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Real Estate Definitions

Terms

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Internet Listing Display Policy
A policy from the National Association of REALTORS ® that allows all MLS members to have equal right to display MLS data, and respects the rights of property owners and their listing brokers to market a property as they wish.
Unenforceable Contract
Contract that has all the elements of a valid contract, yet neither party can sue the other for performance; an unsigned contract is usually unenforceable
Joint and Several Liability
Each of the individual owners is personally responsible for the total damages
Trade Fixture
Personal property: Business items permanently attached by tenant. May be removed up to last day of lease. If left, landlord acquires by process of accession
Capitalization Rate
The rate of return a property will product on the owner's investment
Confession of Judgment Clause
Permits judgment to entered against a debtor without the creditor's having to institute legal procedures
Clustering
Grouping of home sites within a subdivision on smaller lots than normal with the remaining land used as common areas
Ranges
Strip of land six mile wide in rectangular survey system of land description, going north and south and numbered according to its distance from the principal meridian
Chain of Title
Succession of conveyances from some accepted starting point, whereby the present hold of title derives the title, there should be no "breaks" in the succession
Mixed Unit Developments (MUD)
Often self contained, combine variety of uses from commercial to retail to residential
Private Mortgage Insurance
PMI; insurance provided by private carrier that protects a lender against loss if a foreclosure and deficiency; usually insures top 10 - 20 percent of the loan
Agency Coupled with an interest
An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property)
Equal Credit Opportunity Act (ECOA)
Federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, receipt of public assistance, age, marital status
Transaction Broker
Intermediary between buyer and seller who assists bother parties, though not an agent of either. AKA nonagent, facilitator, coordinator or contract broker
Uniform Settlement Statement (HUD-1)
Form required by RESPA includes all charges that will be collected at closing, whether required by the lender or a third party; must be available day before closing
Month to Month Tenancy
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written) a tenancy is generally considered to be month to month
Renewal Option
A clause in a lease that grants the lessee the privilege of renewing the lease.
Build Related Illness (BRI)
An illness due to air quality problems, typically toxic substances or pathogens and is a clinically diagnosed condition. Symptoms include asthma, allergies, and hypersensitivity
Encapsulation
Sealing off of disintegrating asbestos or chipping and peeling lead based paint; may be preferable to removal; still leaves hazard behind
Worker's Compensation Act
Covers claims for medical or hospital payment for injuries sustained by building employees hurt in the course of employment
Statutory Lien
A lien imposed on property by statute - a tax lien, for example - in contrast to an equitable lien, which arises out of common law.
Special Assessment
Tax or levy against only the properties that will benefit from a proposed public improvement like a sewer or paving a street
Preventative Maintenance
Regularly scheduled maintenance to prevent costly breakdowns; i.e., paining and seasonal servicing of appliances and system.
Will
A written document, properly witnessed, providing for the transfer of title to property owned by the decease, called the testator.
Life Cycle Costing
In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime
Deed in Trust
An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement
Estate in Land
The degree, quantity, nature, and extent of interest a person has in real property
Subordination
Written agreement between lien holders that changes the priority of mortgage, judgment and other liens under certain circumstances
Loan Origination Fee
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Remainder Interest
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
Rate Cap
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.
Automatic Extension
A listing agreement clause stating that the agreement will continue automatically for a certain period of time after its expiration date. In many state this clause is discouraged or prohibited
Wraparound Loan
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 borrow by lending an amount over the existing first mortgage amount without disturbing the existence of the first mortgage.
Open Listing
Multiple agents; only the selling agent (broker) entitled to commission; seller retains right to sell independently without obligation to pay anyone a commiss
Exclusive-Agency Listing Agreement
One agent (broker) is hired; broker receives a commission only if he or she is the procuring cause; seller retains right to sell without obligation to pay commission
Mill
One-tenth of one cent used in some states to compute real estate taxes; i.e., 52 mills = $0.052 tax for each dollar of assessed valuation of a property
Brownfields
Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes
Appurtenance
Right, privilege or improvement belong to, and passing with the land
Waste
An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor, or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary right.
Bargain and Sale Deed
A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion
Reconveyance Deed
A deed used by a trustee under a deed of trust to return title to the trustor
General Warranty Deed
Deed that offers the most protection in which grantor fully warrants good clear title to the premises
Sublease
See subletting
Fee Simple Absolute
Maximum possible estate or right of ownership of real property, continuing forever
Office of Thrift Supervision (OTS)
A government agency that governs the practices of fiduciary lenders. OTS was created by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
Multiperil Policies
Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability and casualty
Radon
Radioactive odorless, tasteless gas; with long term exposure may cause lung cancer
Earnest Money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyers defaults but applied to the purchase price if the sale is closed
Strict Liability
The owner is responsible to the injured party without excuse.
Laches
An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.
Computerized Loan Origination
Electronic network for handling load applications through remote computer terminals linked to various lenders' computer; borrower must pay for this extra service
Subdivision
Spilitting a single property into smaller parcels
Categories of Real Property
Residential, Commercial, Industrial, Agricultural, Special Projects
Interim Financing
A short term loan usually made during the construction phase of a building project (in this case often referred to as a construction loan).
Fee Simple
The highest interest in real estate recognized by the law; the holder is entitled to all rights to the property
Growing Equity Mortgage (GEM)
A loan in which the monthly payment increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan
Cash Rent
In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to sharecropping
Levy
To assess; to seize or collect. To levy a tax is to asses 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.
Landfill
An enormous hole to store hazardous materials, lined to prevent leakage of waste materials; includes underground drainage pipes to monitor for leaks and leaching
Land
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 and water.
Fiscal Policy
The government's policy in regard to taxation and spending programs. The balance between these two areas determines the amount of money the government will withdraw from or feed into the economy, which can counter economic peaks and slumps
Nondisturbance Clause
A mortgage clause that states the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor's building.
Trustee
One to whom something is entrusted, and holds legal title to property and administers the property for the benefit of a beneficiary. Or a member of a board entrusted with the administration of an institution or organization, such as a cooperative.
Descent
Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law
Habendum Clause
"To have and to hold" clause in a deed defining the extent of ownership bing granted; i.e., a life estate or a defeasible fee
Ginnie Mae
HUD division, corporation without stock; administers special-assistance programs and works in tandem with Fannie Mae by guaranteeing payments
Lease
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state low leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Real Estate License Law
State law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate
Easement by Condemnation
An easement created by the government of government agency that has exercised the right under eminent domain
Branch Office
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker
Statute of Limitations
That law pertaining to the period of time withing which certain actions must be brought to court.
Recording
Act of entering documents affecting ownership or interests in real estate in the recorder's office established in each county
Breach of Contract
Failure to perform a condition of a contract, such as not paying the rent or mortgage payment
Escrow
Closing of transaction through third party called escrow agent; who receives funds and documents to be delivered upon performance of certain instructions
Government National Mortgage Association
Ginnie Mae
Novation
Substituting a new obligation for an old one or substituting new parties to an existing obligation
Agent
Person who is hired to act for another. Hired by the principal
Progression, Regression
Value of properties near a better property see their values rise; the opposite is regression; a rundown property will negatively affect neighboring properties
Vested Interest
A present right, interest or title to property that gives the holder the right to convey it to another, even thought the right might not be enjoyed by one or both of the parties.
Deed in Lieu of Foreclosure
Way for mortgagor to avoid foreclosure by returning deed to lender/mortgagee
Title Search
The examination of public records relating to real estate to determine the current state of the ownership.
Co-Ownership
Title ownership held by two or more persons
Usury
Charging interest in excess of the maximum rate; often residential first mortgage loans are exempt from such laws
Electronic Signatures in Global and National Commerce Act (E-Sign)
An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created
Grantor
The person transferring title to or an interest in real property to a grantee
Testator
A person who has made a valid will. A woman often is referred to as a testatrix, although testator can be used for either gender.
Boot
Money or property given to make up any difference in value or equity between two properties in an exchange
Attorney's Opinion of Title
Statement that attorney has certified an abstract to be an accurate statement of the fact concerning the property ownership
Ratification
Method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principals agent
Manufactured Housing
Dwellings that are built off-site and trucked to a building lot where they are installed or assembled
Limited Consensual Dual Agent
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Informed Consent
34-27-81 (9) A consumer's agreement to allow something to
Release Deed
A document, also know as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
Deficiency Judgment
Personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay fully the mortgage debt
Estate Taxes
Federal taxes on decedent's real and personal property
Listing Agreement
A contract between an owner (as Principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission
Rectangular Survey System
System for surveying and describing land by reference to principal meridians and base lines; also called government survey system
Planned Unit Developments (PUD)
Planned combination of diverse land uses, such as housing, recreation and shipping, in one contained development or subdivision.
Property Manager
Property manager (agent) is hired by the owner (principal) to maintain owner's investment and ensure that the property produces income
Usury
Charging interest at a higher rate than the maximum rate established by state law.
Federal Home Loan Mortgage Corporation
Corporation buys primarily conventional mortgage loans in secondary market, does not guarantee principal and interest payments of these mortgages
Fannie Mae
Quasi-government agency buys any kind of mortgage loans in secondary market from primary lenders; guarantees timely principal and interest to security holders
Trigger Terms
Specific credit terms, such as down payment, monthly payment and amount of finance charge or term of loan.
Code of Ethics
Written system or moral standards for ethical behavior that often goes goes beyond the letter of the law
Sub-Agent
34-27-81 (16) A licensee who is empowered to act for another broker in
Carbon Monoxide
Colorless, odorless poisonous gas produced as a by-product of incomplete combustion; can be dangerous if not properly ventilate
Assignment
Transfer in writing of interest in a bond, mortgage, lease
Prepayment Penalty
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost
Zoning Ordnance
An exercise of police power by a municipality to regulate and control the character and use of property
Broker's Price Opinion
An opinion of real estate value commissioned by a bank or attorney and provided by a broker
Financial Institutions, Reform, Recovery, and Enforcement Act (FIRREA)
This act restructured the savings and loan association regulatory system; enacted in response to the savings and loan crisis of the 1980s
Listing Broker
The broker in a multiple listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person
Trust Deed
An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefits of the note holder (the lender); also called a deed of trust.
Quantity Survey Method
The appraisal method of estimated building cost by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction
Eminent Domain
The right of a government or municipal quasi-public body to acquire property for public use through a court action called a condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner
Tax Sale
A court ordered sale of real property to raise money to cover delinquent taxes.
Curtesy
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished Curtesy
Uniform Commercial Code
Concerned with person property transaction, not real estate, governs the documents when personal property is used as security for a loan
Foreclosure
A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure bring the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, fee of all encumbrances affecting the property subsequent to the mortgage.
Granting Clause
Words in deed on 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
Farmer Mac
A government sponsored enterprise that operates similarly to Fannie Mae and Freddie Mac but for agricultural loans
Allodial System
A system of land ownership in which land is held free and clear or any rent or service due to the government; commonly contrasted to the feudal system is held under the allodial system in the United States
Exclusive Right To Sell Listing
A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.
Regression
An appraisal principle that states that, between dissimilar properties, the value of the better quality property is affected adversely by the presence of the lower quality property
Single Agent
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Enabling Acts
State legislation that confers zoning powers on municipal governments
Cloud on Title
Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title
Implied Agency
Based on the actions of the parties that imply that they have mutually consented to an agency relationship, an implied agency relationship is formed
Asbestos
Mineral used extensively in insulation; inhaling fibers can cause sever respiratory diseases; particularly dangerous if friable, i.e., easily crumbled
Equalization
The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other countries or districts
Due On Sale Clause
A provision in the mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property
Redemption
The right of a defaulted property owner to recover his or her property by curing the default
Acknowledgment
Formal declaration by someone like a notary that the signature is both voluntary (no force) and genuine (no forgery)
Deed of Trust
Borrower conveys naked title to a trustee who holds it as security for the lender
Easement
A right to use the land of another for a specific purpose, such as for a right of way or utilities; an incorporeal interest in land
Satisfaction
Also know as release; documents indicating that the mortgage has been paid off
Surface Rights
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
Junior Lien
An obligation, such as a second mortgage, that is subordinate in rights or lien priority to an existing lien on the same realty
Market
Place where goods are bought and sold, price is established
Comprehensive Loss Underwriting Exchange (CLUE)
A database of consumer claim history that allows insurance companies to access prior claim information in the underwriting and rating process
Estoppel
Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent and a third person relies on that representation
Mortgagor
A borrower in a mortgage loan transaction
Real estate Settlement Procedures Act (RESPA)
Federal law requires certain disclosure to consumers about mortgage loan closings; prohibits kickbacks, certain referral fees, requires good faith estimate in 3 business day
Covenant
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, lasses and contracts for deed
Anticipation
Appraisal principle that holds that value can increase or decrease based on the expectation that some future event may or may not occur
Retroactive Liability
Liability is not limited to the current owner, but includes people who have owned the site in the past.
Real Property
Interests, benefits, and rights associated with real estate ownership
Plat Map
Map of a town, section or subdivision indicating the location and boundaries of individual properties
Unilateral Contract
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.
Net Lease
Lease requiring tenant to pay not only rent but also taxes, insurance, utilities and repairs
Amortized Loan
Loan in which the monthly payment consists of principal and interest that partially pay off both each month over the term of the loan
Employee
Works for employer is responsible for withholding income taxes and FICA
Point of Beginning
The starting point in a metes and bounds legal description; these description must follow the boundaries back to the point of beginning
Trustee's Deed
A deed executed by a trustee conveying land held in a trust.
Certificate of Sale
The document generally given to the purchaser at a tax foreclosure sale. A Certificate of Sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the holder paid the property taxes for that interim period.
Supply and Demand
Interrelationship of availability of properties and desire for those properties; real estate is affected by marketplace just like most commodities
Legal Life Estates (3)
Curtesy (husband's rights), dower (wife's interest, homestead (protect family home from certain creditors)
Involuntary Lien
A lien placed on property without the consent of the property owner
Standard Homeowners Insurance
Insurance package that covers residential property owner against financial loss from fire, theft, public liability, etc.
Credit, Debit
On closing statement, amount entered in a person's favor; either an amount that party has paid or amount for which party must be reimbursed; debit is amount charged
Unity of Ownership
The four unities that are traditionally needed to create a joint tenancy - unity of title, time, interest and possession.
Life Estate
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons
Proprietary Lease
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment
Real Estate Investment Trust (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax
Subsurface Rights
Ownership right in a parcel of real estate to the the water, minerals, gas, oil and so forth that lie beneath the surface of the property.
Express Agreement
An oral or written contract in which the parties state the contract's terms and express their intentions in words
Ad Valorem Tax
Tax levied according to value, used to refer to real estate taxes
Electromagnetic Field EMFs
Generated by movement of electrical currents; prolonged exposure may cause cancer; major concern for property owners near high voltage line
Density Zoning
Zoning ordinances that restrict the maximum average number of house per acre that may be built within a particular area, generally a subdivision
Fair Housing Violation Enforcement
Unlimited punitive damages, actual damages, injunction, fines ranging from $10,000 to $50,000
Mortgage Lien
Lien on the property of a mortgagor (owner) that provides security for a loan
Accrued Items
On a closing statement, items of expense that are incurred but not not yet payable, such as interest on a mortgage loan or taxes on real property
Gross Income Multiplier
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value
Joint Tenancy
Co-ownership of real estate; when one of the owners dies, that interest goes to the remaining owners (right of survivorship)
Town House
A type of residential dwelling with tow floors that is connected to one or more dwellings by a common wall(s). Title to the unit and lot vest in the owner who shares a fractional interest with other owners for the common areas.
Jones v. Mayer
Supreme Court decision upholding Civil Right Act of 1866; under no circumstances is anyone exempted from the law prohibiting racial discrimination
Defeasible Fee
Fee simple estate in which the holder may lose title if a certain event occurs or does not occur: "So long as ....., " or "no alcohol sales," etc.
Judgment Lien
After judgment entered and recorded with county recorder, becomes a general lien on defendant's real and personal property
Federal National Mortgage Association
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Net Operating Income (NOI)
The income projected for an income producing property after deducting losses for vacancy and collection and operating expenses
Future Interest
A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of re-entry
Lien Theory
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has not right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
Assemglage
Combining of two or more adjoining lots into one larger tract to increase their total value
Capitalization
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating incomes expected to be produced by the property. The formula is expressed as: Income ÷ Rate = Value.
Redemption Period
Time frame in which property owners in some states have the right to redeem their real estate by paying the sales price, interest and costs
Section
A portion of 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.
Economic Life
Number of years during which an improvement will add value to the land
Homeowner's Insurance Policy
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks
Deed Restriction
Clause in deed limiting future use of property; may limit density of buildings, dictate types of structures or even prevent buildings from being used for a specific purpose
Cost Recovery
An Internal Revenue Service term for depreciation
Water Rights
Common law rights held by owners of land adjacent to rivers, lakes or oceans and includes restriction on those rights and land ownership.
Risk management
Perils of any risk evaluated in terms of options: avoid, control, transfer or retain (ACTOR); often involves buying insurance to transfer risk to third party
Nuncupative Will
An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing
Actual Eviction
The legal process that results in the tenant's being physically removed from the leased premises
Blockbusting
Illegal practice of inducing homeowners to sell their properties by telling them that a certain people of a certain race, national origin or religion are moving into the area
Easement by Prescription
Easement claimant has used another's land for a certain period of time (10 - 20 years) openly, continuously and without the owner's approva
Gap
A defect in the chain of tile of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land
Conditional Use Permit
Written governmental permission allowing a use inconsistent with zoning buy necessary for the common good, such as locating an emergency medical facility in a predominately residential area
Net Listing
Broker entitled to any amount above the seller's stated net; often illegal; potential conflict of interest between broker's interest and seller's interest
Special Warranty Deed
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through, or under the grantor but not otherwise."
Americans with Disabilities Act (ADA)
Protects rights of disabled individuals in employment and public accommodation; requires reasonable accommodation that enable disabled persons to work with dignity
Township Tiers
Township lines that form strips of land and are designated by consecutive numbers north or south of the base line.
External Depreciation
Reduction in a property's value caused by outside factors (those that are off the property)
Acre
A measure of land equal to 43,560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares
Agency
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transaction
Farm Service Agency (FSA)
An agency of the federal government that provides credit assistance to farmers and other individuals who live in rural areas
Index Method
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs
Lot and Block (Recorded Plat)
Method of describing property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat
Reduction Certificate (Payoff Statement)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interest.
Tax Credit
An amount by which tax owed is reduced directly.
Fixture
Item that was once personal property and is now permanently affixed and is real property, such as a chandelier or ceiling fan
Co-Ownership
Title ownership held by two or more persons who must agree on how the property is used
Automated Underwriting
Computer system that permits lender to expedite the loan approval process and reduce lending costs
Time Shares
Buy or lease the use of the property for a certain time frame - often used in resort areas
Inactive License
34-27-35 (g) The commission shall prescribe a license renewal form, which shall accompany renewal fees which shall be filed on or before August 31 of the final year of each license period in order for the respective license to be renewed on a timely basis for the following license period. If any of the foregoing are filed during the period from September 1 through September 30 of the final year of a license period, the one hundred fifty dollar ($150) penalty set out below shall be paid in addition to the renewal fees. Failure to meet this September 30 deadline shall result in the license being placed on inactive status on the following October 1, and the license shall be subject to all reactivation requirements. Reactivations shall be processed in the order
Abstract of Title
Certification by abstractor that condensed history of title to a particular parcel of real estate, including, conveyances and encumbrances, is correct
Sales - Leaseback
Transaction in which owner sells improved property and as part of transaction, signs a long term lease to remain in possession of premises; permits owner to "pull out" equity
Codicil
A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will
Certificate of Reasonable Value (CRV)
A form indicating the appraised value of a property being financed with a VA loan
Probate
Legal process by which a court determines who will inherit a deceased person's property and what the assets of the estate are
Multiperil Policy
Insurance package for apartment, commercial buildings; standard fire, hazard, public liability and casualty, require special coverage for earthquakes and floods
Comparable
Properties used in an appraisal report that are substantially equivalent to the subject property
Correction Lines
Provisions in the rectangular survey system made to compensate for the curvature of the earth' surface. Every fourth township line (at 24 mile intervals) is used as a correction line on which the intervals between the north and south range lines are remeasured and correct to a full six mile
Sick Building Syndrome (SBS)
An illness caused by poor air quality, typically in office building settings. Symptoms include fatigue, nausea, headache and sensitivity to odors.
VA Loan
Mortgage to qualified veteran by authorized lender; guaranteed by Department of Veteran Affairs; up to 100% LTV based on certificate of reasonable value (CRV)
Primary Mortgage Market
Mortgage market in which loans are originated; includes commercial banks, savings banks, mutual banks; the market that meets borrowers face to face
Truth in Lending Act
Consumer protection act intended to force lenders to be truthful in their advertising; implemented by Regulation Z
Straight Loan
Loan in which only interest is paid during term of loan with entire principal amount due with the final interest payment
Base Line
Imaginary line running east and west used by surveyors as a reference in describing land under the rectangular survey system
Syndicate
A combination of 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 profits generally arising from the sale of the property.
Fiduciary Relationship
Relationship of trust and confidence between principal and agent; agent owes duties of care, obedience, accounting, loyalty and disclosure
Market Value
Most probable price a property would bring in an arm's length transaction under normal market conditions on the open market; market price is what is actually paid
Evidence of Title
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance, or a Torrens registration certificate
Value
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.
Economics Characteristics of Real Estate (4)
Scarcity, improvements, permanence of investment, area preference (location)
Beneficiary
(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.
Real Estate Mortgage Investment Conduit (REMIC)
A tax entity that issues multiple classes of investor interests (securities) back by a pool of mortgages.
Subordination
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
Brokerage
Bringing together parties interested in a real estate transaction
Legacy
A disposition of money or personal property by will
Tenant
One who holds or possesses lands or tenements by any kind of right or title.
Civil Rights Act of 1866
Act that prohibits any racial discrimination in the sale or rental of housing
Community Association Management
Provides a team of property manager, accounting staff, office staff and property consultants to manage property
Competition
The appraisal principle that state that excess profits generate competition
Estate at Sufferance
Tenant remains on the property, without the landlord's permission, after the lease has expired
Promissory Note
Evidence that a loan was made; states terms of obligation, signed by its maker and is negotiable (transferable to a third party)
Cash Flow
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed incomer, a negative cash flow results
Fractional Section
A parcel of land less than 160 acres, usually found at the edge of a rectangular survey
Shared Appreciation Mortgage (SAM)
A mortgage loan in which the lender, in exchange for a loan with a favorable interest rate, participates in the profits (if any) the borrower receives when the property is eventually sold.
Living Trust
A trust that is created during one's lifetime
American Land Title Association (ALTA) Policy
A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan
Adjustable Rate Mortgage (ARM)
Loan that has a fluctuating interest rate, usually one tied to a cost-of-funds index; the cost of doing business is the margin that stays fixed and is added to the base rate
Satisfaction Piece
Document acknowledging that the debts have been repaid
Specific Lien
Lien affecting or attaching only to a certain, specific parcel of land
Equitable Title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name
Severance
Changing of real to personal property, such as cutting down a tree, removing stained glass window,
Rent
Fixed, periodic payment make by tenant to owner for possession and use, usually by prior agreement of the parties
Life Cycle Costing
Initial and operating costs of equipment over its expected life must be measured to compare total cost of one type of equipment with that of another
Universal Agent
A person empowered to do anything the principal could do personally.
Intestate
Person dies without a valid will; his or her property will pass to heirs as provided in the state law of descent
Condemnation
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
Covenant of Quiet Enjoyment
The covenant implied by law by which a landlord guarantees that a tenant my take possession of leased premises and that the landlord will not interfere in the tenants;s possession or use of the property
Variance
Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by current zoning laws; an exception from zoning ordinances
Freehold Estate
An estate in land in which ownership is for an indeterminate length, in contrast to a leasehold estate.
Appraiser
An independent person trained to provide an unbiased estimate of value
Leasehold Estate
Tenant's right to occupy real estate during term of lease, generally held to be a personal property interest
Binder
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser's good faith and intent to complete the transaction
Reverse Annuity Mortgage (RAM)
RAM; homeowner receives monthly payments based on accumulated equity rather than one lump sum; repaid at certain date or owner's death or sale of property
Constructive Notice
Notice given to the world by recorded documents; possession of property may also be considered constructive notice
Appurtenant Easement
Easement that is attached to and travels with the ownership of one parcel allowing the owner the use of the use of the neighbor's land
Graduated Payment Mortgage (GPM)
A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then levels off for the remaining loan term
Security Deposit
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.
Mortgage Banker
Mortgage loan companies that originate, service and sell loans to investors
Proration
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at closing
Steering
Illegal practice of channeling home seekers to particular neighborhoods based on race, religion, national origin; an illegal limitation of a purchaser's options
Salesperson
Performs real estate activities under supervision of licensed real estate broker
Leasehold Estate
A tenant's right to occupy real estate during the term of a lease, generally consider to be a personal property interest.
Emblements
Annual, harvestable crops such as corn, wheat; personal property
Lien
Monetary interest in real property; example are mortgage liens, mechanics liens
Bundle of Legal Rights
Ownership of all legal rights: control, possession, use, disposition, enjoyment
Open End Loan
A mortgage loan that is expandable by increments up a maximum dollar amount, the full loan being secured by the same original mortgage
Judicial Precedent
In law, the requirements established by prior court decision
Corrective Maintenance
Actual repairs that keep building equipment functioning; i.e., repairing a boiler, fixing a leaky faucet, fixing an air conditioner
Annual Percentage Rate (APR)
The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth In Lending Act
Latent Defect
Hidden structural defect that would not be discovered by ordinary inspection
Grantee
The person who receives a conveyance of real property from a grantor
Quiet Enjoyment Covenant
Clause in deed guaranteeing that the grantee's title will be good against third parties who might bring court action
Satisfaction of Mortgage
A document acknowledging the payment of a mortgage debt.
Vendor
A sellor, usually under the terms of a land contract.
Balance
The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each each as well as the land
Credit
On a closing statement, an amount entered in a person;s favor - either an amount the party has paid or an amount for which the party must be reimbursed
Subrogation
Substitution of one creditor for another; used by title insurers to acquire from the injured party rights to sue in order to recover any claims they have paid
Brownfields Legislation
Provides federal funding to states and localities to clean up brownfields sites.
Installment Contract
Also know as land contract, contract for deed, selling under contract. Purchaser receives possession but not legal title until all payments have been made
Principal
One who hires; in real estate, the broker (principal) hires salespeople; seller (principal) hires the broker/agent; or buyer (principal) hires broker/agent
Plottage
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one large lot
Vendee
A buyer, usually under the terms of a land contract.
Gross Lease
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 obligation continue until the lease expires or is terminated through default
Interstate Land Sales Full Disclosure Act
Federal law that regulates the sale of certain real estate in interstate commerce
Contribution
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value
Legally Competent Parties
People who are recognized by law as being able to contract with others; those of legal age and sound mind
Regulation Z
Implements Truth in Lending Act requiring credit institutions to inform borrowers of true cost of obtaining a load (APR); certain advertising "triggers" disclosure in ads
Conformity
Appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value
Installment Contract
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may be not until final payment. Also, called a contract for deed or articles of agreement for warranty deed.
Exchange
A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate)
Commission
Payment to broker for services rendered. In the sale of real property, often a percentage of the selling price.
Loan to Value Ratio
Relationship between amount of mortgage loan and value of the real estate being pledged as collateral
Expiration of listing
Specific termination of listing; in most states, failure to specify specific date is grounds for suspension or revocation of license
Township Strips
See Tier
Home Equity Loan
A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property
Real Estate Recovery Fund
A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage thought the actions of a real estate license.
Judgment
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.
Depreciation
(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, an expense deduction for tax purposes taken over the period of ownership of income property
Taking
From the "taking" clause of the 5th Amendment to the U.S. Constitution, "nor shall public property be taken for public use, without just compensation"
Kickbacks
Prohibited unearned fees when no service has been rendered; i.e., receiving fees for making referrals to lenders, attorneys, surveyors, appraisers, etc
Prepaid Item
On closing statement, items that have been paid by the seller, such as real estate taxes, for which he or she must be reimbursed by the buyer (credit seller, debit buyer)
Setback
The amount of space local zoning regulations require between a lot line and a building line.
Assignment
In a lease, transferring all of one's remaining interest in the property, although the original lessee is till responsible for the financial obligations
Management Plan
A highly detailed plan that lays out the owner's objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information
Priority
Order of position or time; priority of liens is by chronological order, first recorded having first claim except that taxes always have first place even if not recorded
Customer
The third party or non represented consumer for whom some level of service is provided
Stigmatized Property
Property branded as undesirable because of an event that happened there, such as murder, suicide, drug dealing
Client
34-27-81 (6) A person who has an agency agreement with a broker for
Suit for Possession
A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration
Inquiry Notice
Notice the law presumes a reasonable person would obtain by inquiring into a property
Dower
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage
License Laws
State laws enacted to protect the public by ensuring a standard of competence and professionalism in the real estate industry
Groundwater
Water that exists under earth's surface in tiny spaces or crevices in geological formations; if contaminated, threatens source of clean drinking water
Suit to Quiet Title
Court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title
Redlining
Illegal practice of refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than economic qualifications of applicants
Building Permit
Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances
Package Loan
Real estate loan secured by both real and personal property; i.e., new home that includes window treatments and major appliances
Estate for Years
Leasehold interest for specific period of time; definite beginning, definite ending; not terminated by death of either party, nor sale of property; no notice required
Subdivider
One who buys undeveloped land, divides it into smaller, usable lots and sells the lots to potential users
Voluntary Alienation
See alienation.
Township Lines
All the lines in a rectangular survey system that run east and west, parallel to the base line six miles apart.
Lease Purchase
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.
Estate from Period to Period
Leasehold interest that automatically renews until either party gives notice to change the terms; month to month; not terminated by death of either party, nor sale of property
Substitution
An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
Sharecropping
In an agricultural lease, the agreement between the landowner and the tenant former to split the crop or the profit from its sale, actually sharing the crop.
Developer
Person who attempt to put land to its most profitable use through the construction of improvements
Alienation Clause
Also know as "due on sale" clause permits lender to declare balance of loan immediately due if property is sold; prevents loan assumption without lender approval
General Lien
The right of a creditor to have all of a debtor's property - both real and personal - sold to satisfy a debt
Familial Status
In fair housing, at least one person over the age of 18 having legal custody of one person under 18, includes pregnant women and foster children
Duress
Unlawful constraint or action exercised upon a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable
Attachment
The act of taking a person's property into legal custody by writ or other judicial order to hold it available for application to that person's debt to a creditor
Lease, Lessor, Lessee
Contract (lease) between landlord (lessor) who gives up possession and tenant (lessee) who pays rent
Capital Gain
Profit earned from the sale of an asset
Alienation
The act of transferring property to another. Alienation may be voluntary, such as by6 gift or sale, or involuntary, as through eminent domain or adverse possession
Undivided Interest
See Tenancy in Common
Power of Attorney
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument
Title VIII of the Civil Rights Act of 1968
Prohibits discrimination in the sale or rental of housing based on race, color, religion, national origin, sex, familial status, and handicap
Contract Broker
34-27-81 (17) A licensee who assists one or more parties in a contemplated real estate transaction without being an agent or fiduciary or advocate for the interest of that party to a transaction.
Metes and Bounds
Legal description that begins at a well marked point and follows the boundaries around the tract, back to the place of beginning
Unbundling Service
Offering real estate services in a piecemeal fashion.
Devise
A gift of real property by will. The donor is the devisor and the recipient is the devisee
Right of Survivorship
When a joint tenant dies, his or her interest passes to the remaining owners of the property; becomes an issue only at death of one of the owners
Eviction
A legal process to oust a person from possession of real estate
Township
The principal unit of the the rectangular (government) survey system. a township is a square with six mile sides and an area of 36 square miles.
Inheritance Taxes
State imposed taxes on a decedent's real and personal property
Interest Only Mortgage
A mortgage that only requires the payment of interest for a stated period of time with the principal due at the end of the term
Good Faith Estimate (GFE)
Settlement costs that borrower is likely to incur; must be given within three business days after loan application; should be pretty accurate
Benchmark
Permanent reference mark of point established for use by surveyors in measuring differences in elevation
Inverse Condemnation
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property's public use.
Basis
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
Subdivision and Development Ordinances
Municipal ordinances that establish requirements for subdivisions and development.
Competitive Market Analysis (CMA)
Analysis of market activity among comparable properties; not an appraisal
Puffing
Exaggerated comments about a property: "This is the best view of the valley."
Fair Housing Act
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin
Estate at Will
Term is indefinite; i.e., "I will rent to you until I sell the house," will be terminated by death of either party or sale of property
Sales Comparison Approach
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
Consideration
Something of value that gets a person to enter into a contract; owner of property promises to convey marketable title and the buyer promises a certain amount of money
Ostensible Agency
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document
Unit-In-Place Method
The appraisal method of estimated building costs by calculating the costs of all of the physical components in the structure, with the cost of each item including its proper installation, connection, etc; also called the segregated cost method.
Front Footage
The measurement of a parcel of land by the number of feet of street or road frontage
Liquidated Damages
Amount predetermined by parties to contract as total compensation due injured party should the other party breach the contract
Improvement
Man-made attachment to the land, such as a building, streets, utilities
National Flood Insurance Act
Requires flood insurance when financing with federally related loans on properties located in flood-prone areas
Equity
The interest an owner has in a property over and above any outstanding loans (Market Value - Loans = Equity)
Qualifying Broker
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Corporation
An artificial entity created by operation of law whose rights in business are similar to those of an individual. Continuous existence until it is legally dissolved
Holdover Tenancy
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy as defined by state law
Ethics
The system of moral principles and rules that becomes standards for professional conduct
Trust
Fiduciary arrangement whereby the owner (trustor) conveys property to a third party, (trustee), to be held and administered on behalf of another person (beneficiary)
Closing
An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer
Title
(1) The right to ownership or the ownership of land. (2) The evidence of ownership of land.
Appraisal Report
An opinion of market value on a property given to a lender or client with detailed and accurate information
Multiple-Listing Service (MLS)
Marketing organization in which brokers share information and commission with other brokers; sellers gain because of greater exposure to larger market
Fee Simple Determinable
A fee simple estate qualified by a special limitation. Language used to describe limitation includes the words, "so long as" or "while" or "during."
Personal Property
Movable objects, not real property, sometimes called chattels, such as cars, cash, stock
Tying Arrangemen
Illegal antitrust activity. Agreement to sell one product if the buyer purchases another product as well
Federal Deposit Insurance Corporation
An independent federal agency that insures the deposits in commercial banks
Time is of the Essence
Phrase in contract that requires the performance of a certain act within a stated period of time
Community Reinvestment Act of 1977 (CRA)
Under the act, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community develo0pment and rehabilitation projects; and participate in loan programs for housing, small business and small farms.
Survey
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.
Community Property
System of ownership; each spouse has an equal interest in property acquired during marriage: separate property is that acquired before marriage
Servient Tenement
Land on which an easement exists in favor of an adjacent property (called a dominant estate): also called a servient estate.
Highest and Best Use
Possible use of a property that would produce the greatest net income and thereby develop the highest value; making an office building where a parking lot once stood
Electronic Contracting
A process of integrating information in a real estate transaction between clients, lender, and title and cosing agents electronically
Gross Lease
Tenant pays rents, landlord pays all expenses of property; most common form of residential lease
Square-Foot Method
Appraisal method of estimating building cost; multiplying number of square feet in the improvement by cost per square foot of recently constructed similar properties
Federal Reserve System
The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates
Sole Proprietorship
Single owner company
Valid Contract
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.
Employment Contract
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement
Easement by Necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land
Homestead
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
Feudal System
A system of ownership usually associated with pre-colonial 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.
Subletting
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
Partition
Court procedure dividing up cotenants' interest in real property when the parties do not all voluntarily agree to terminate the co-ownership
Equitable Right of Redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges
Counteroffer
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror
Escrow Account
The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction
Default
The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due
Controlled Business Arrangement
One stop shopping for real estate consumers; consumer must be informed of relationship among the service providers and that other are available
Conditional Use Permit
Written governmental permission allowing the use inconsistent with the zoning, but necessary for the public good; i.e., emergency medical facility in residential area
Accretion
The increase or addition of land by the deposit of and or soil washed up naturally from a river, lake or sea
Equalization Factor
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valor em tax would be based on this adjusted value
Accession
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams
Implied Agreement
A contract under which the agreement of the parties is demonstrated by their acts and conduct
Special Agent
Agent hired by principal to perform a single act. In real estate, broker is special agent hired by seller to find ready, willing, able buyer
Broker Protection Clause
Protects broker from buyer and seller making contract behind broker's back. Provides for commission if broker's buyer purchases a period after listing expires.
Offer and Acceptance
Two essential components of a valid contract; a "meeting of the minds"
Bilateral vs. Unilateral Contract
Bilateral contract: both parties are legally bound to act as they promised, i.e., lease, purchase agreement. Unilateral contract: only one party is bound to act (option, promissory note)
Vendor's Lien
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.
Price Fixing
Brokers conspiring to set fixed compensation rates
Specific Performance
A legal action to compel a party to carry out the terms of a contract.
Rescission
The practice of one party canceling or terminated a contract, which has the effect of returning the parties to their original positions before the contract was made.
Tenant's Insurance
Insurance coverage that protects the personal belongings of tenants.
Pur Autre Vie
"For the life of another." A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee
Secondary Mortgage Market
Market for purchase and sale of existing mortgages; designed to provide greater liquidity for mortgages; generally does not deal directly with borrowers
Negligent Misrepresentation
Misrepresentation occurring when the broker should have know that the statement about a material fact was false
Tax Deed
An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. See also Certificate of Sale.
Executed Contract
A contract in which all parties have fulfilled their promise and thus performed the contract
Time Sharing
Form of ownership that allows use of the property for a fixed or variable time frame, often used in resorts
Statute of Frauds
State law requires certain instruments, such as deeds, real estate sales contracts and certain leases, to be in writing to be legally enforceable
Closing Statement
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
Blanket Loan
Mortgage loan secured by more than one parcel of real estate, provides for each parcel's partial release for mortgage lien upon some repayment; used by developers
Management Agreement
Document setting up an agency relationship between owner and property manager who is general agent establishing the rights and duties of each party
Rules and Regulation
Licensing authority to provide for administering the law and set operating guidelines for licensees. Have the same force and effect as any law.
Monuments
Fixed natural or artificial object used to establish real estate boundaries for a metes and bounds description
Coinsurance Clause
Requires policyholder to maintain fire insurance, coverage equal to at least 80% of property's actual replacement value
Acceleration Clause
Clause in mortgage or deed of trust that can be enforced to make the entire debt payable immediately if borrower defaults
Liquidity
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time
Encumbrance
Anything - such as a mortgage, tax or judgment lien, an easement, a restriction on the use of the land, or an outstanding dower right -that may diminish the value or use and enjoyment of a property
Mortgagee
A lender in a mortgage loan transaction
Broker
One who acts as an intermediary on behalf of others for a fee or commission
Tier (township strip)
A strip of land six miles wide, extending est and west and numbered north and south according to its distance from the base line in the rectangular (government) survey system of legal description.
Local improvement District (LID)
An assessment (i.e., tax) on a local improvement district for a public improvement project the district has approved
License
(1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson. (2) The revocable permission for a temporary use of land - a personal right that cannot be sold.
Conveyance
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring
Express vs. Implied Contract
Express is oral or written contract in which parties express intention in words. An implied contract is a result of the actions of the parties
Realtor (r)
Member of National Association of REALTORS, adhere to Code of Ethics
Farm Credit
A federal agency of the Department of Agricultural that offers programs to help families purchase or operate family farms
Replacement Cost
Current cost to reconstruct a building to serve the same function but not an exact duplicate of the original
Easement in Gross
Individual interest in someone else's land; no dominant tenement. Commercial may be assigned, conveyed or inherited; examples: utility lines, sewer, water
Discount Point
A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan
4 Unities of Joint Tenancy
PITT: Possession, Interest, Time and Title. All four must exist simultaneously for joint tenancy to exist
Affidavit of Title
Written statement, made under oath, that grantor identifies himself and marital status, certifies that there are no new defects on title
Property Management
Management of another's property for compensation
Exclusive-Right-To-Sell Listing Agreement
One agent (broker) is hired; broker receives a commission regardless of who finds the buyer for the property
Interest
Charge made by lender for use of money; a charge to "rent" the money
Appraisal
An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that set forth the process of estimation and conclusion of value
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Reconciliation
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison cost, and income approaches to arrive at a final estimate of market value the subject property.
Encroachment
A building or some portion of it - a wall or fence for instance - that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley
Errors and Omissions Insurance
Liability insurance to cover broker for errors and negligence in general business; usually does not cover civil rights or antitrust violations
Title Insurance
Policy insuring the owner or mortgagee against loss by reason of defects in the title of a parcel of real estate
Reversionary Right
The remnant of an estate that the grantor holds after granting a life estate to another person.
Defeasance Clause
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
Holographic Will
A will that is written, date, and signed in the testator's handwriting
Percentage Lease
Common lease for retail property; often a base monthly rent plus a percentage of any gross sales over that amount
General Warranty Deed
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed
Trust Deed Lien
A lien on the property of a trustor that secures a deed of trust loan.
National Association of Real Estate Brokers (NAREB)
Dedicated to equal housing opportunity, members are REALISTS
Heir
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
Incorporeal Right
A nonpossessory right in real estate; for example, an easement or a right of way
Implied Warrant of Habitability
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
Antitrust Laws
Laws to minimize unfair competition. Illegal to conspire to fix prices, allocate customers or markets
Material Fact
34-27-81 (12) A fact that is of significance to a reasonable party
Government Check
The 24 mile square parcels composed of 16 townships in the rectangular (government) survey system of legal description
Partnership
Under law, a group of individuals who carry on a continuing business for profit as co-owners; regarded as a single entit
Legal Description
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify
Mortgage, Mortgagor, Mortgagee
Document creating a pledge of real estate as security for the payment of the debt; borrower is the mortagor; lender is the mortgagee
Life Tenant
A person in possession of a life estate
Functional Obsolescence
Loss of value to an improvement to real estate because of functional problem, often caused by changing tastes or poor design
Leverage
The use of borrowed money to finance an investment
Intermediate Theory
Adopted by a number of states, a theory based on the principles of title theory but requires the mortgagee foreclose to obtain legal title.
Capping
Process of laying two to four feet of soil over the top of a landfill site and planting grass to enhance aesthetic value and to prevent erosion
Building Code
Ordinance that specifies minimum standards of construction for buildings to protect public safety and health
Prior Appropriation
A concept of water ownership in which the landowner's right to use available water is based on a government administered permit system
Liability Coverage
Insurance protecting property owner in case of damage to a person or another's property due to owner's negligence
Balloon Payment
Final payment of mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized
FHA Loan
Loan insured by Federal Housing Administration; made by approved lender with FHA's regulation; borrowers pay mortgage insurance premium (MIP)
Escheat
The reversion of property to the state or county, as provide by state law, in cases where a decedent dies intestate without heirs capable of inheriting , or when the property is abandoned
Title Theory
Some states interpret a mortgage to mean the lender is the owner of mortgaged land. Upon full payment of the mortgage debt, the borrower becomes the landowner.
Blue Sky Law
Common name for those state and federal laws that regulate the registration and sale of investment securities
Government Powers (4)
Police powers, eminent domain, taxation, escheat
Uniform Electronic Transaction Act (UETA)
Sets forth rules for entering into an enforceable contract using electronic means.
Land Contract
See installment contract
Parol Evidence Rule
A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations
Negotiable Instrument
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.
Real Estate Settlement Procedures Act (RESPA)
Federal law that requires certain disclosures to consumers about mortgage loan settlement; prohibits paying or receiving kickbacks and certain kinds of referral fees
Torrens System
A method of evidencing title by registration with the proper public authority, generally called the registrar, named for its founder, Sir Robert Torrens.
Federal Reserve System
Country's central banking system, responsible for nations monetary policy by regulating supply of money and interest rates; requires member banks to keep a reserve
Cooperative
Multi tenant building owned by trust or corporation; tenants own share of stock and proprietary lease
Designated Agent
A license authorized by a broker to act as the agent for a specific principal in a particular transaction
Mechanic's Lien
Statutory lien in the property where contractors or materialmen have labor or materials in a given property
Executory Contract
A contract which something remains to be done by one or more of the parties
Assessment
The imposition of a tax, charge, or levy, usually according to established rates
Escrow Contract
An agreement between a buyer, seller and escrow holder setting forth rights and responsibilities for each. An escrow contract is entered into when Earnest money is deposited in a broker's escrow account.
Common Law
The body of law based on custom usage and court decisions
Parol Evidence
Oral or verbal evidence
Statutory Right of Redemption
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
Air Lot
Designated airspace over a piece of land; my be transferred; used in describing a condominium unit
Cost Approach
Process of estimating property value by adding to estimated land value the appraiser's estimate of the cost of the building new, less depreciation
Option
Agreement to keep open for a set period an offer to sell or purchase property; usually a unilateral contract; one party must perform if the other so decides
Grantor, Grantee
n a deed, the grantor is the person transferring title in real estate to the grantee
Escrow Instructions
A document that sets forth the duties of the escrow agent, as well as the requirements and obligations of the parties, when a transaction is closed through an escrow
Buyer's Broker
A residential real estate broker who represents prospective buyers exclusively. As the buyer's agent, the broker owes the the buyer-principal the common law or statutory agency duties.
Tenant Improvement
Alterations to building to meet commercial or industrial tenant's particular space needs; must clarify trade fixtures (tenant's personal property) vs. landlord ownership
Requirements for sales person license
(a) A license for a broker or a salesperson shall be registered to a specific real estate office and shall be issued only to, and held only by, a person who meets all of the following requirements:
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
Passed in 1980, established Superfund to clean up uncontrolled hazardous waste site and to respond to spills
lis pendens
Recorded legal document giving constructive notice that the property is the subject of an action filed in a state or federal court
Estoppel Certificate
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest
Indemnification
In a listing, a clause that states that the seller and broker will not sue each other for any incorrect information supplied by one to the other
Buffer Zone
Strip of land separating one type of use from another; i.e., a park or running trails between the commercial buildings and the residential neighborhood
Tenancy by the Entirety
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.
Nonagent
An intermediary between a buyer and seller, or landlord and tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator and contract broker.
Annexation
Change personal property to real property, such as mising sand, stone and cement, and making a sidewalk
Voluntary Lien
A lien placed on property with the knowledge and consent of the property owner.
Testate
Having made and left a valid will.
Discount Point
Unit of measurement used for various loan charges; one point equals one percent of the loan amount
Physical Characteristics of Real Estate (3)
Immobility, Indestrucibility, Uniqueness (nonhomogeneity)
Department of Housing and Urban Development (HUD)
Governmental department that has established rules and regulations that further interpret the practices affected by the law. In addition, HUD distributes an equal housing opportunity poster.
Surety Bond
Cover an owner against financial losses resulting from employee's criminal acts or negligence while performing assigned duties
Pyramiding
The process of acquiring additional property by refinancing properties already owned and investing the loan proceeds in additional properties
Assumption of Mortgage
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and condition of the mortgage, including payments
Contract
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provide 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
Caveat Emptor
A Latin phrase meaning Let the Buyer Beware
Management Agreement
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority
Void vs. Voidable
Void has no legal force because it is lacking an essential part of a contract; voidable is one in which either or both parties may reject or disaffirm (contingencies)
Subdivision Plat
See plat map.
Datum
Horizontal plane from which heights and depths are measured
Severalty
Ownership of real estate by one person only; although a corporation (single entity) can own in severalty
Buyer's Agent
A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer's agent owes the buyer-principal the common law or statutory agency duties.
Dedication
The voluntary transfer of private property by its owner to the some public use, such as for streets or schools
Casualty Insurance
Coverage against theft, burglary, vandalism and machinery dames; health and accident insurance; often written for specific risks, i.e., theft, rather than all inclusive
Express Agency
An agency relationship based on a formal agreement between the parties
Security Agreement
See Uniform Commercial Code
Quitclaim Deed
Offers the least protection of any deed; conveys a real estate interest, if any; often used to correct misspelled names, etc.
Equal Credit Opportunity Act (ECOA)
Prohibits discrimination in lending based on race, color, religion, national origin, sex, receipt of public assistance, age and marital status
Federal Home Loan Mortgage Corporation
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Subagent
Agent working for an agent; in real estate, the salesperson is the broker's agent and the subagent to the seller (or buyer) Note - Not permitted in some states
Conventional Loan
Loan that is neither FHA nor VA; does not require insurance or guarantee, although today high LTV loans are made along with PMI (private mortgage insurance
Reproduction Cost
Construction cost at current prices of an exact duplicate of the subject property; i.e., using slate shingles on the roof instead of equally effective fiberglass shingle
Legal Description
Description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it
Lien
Right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by court sale
Restrictive Covenants
A clause in a deed that limits the way the real estate ownership may be used.
Taxation
The process by which a government of municipal quasi-public body raises monies to fund its operation.
General Real Estate Tax
A tax that is made up of the taxes levied on the real estate by government agencies and municipalities
General Agent
Agent hired to represent principal in specific range of matters: long-term broad authority
Riparian Rights
Owner's rights in land that borders on or includes a stream, river or lake. Rights include access to and use of the water
Encumbrance Claim
Charge or liability that attaches to real estate liens, restrictions, easements, encroachments
Certificate of Title
Based on examination of public records, a statement of opinion on the status of the title to a parcel of real estate
Fannie Mae
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Leasehold Estate
Tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest
Marketable Title
Good or clear title, reasonably free from the risk of litigation over possible defects
Purchase Money Mortgage
Form of seller financing; note and mortgage from buyer are given to seller (lender) as part of the purchase price of the real estate
Avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream
Tacking
Adding or combining successive periods of continuous occupation of real property by adverse possessors. this concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.
Income Property
Property held for current income as well as a potential profit upon its sale
Involuntary Alienation
See alienation
Transfer Tax
Tax on the transfer of real property; may require that stamps be attached to deed
Common Elements
Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements
Payment Cap
The limit on the amount the monthly payment can be increased on an adjustable rate mortgage when the interest rate is adjusted
Separate Property
Under community property law, property owned solely by either spouse before the marriage, acquired by gift, or inheritance after the marriage, or purchased with separate funds after the marriage.
Installment Sale
A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year
Tenancy in Common
Form of co-ownership in which each owner holds an undivided interest as if he or where were sole owners; individual owners have right to partition, right of inheritance
Market Data Approach
(also known as the sales comparison approach) An estimate of value obtained by comparing property being appraised with recently sold comparable properties
Dual Agency
Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states
Property Reports
The mandatory federal and state documents compiled by subdivides and developers to provide potential purchasers with facts about a property, prior to their purchase
Periodic Estate (Tenancy)
See Estate from Period to Period
Right of Survivorship
See Joint Tenancy
Nonconforming Use
Use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area
Participation
A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property
Underground Storage Tanks UST
Often used to store petroleum, if leaking can contaminate groundwater, only 10% of tank meeds to be underground to require monitoring
Lease Purchase
Purchase of real property after a period of a lease, usually long term; usually done for tax or financing purposes
Party Wall
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties
Income approach
The process of estimated 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
Change
The appraisal principle that holds that no physical or economic conditions remains constant
Real Property
Interests, benefits and rights inherent in real estate ownership
Independent Contractor
Person hired to perform a certain act, only end result is under control and direction of another. Most real estate licensees are treated as independent contractors
Fraud
Intentional misrepresentation of a material fact in order to harm or take advantage of another person
Fee for Service
Arrangement where a consumer asks a licensee to perform specific real estate services for a set fee
Straight Line Method
A method of calculating depreciation for tax purposes computed by dividing the adjusted basis or a property by the estimated number of years of remaining useful life.
Real Estate
Land; a portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially
Payoff Statement
See Reduction Certificate
Condominiums
Ownership of the airspace of a unit, plus undivided interest in common elements
Will
Written document, properly witnessed, providing for transfer of title to property owned by the deceased, called the testator
Procuring Cause
In order to be paid, the broker starts an uninterrupted chain of events that results in a sale
Commingling
The illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties funds held temporarily by the broker
Actual Notice
Express information or fact; that which is known, direct knowledg
Right-of-Way
The right given by one landowner to another to pass over the land, construct a roadway or use as a pathway, without actually transferring ownership.
Littoral Rights
(1) A land owner's claim to use water in large navigable lakes and ocean's adjacent to his or her property. (2) The ownership rights to land bordering these bodies of water up to the high water mark.
Reversion/Remainder Interests
Future ownership rights after life estate ends; remainder interest passes to a third party; reversionary interest reverts to the original owner or heirs
Adverse Possession
Possession of another's land as if the owner for a statutory period which may lead to acquiring title
Air Rights
The right to use the open space above a property usually allowing the surface to be used for another purpose
Deed
Written document that, when executed and delivered, conveys title to or an interest in real estate
Fiduciary
One in whom trust and confidence is placed; a reference to a broker employed under the terms of listing contract or buyer agency agreement
Trustor
A borrower in a deed of trust loan transaction; one who places property in a trust. Also called a grantor or settler.
Equity Buildup
That portion of the loan payment directed toward the principal rather than the interest, plus any gain in property value due to appreciation
Protected Classes
Any group of people designated by HUD in consideration of federal and state law; currently includes ethnic minorities, women, religious groups, handicapped and others
Quiet Title
A court action to remove a cloud on the title
Contingency
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding
Multiple Listing Clause
A provision in an exclusive listing for the authority and obligations on the part of the listing broker to distribute the listing to other brokers in the multiple listing organization
Market Value
Most probable price the property will sell for in an arm's-length transaction under normal conditions on the open market
Hypothecation
To pledge property as security for loan obligation without giving up possession of it; opposite of practice in a pawn shop
Constructive Eviction
When the tenant is forced to vacate the property because the landlord failed to provide essential services; tenant is no longer obligated for any further rent
Real Estate Investment Syndicate
See Syndicate
Development
Construction of improvements on lnad, i.e., new homes, water lines
Group boycotts
Illegal antitrust activity. Two or more businesses conspire against another business or agree not to work with another company in order to reduce competition
Tax Lien
A charge against property created by operation of law. Tax liens and assessments take priority over all other liens.
Mortgage
A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.
Lead
Metal in body can cause serious damage to brain, kidneys, nervous system; used extensively in paint; must be discussed when selling a house built before 1978
Urea Formaldehyde Form Insulation (UFFI)
Gases that leak out of UPPI becomes trapped in building, may cause respiratory problems

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