be a note with no payments on either principal or interest until the entire sum
Straight Note
A buyer takes over the existing loan payments, but assumes no personal liability for the loan
Subject-To Clause
A clause in which the holder of a trust deed permits a subsequent loan to take priority
Subordination Clause
A deed given to a buyer of real property at a trustee's sale
Trustee's Deed
The forced sale of real property, by a lender, to satisfy a debt
Trustee's Sale
Holds naked legal title to property as a neutral third party where there is a deed of trust
The borrower under a deed of trust
A law that requires borrowers to be informed about the cost of borrowing money
Truth In Lending Act (Regulation Z)
A act of changing a rate of interest in excess of that permitted by law
Related to an adjustable rate loan
Variable Rate Mortgage (VRM)
The buyer under a contract of sale (land contract)
The seller under a contract of sale (land contract)
A process where financial institutions that formerly had been restrained in their lending activities by the law are allowed to compete freely for profits in the marketplace
The process of depositors removing funds from savings
An organization that obtains funds through deposits and then lends those funds to earn a return-such as savings banks, commercial banks, credit unions and mutual savings banks
Financial Intermediary
The process of transferring capital from those who invest funds to those who wish to borrow
A statement that informs the buyer of all charges and expenses related to a particular loan
Mortgage Loan Disclosure Statement
The device commonly used to secure a loan on personal property
Security Agreemen
An economic situation in which the supply of money is limited, and the demand for money is high, as evidenced by high interest rates
Tight Money
The process of assembling into one package a number of mortgage loans, prior to selling them to an investor
Accumulated over a period of time
The difference between the cost to replace the property and the property's current appraised value
Accrued Depreciation
The real age of a building
Actual Age
That depreciation occurring as a result of physical, functional or economic forces, causing loss in value to a building
Actual Depreciation
The estimate or opinion of value supported by factual information as of a certain date
A written report stating an appraiser's estimated of a subject property's value
Appraisal Report
An increase in value
An accounting concept which refers to an allowance taken to provide for recovery of invested capital
Book Depreciation
The initial cost of the property plus capital improvements minus the total accrued depreciation
Book Value
A term sometimes used when referring to capitalization rate
Cap Rate
Any permanent improvement made to real estate for the purpose of increasing the useful life of the property in increasing the property's value
Capital Improvements
The process of calculating the present worth of a property on the basis of the capacity to continue to produce an income stream
A term used by real estate agents and appraisers to mean comparable properties
A lot found at the intersection of two lots
Corner Lot
Represents expenses in money, labor, material or sacrifices in acquiring or producing something
A lot found on a dead-end street
Cul-De-Sac Lot
Negligent care of a building; ordinary care and maintenance the owner fails to perform
Deferred Maintenance
Loss in value for any cause
The years of age shown by the condition and utility of a structure, rather than its actual or chronological age
Effective Age
The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller
Fair Market Value
Looks like a flag on a pole, which represents the access to the site; usually located to the rear of another lot fronting a main street
Flag Lot
The width of a property along a street
Front Footage
Income (figured annually) received from rental units before any expenses are deducted
Gross Rent
Any building or structures on a lot
One that is surrounded by other lots, with frontage on the street; the most common type lot. which may or may not be desirable-depending on other factors
Interior Lot
So named because it resembles a key fitting into a lock; one that is surrounded by the backyards of other lots, therefore is the leaser desirable because of the lack of privacy
Key Lot
The rent a property should bring in the open market
Market Rent
Sometimes known as net operating income; the remaining income after operating expenses have been subtracted from the gross income of a property
Net Income
Putting several smaller, less valuable parcels together under one ownership to increase value of total property
Plottage or Assemblage
What is paid for something
Sometimes called correlation. this is the adjustment process of weighing results of all three appraisal methods to arrive at a final estimate of the subject property's market value
The cost of replacing improvements with modern materials and techniques
Replacement Cost
The current cost of building a replica of the subject structure, using similar quality materials
Reproduction Cost
The position, situation or location of a piece of land in the neighborhood
A lot that is fronted head-on by a street; noise and glare from headlights may be detractors from this type of lot
T-Intersection Lot
The usefulness of the property
Utility Value
Loss of income because of a vacant unit
Vacancy Factor
The power of goods or services to command other goods in exchange for the present worth of future benefits arising form property ownership

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