A-G Flashcards
Abatement
A method of termination of a nuisance.
Absorption Rate
Rate at which new or vacant property is being occupied.
Abstract
A recorded history of a property (abstracts of all recorded documents).
Abstractive Method
An appraisal method used to find comparable land value. The value of improvements is deducted from comparable sales, and the remainder is the value attributed to the land.
Abstract of judgment
A condensation of a court judgment which, when recorded in the county where the property of the debtor is located, becomes a lien on the property.
Abut
To border on or to touch
Accelerated depreciation
Any method of depreciation that allows a greater rate than the straightline method.
Acceleration clause
A clause in a note giving the lender the right to demand the entire balance owed upon the happening of some event.
Acceptance
The agreement of the offeree that forms the binding contract.
Access Right
The right of an owner for ingress and egress.
Accession
Acquiring property because it has become joined with other property (such as fixtures).
Accommodation party
A third person who signs a negotiable instrument to give it strength.
Accord and satisfaction
Acceptance of a different consideration than had been agreed to. This is common where there is a disputed claim and one party accepts less than the agreement calls for
Accretion
Addition to land from buildup of soil or action of water
Accrued depreciation
Depreciation that has occurred. It is the difference between present replacement cost and present market value.
Accusation
The first action of the Real Estate Commissioner in instituting a hearing against a licensee
Acknowledgment
A declaration made before a notary by an individual that he or she has, in fact, executed (signed) a document.
Acquisition
Act of procuring property.
Acre
A measurement of land equal to 43,560 square feet or 208.7 feet by 208.7 feet.
Action in personam
Legal action against a person.
Action in rem
Legal action against a property.
Actual notice
Personal knowledge of an interest or instrument.
Ademption
The disposal of a property before death that revokes any disposition made by a will.
Adjusted cost basis
Cost plus improvements minus deductions taken for depreciation.
Adjusted gross income
Gross income adjusted for a vacancy factor and collection losses.
Adjusted market value
Adjustments to comparable property sales to estimate sale price of a subject property.
Administrative Procedures Act
An act that covers procedures for hearings by administrative agencies, such as hearings for revocation, denial, or suspension of real estate licenses.
Administrator
A man appointed by a probate court to administer the estate of the deceased. (A woman would be an administratrix.)
Adobe
A type of soil (also a type of brick).
Ad valorem
A tax according to value (such as
real estate tax).
Advance commitment
A lender’s prior agreement to provide permanent financing after construction is complete.
Advance fee
A fee charged by a business-opportunity broker for advertising (the ad must be in a publication primarily devoted to the sale of property).
Adverse possession
Holding property adversely to the owner’s right. Title can be obtained by adverse possession.
Aesthetic zoning
Zoning for appearance.
Affidavit
A written statement sworn under oath.
Affirm
To ratify or verify
Affirmation
A solemn statement before a court by a person whose religion prohibits him or her from taking an oath.
Affirmative easement
An easement that allows the holder of the dominant tenement to use the land of the servient tenement.
Affordability Index
A National Association of Realtors® Index that shows the relationship between the median family income and the median price home in a community.
After-acquired title
A title or interest acquired by a grantor after he or she has conveyed the property.
Age-life tables
Appraiser’s tables that show economic life for various types of structures.
Agency
A relationship between a principal and an agent whereby the agent is empowered to act for the principal.
Agency by estoppel
Agency formed when principal’s actions or words Reasonably result in a third person relying on the existence of an agency
Agency by ratification Agency formed when principal accepts benefits of unauthorized acts by another.
Agency coupled with an interest An irrevocable agency in which the agent has an interest in the subject property.
Agent
One who represents another.
Agreement of sale
A written contract setting forth the conditions of sale.
Air rights
The right of a landowner to reasonable use of the air space above the property.
Alienation Transfer
A type of acceleration clause requiring the existing loan to be paid if property is transferred. Also known as a due-on-sale clause.
Allodial tenure
An ownership system in which ownership is complete except for some rights held by the government.
Alluvium
Soil deposited by action of water (accretion).
ALTA (American Land Title Association)
An extended-coverage policy of title insurance to protect the lender.
Alteration
Unauthorized changes in a contract made by one party to the agreement. It voids the contract.
Amend-escrow instructions
A change in escrow instructions, such as an extension. Both parties must sign.
Amendment
Change to an agreement that has
Amenities
Satisfaction derived from living in a home, such as the beauty, privacy, and so on, that contribute to the quality of life.
AMO (Accredited Management Organization)
A firm that meets the guidelines of the Institute of Real Estate Management (IREM) and includes at least one Certified Property Manager (CPM).
Amortization
Payment of a debt on an equal installment basis in which the last payment liquidates the obligation.
Anchor bolt
A bolt used to anchor the mudsill to the foundation.
Anchor tenant
Major tenant in shopping center that attracts other tenants.
Ancillary probate
A probate in a state other than the domicile state in which the deceased owned property.
Annexation
Adding to, such as a city adding additional land
Anticipatory breach
An act or renunciation prior to performance due that can be treated by other party to contract as a breach.
Antimerger clause
A clause that provides that the senior lienholder retains lien priority in the event of a merger should there be a deed in lieu of foreclosure. While a foreclosure of a senior lien wipes out junior liens, a deed in lieu of foreclosure would leave the junior liens intact if this clause were not in the trust deed.
Appraisal
An opinion of value.
Appreciation
A rise in value.
Appropriation of water
Diverting water to one’s own use. The appropriator, after doing so for a period of time, obtains a continuing right (the right of prior appropriation).
Appurtenance Something that belongs with another thing and goes with it (such as a house with land).
Appurtenant easement An easement right that transfers with the dominant tenement.
APR (annual percentage rate) Expressed as simple interest considering loan costs
APY (annual percentage yield) The annual interest paid by a bank for deposits based on compounding the interest.
Arbitrage
Making money on an interest difference (buying at one interest rate and selling at a higher rate).
ARM (adjustable rate mortgage)
A mortgage whose rate is tied to an index such as the T-bill rate
Articles of Incorporation
Filed with secretary of state that state the activities the corporation can be engaged in.
Artificial monument
A manmade point on a metes and bounds description, such as an iron stake, road, canal, or building.
Asbestos
Mineral formerly used in construction. Asbestos dust causes lung problems.
As is
A statement intended to mean that the purchaser will not hold the seller liable for any problems. Its use is considered unethical unless it refers to a specific problem that the purchaser is aware of.
Assemblage
The act of bringing together two or more contiguous parcels to form a larger parcel.
Assessed value
A value placed for tax purposes.
Assessment
The amount of tax levied.
Assessor parcel number
Informal property description based on assessor’s designation. Used on tax bills.
Assets
Property owned by or owed to a business.
Assignment
The turning over to another of a person’s rights in property.
Assignment of rents
Transfer of the right to collect rent. This is often included in trust deeds, allowing the beneficiary to collect the rents when the trustor is in default.
Assignor
One who assigns to another.
Assigns/assignees
Those to whom property has been assigned
Associate broker
Broker employed by another broker in a salesperson capacity.
Assumption
Taking over an obligation of another and agreeing to pay
Assumption fee
Fee charged by a lender to allow assumption of loan.
Attachment
Seizure of property before a judgment under court order to make sure it will be available after judgment. An attachment lien is good for three years.
Attest
To witness a document.
Attorney-in-fact
One who operates under a power of attorney. Not necessarily a licensed attorney.
Attornment
A tenant’s agreement to pay the new landlord and the landlord’s agreement to honor the lease. A tenant will often enter an attornment agreement with a lender to be protected in case the prior trust deed is foreclosed.
Attractive nuisance doctrine
A doctrine according to which an owner is liable for unsafe conditions to child trespassers if children are likely to be attracted
Avulsion
Tearing away of land by action of water
Axial growth
Fingerlike growth in all directions from the center of a city following highways, rivers, and so on.
Back-end ratio
Loan qualifying ratio (gross income to loan payment and long-term debt payments).
Backfill
Dirt filled in around an excavated foundation.
Bailment
Giving possession of personal property for some purpose but retaining title (such as renting a trailer or leaving shoes for repair).
Balance sheet
A document that shows net worth by listing assets on one side and liabilities on the other.
Balloon payment
A final installment payment greater than the preceding payments; it is needed to pay the debt in full.
Baltimore method
An appraisal method for a corner commercial lot in which the value of the corner lot is said to be equal to the sum of the values of the lots on each side of it.
Band-of-investment method
A method of finding an average capitalization rate to use for appraising.
Banker’s interest
Interest based on a 30-day month and a 360-day year.
Bankruptcy
A legal procedure whereby a person can eliminate his or her unsecured debts (to eliminate secured debts, one must surrender security). A person cannot go bankrupt more than once every six or eight years.
Bargain-and-sale deed
A deed, given for consideration, that does not contain any warranties other than that the grantor has not harmed or
clouded the title.
Baseboard
A narrow board placed against the wall at the floor around the perimeter of a room.
Base line
An east-west surveyor’s line used to locate property.
Base shoe or molding
Molding used in conjunction with the baseboard.
Basis point
A measure: 1 /100 of 1 percent.
Batten
Wood strips used to cover joints (as in board-and-batten siding).
Beam
A heavy horizontal structural member.
Bearer paper
An instrument made out “to bearer” or to “cash.” No endorsement is necessary to negotiate it.
Bearing wall
A wall that also supports the building.
Benchmark
A location marker placed by a government survey showing elevation.
Beneficiary
One who is benefited by a trust, or the lender under a trust deed.
Beneficiary statement
A statement by a lender as to the condition of a trust note (the balance).
Bequeath
To give by will.
Betterments
Improvements to real estate.
Bilateral contracT
A promise made for a promise.
Bill of sale
A written instrument passing title to personal property
Binder
Insurance coverage given by an agent prior to issuance of policy.
Biweekly mortgage
A mortgage where half of the monthly payment is made every two weeks resulting in 13 monthly payments per year.
Black mold
Dangerous mold that can affect respiratory systems.
Blank endorsement
Signing name only on back of negotiable instrument. No further endorsements are required
Blanket mortgage
One encumbrance covering several separate properties.
Blended interest rate
A rate of interest greater than the previous rate but less than the prevailing rate. It is used in refinancing and loan assumptions.
Blind advertisement
An ad that fails to state that the advertiser is a broker or an agent. (An abbreviation, such as Agt. or Bro., is Acceptable.)
Blind pool
A syndication in which the property to be purchased will be selected after the money is raised
BLM (Bureau of Land Management)
The federal bureau that controls federal land.
Blockbusting
The illegal procedure of inducing panic selling based on the fear of minority groups entering the area.
Blue sky laws
State security laws to prevent sale of securities without registration. Purpose is to help prevent fraud
Board foot
A measurement for lumber. One foot by one foot by one inch, or 144 cubic inches.
Book value
The value at which a firm carries an asset on its books (cost plus improvement expenses minus depreciation).
Boot Additional money or unlike property given to even up a trade of property
Bracing Diagonal boards added for rigidity (located in corners).
Breach
The breaking of an agreement or a law.
Bridging
Diagonal boards nailed between joists.
Broker
A person employed as an agent for real estate dealings. Only a broker can employ a salesperson.
Brownfields
Areas having soil contamination due to chemical discharge.
BTU (British thermal unit)
A unit of heat measurement. One BTU equals the amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit. It is used to measure the capacity of heating units
Budget loan
A loan with payments that include taxes and insurance.
Buffer zone
An area that divides different zoning uses.
Building line
The setback for building.
Building paper
Tar or impregnated paper used as a vapor barrier in the walls and on the roof.
Building permit
Construction permit issued by building inspector’s office.
Bulk Sales Act
Part of the Uniform Commercial Code. It requires recording and publication of sales not in the course of usual business.
Bulk zoning
The use of zoning to control density with setbacks, height, and open-area requirements.
Bullet loan
A short-term unamortized loan
Bundle of rights
Includes all rights that are incidental to ownership (such as the right to sell or lease).
Buy-down loan
A loan in which the seller pays the lender so that the lender will provide the purchaser with a loan at a lower rate of interest.
Buyer agency
Single agency where licensee represents buyer, not seller.
Buyer’s market
A real estate marketplace where there are more sellers than buyers.
Bylaws
Corporate rules that include the authority of officers.
Caliche
A type of soil.
California Homeowners Protection Law
An act that gives homeowners a bill of rights dealing with
foreclosure.
California Housing Finance Agency (CALHFA)
A state housing bank supported by bond issues that
offers home loans to lower and moderate income
buyers.
CALVET loans
Loans made to California Veterans; administered by the California Department of Veterans Affairs
CAN-SPAM Act of 2003
An act to control unsolicited and misleading e-mail solicitations.
CAP
The limit an adjustable rate loan can be increased at each adjustment period and/or over the period of the loan.
Capital assets
Physical assets (land, buildings, and equipment).
Capital gain
Profit from the sale of a capital asset.
Capitalization method
An appraisal method based on the income of a property.
Capitalization rate
A percentage of return that is divided into net income to arrive at value
Capital loss
Loss from the sale of a capital asset.
Capital market
Refers to the financial marketplace for bonds, notes, and treasury bills.
CAR (California Association of REALTORS®)
The state organization of the National Association of REALTORS®.
Casement window
A window on hinges that swings outward.
Cash flow
The amount of cash left over from gross receipts after cash expenses (does not consider paper expenses such as depreciation).
Casing
Wood trim around doors and windows.
Caveat emptor
“Let the buyer beware.” The old rule is now being replaced with duties on the seller.
CC&Rs
Covenants, conditions, and restrictions.
CCIM (Certified Commercial Investment
Member)
A designation earned by a member of the Commercial-Investment Real Estate Institute, which is a part of NAR.
CERCLA (Comprehensive Environmental
Response Compensation and Liability
Act)
Makes owners strictly liable for cleanup costs
Certificate of eligibility
A certificate given by the VA to a veteran as to loan eligibility.
Certificate of occupancy
Required from building inspector’s office prior to new structure being occupied.
Certificate of Reasonable Value (CRV)
A VA loan appraisal.
Certification of title
An opinion of title showing liens
Certified appraisal
A written appraisal in accordance with standards required by law.
Chain
A surveyor’s measurement equal to
66 feet.
Chain of title
A history of the actual conveyances from the original patent to the present owner.
Chattel
An archaic term for personal property.
Chattel mortgage
A mortgage on personal property.
Chattel real
A personal property interest in real property (a lease).
Check
A 24-mile square area formed by correction lines on government surveys. This is also known as a quadrangle.
Chronological age
The actual age of a structure.
Circuit breaker
A safety device that shuts off electricity in the event of an overload (used instead of a fuse).
Civil Rights Act of 1866
First act to prohibit race discrimination in housing accommodations.
Civil Rights Act of 1964
Act that prohibits discrimination in government related housing.
Civil Rights Act of 1968
Federal Fair Housing Act.
Clapboard
Overlapped horizontal board siding
Clearance receipt
A receipt from the State Board of Equalization for the sale of a business, certifying that the sales taxes have been paid to a certain date.
Client
Principal that employs the agent.
Close corporation
Corporation where stock is held by a small number of stockholders who actively control the corporation. There is no ready market for its stock.
Closing statement
The final accounting statement for a real estate transaction.
Cloud on title
Anything of record that may create any possible doubt as to marketability of the title.
CLTA (California Land Title Association)
The organization that developed the standard form of
title insurance for buyer protection.
Cluster zoning
Zoning where housing is densely clustered allowing open spaces between clusters.
Codicil
An amendment to a will.
Coinsurance
Requires that insurance be at least 80 percent of the replacement value. If the insured carries only a percentage of the required coverage, then the insured gets only that percentage of any loss (generally for non-residential property).
Collar beam
A horizontal beam connecting opposite rafters.
Collateral
Property given as security for a loan
Collaterally
secured Describes a loan secured by other loans, such as in mortgage warehousing.
Collusion
Agreement to defraud or to perform an illegal act.
Color of title
An appearance of having title but actually not having title at all.
Commercial acre
The net remainder of an acre after deduction of land for streets, walks, and so on (less than 43,560 square feet).
Commercial paper
Bills and drafts used in lieu of currency in a business
Commingling
Failure to properly segregate the personal funds of a licensee from funds entrusted to the licensee as an agent.
Commission
An agent’s percentage for successfully completing a sale, lease, and so on. For tax purposes, it is treated as an expense of the sale or lease.
Commitment
A pledge or promise. For example, a loan commitment is a promise to make a loan.
Common area
An area of common interest owned by all owners in a subdivision.
Common elements
Those portions of the common areas for the use of all the owners (see Limited common elements).
Common interest development(CID)
A subdivision with areas owned in common with other
owners, such as planned developments, condominiums, stock cooperatives, and community apartment projects.
Common law
The unwritten law of England carried over into U.S. statutes.
Community apartment project
Two or more units where each tenant has an undivided interest in the entire building plus the right to occupy a particular unit.
Community property
Property acquired during marriage that is owned equally by both spouses.
Community property with right of survivorship
Community property type that cannot be willed.
Community Reinvestment Act
Requires federally regulated lenders to publicize equal lending opportunity
Compaction
Packing soil to support a building load. Important where fill material has been used
Company dollar
The broker’s share of commission dollars earned (expenses would be deducted to determine the broker’s net income).
Comparative Market Analysis (CMA)
An analysis by real estate agents to estimate the likely sale price by adjusting the value to the price paid for comparable properties.
Compensating balance
A lender requirement that a borrower maintain a portion of the loan in a low-yield account with the lender. It serves to raise the effective rate of interest.
Compensatory damages
Damages awarded to make up for a loss suffered or to compensate for the damages.
Complete escrow
An escrow in which everything required to be done has been completed.
Completion bond insurance
Bond that obligates insurance company to complete construction if the builder defaults.
Compound interest
Interest paid both on previously accumulated interest and on principal.
Concentric-circle growth
Urban growth in a circular pattern from the city center.
Condemnation
The process of taking private property for public use. Also a declaration that the property is unfit for use.
Condition precedent
The passing of title is not accomplished until the condition has been fulfilled.
Condition subsequent
The reversion of title to the previous owner upon the happening of some event.
Conditional commitment
A promise to make a loan of a specified amount to a buyer yet unknown, providing his or her credit is okay
Conditional sales contract
A sales contract for personal property in which the buyer obtains possession, but the seller retains title as security
Conditional-use permit
Permission for a use not allowable by the zoning, but provided for under special permission.
Condominium
A subdivision in which there is individual ownership of the units themselves, but joint ownership of common areas.
Condominium declaration
The document that establishes the condominium.
Conduit
A metal or plastic pipe containing electrical wires.
Confession of judgment
The debtor agrees to a judgment by voluntary admission.
Conforming loan
A loan that meets Fannie Mae and Freddie Mac purchase criteria.
Conservation easement
An easement granted by a landowner that prohibits future development (the land is to remain in a natural state).
Conservator
A person appointed by the court to handle the property of one who is unable to handle his or her own affairs.
Consideration
Something of value given in exchange for a promise, act, or property
Consistency doctrine
The requirement that cities and counties bring their zoning into conformance with the general plan.
Constructive eviction An act of a landlord materially
affecting a tenant’s quiet possession, which
entitles the tenant to consider the tenancy at an
end
An act of a landlord materially affecting a tenant’s quiet possession, which entitles the tenant to consider the tenancy at an end
Constructive notice
The notice given by recording or occupancy. Although the parties are not actually notified, it serves as notice
Constructive severance
When crops are sold, they are considered to be personal property even though they have not been physically severed.
Consumer Caution and Homeownership Counseling Notice
A notice that warns borrowers that the lien they are placing could lead to loss of their home.
Consumer goods
Goods used for personal or household purposes rather than in production.
Consumer Recovery Account
A CalBRE account to indemnify persons harmed by actions of real estate licensees.
Contiguous
Adjoining or actually touching.
Contingent remainder
A remainder interest in property that will vest only if some contingency is met.
Contour lines
Lines on a topographic map. When the lines are far apart, it means that the land is relatively flat.
Contract
An agreement enforceable by law.
Contract of adhesion
A one-sided take it-orleave it contract. In case of ambiguity, the court will decide against party drafting it.
Contraction period
A period in which real estate prices hit their low point; it follows a recession period.
Controlled business arrangement
Broker-controlled service provider that operates as separate business but broker shares in profits.
Conventional loan
A loan neither guaranteed nor insured by the government. It is made by a lending institution.
Conversion
Taking the property of others and converting it to one’s own use.
Convertible mortgage
A mortgage that can be changed to another loan type.
Conveyance
Transfer of property
Cooperative
Ownership where each owner owns stock with a right to occupy a unit.
Corner influence
Additional value of commercial property because of a corner location.
Cornice
Ornamental stonework on top of a wall or building.
Corporation
A legal entity created by law (an advantage of a corporation is no personal liability of stockholders for debts of the corporation).
Corporeal rights
Possessory rights in real property
Correction lines
Surveyor’s lines used to compensate for the curvature of the earth in government surveys. Their use results in some townships not containing 36 square miles and some sections of less than 640 acres
Correlative user
The right of a landowner to use underground percolating water.
Costa–Hawkins Rental Housing Act
Act that allows landlord under rent control to establish new base rent for new tenants.
Cost approach
A method of appraisal that takes the cost to build today minus accrued depreciation plus the value of the land.
Cotswold
A two-story English stone cottage.
Counterflashing (flashing)
Metalwork mounted around the chimney and vents to keep out rain.
Counteroffer
An offer made by original offeree that rejects offer and makes a new offer.
County board of supervisors
Sets the tax rate, sits as the County Board of Tax Equalization for assessment appeals, and also hears zoning appeals.
Covenant
A promise. When recorded, it runs with the land and binds subsequent owners.
Covered Loan
A loan that does not exceed the current Fannie Mae conforming loan limit for single-family first mortgage loans.
CPI (consumer price index)
An index that reflects inflation. Long-term leases are often tied to the CPI.
CPM (Certified Property Manager)
A member of the Institute of Real Estate Management.
Crawl space
The air space between the ground and the floor for homes not built on concrete slabs. The minimum height is 18 inches. The minimum size of the access hole is 18 inches by 24 inches.
CRB (Certified Real Estate Brokerage Manager)
A designation conferred by the REALTORS® National Marketing Institute of the NAR.
CRE (Counselor of Real Estate)
A member of the American Society of Real Estate Counselors.
Creditor
One to whom something is owed.
Cripple
A short vertical piece of two-by-four above or below an opening.
Cross-default clause
A loan provision in which default on one loan constitutes default on the other loans of the trustor.
Cubage
Square feet within a structure.
Cul-de-sac
A dead-end street ending in a circle. It is desirable for homes because it is subject to little traffic.
Cumulative zoning
Zoning that allows more restrictive uses.
Curable depreciation
Depreciation that can be corrected within reasonable limits of expense. If not, it is incurable.
Curtail schedule
A loan schedule showing payments and amount that principal is reduced by each payment.
Curtesy
A common law right one spouse has for the other’s estate. Not valid in California.
Customer
A buyer or seller not represented by the agent.
Damages
The amount of injury suffered for which the injured party can recover from the wrongdoer.
Datum plane
A surveyor’s level plane that shows elevations.
Debenture
Bonds issued by a corporation without any security.
Debtor
A person who owes money
Deciduous trees
Trees that lose their leaves, as opposed to coniferous trees.
Declaration of homestead
A recorded document giving a person an exemption from unsecured liens. It is filed on the home by the owner at the time he or she is living in it.
Declaration of restrictions
Restrictions recorded by the subdivider to cover all the parcels.
Declaratory relief
A court determination of rights of parties prior to a contractual breach.
Declining-balance depreciation
An accelerated method of depreciation used for tax purposes.
Dedication
Giving real property free of charge to a public body. Under common law, the dedicated land belongs to the dedicator, but exclusive use is given.
Deed
A written instrument conveying title to real property
Deed in lieu of foreclosure
A deed given by the trustor to the beneficiary. (It might not wipe out junior encumbrances.)
Deed of reconveyance
A deed given by the trustee to the trustor when the trustor has paid up the trust note. Recording the deed of reconveyance removes the lien.
Default
Failure to meet an obligation.
Defeasance clause
A clause in a mortgage or trust deed that provides for the release of the lien upon payment.
Defeasible estate
An estate that may be lost on the happening of some event (condition subsequent).
Deferred maintenance
Needed maintenance that has not been performed.
Deficiency judgment
A judgment obtained when foreclosure sale of the loan security does not satisfy the entire debt.
Degree
A measurement for angles. Each degree is 1/360 of a circle. A degree may be broken down into minutes, which are 1/60 of a degree.
Demand Statement
A demand of lender for loan payoff amount (includes any fees).
Demise
Transfer of a leasehold interest.
Demographic study
A study of the social and economic makeup of the people in an area (by age, sex, marital status, income, etc.).
Deposit receipt
Now known as a purchase contract and receipt for deposit. It is an offer to purchase given by the buyer and accepted by the seller
Depreciation
A loss in value of property.
Depth table
An appraiser’s table for finding the additional value attributable to additional depth of a property.
Dereliction
Land created by permanent recession of water.
Descent
Passing of property to an heir
Designated agency
A divided agency within a single office where one salesperson is designated the seller’s agent and another buyer’s agent.
Desist-and-refrain order
An order by the Real Estate Commissioner to stop a violation of the Real Estate Law.
Desk cost
The complete office overhead apportioned to each salesperson; overhead divided by the number of salespersons.
Determinable fee
An estate that automatically ends on the happening of an event.
Development method
An appraisal method used to determine land value in which the cost to develop an improvement is deducted from the value the property would have if it were so improved, leaving the value of the land.
Devise
A transfer of real property by will.
Devisee
A person who receives under a will.
Devisor
A person who gives by a will.
Direct endorsement program
A program in which lenders are able to process FHA insurance applications without prior approval of the FHA.
Directional-growth area
An area in which residential sections are spreading from the city
Discounting a loan
Selling a loan for less than the value owed.
Discount loan
A loan in which the interest is deducted in advance from the proceeds.
Discount point
A percentage of loan added by the lender to increase the yield on the loan.
Discount rate
Federal Reserve rate charged to member banks to borrow money.
Disintermediation
The sudden withdrawal of savings from banks and savings and loan institutions.
Disposable income
Income left after taxes.
Distribution
Division of an estate in probate after all expenses and debts are paid.
Doctrine of Agreed Boundaries
Parties can agree on where a boundary lies.
Documentary stamps
A county tax on the equity over $100 transferred in a real estate transaction. The tax is 55 cents per $500 or portion thereof.
Domestic partners
Unmarried couples who wish to be treated with marital rights by registering their relationship.
Domiciliary probate
Probate in the state where the deceased lived.
Dominant tenement
The estate that has the use of the land of another under an easement.
Donee
A person who receives a gift.
Donor
A person who makes a gift.
Do-Not-Call
Registry Registration that prohibits most unsolicited solicitation phone calls to residential phones where the phone number has been placed on a registry.
Double escrow
Use of one escrow by an individual to both buy a property and resell it. It is used by dealers and speculators.
Double-hung window
A window that slides up and down.
Dower
One spouse’s right in the estate of the other spouse under common law. Not valid in California.
Down zoning
A change in zoning to a more restrictive use, such as a change from commercial to residential zoning.
Dragnet clause
A clause extending a deed of trust to cover past and future obligations between the trustor and the beneficiary.
Drive-by appraisal
Appraisal report based on exterior appearance and comparable sales.
Drywall
An interior wallboard treatment other than plaster (which is applied wet).
Dual agency
An agency in which the agent represents both the buyer and the seller.
Due diligence
Process of investigation that a reasonable person would make.
Duress
Unlawful constraint in which a person is forced to act. Duress may be a threat or actual violence.
DVA (Department of Veterans Affairs)
Guarantees VA loans
80/20 loan
A no down payment loan with an 80 percent loan and a 20 percent loan as secondary financing.
Earnest money
Money given with an offer.
Easement
A right of a landowner to use the land of another for a special purpose.
Easement by necessity
An easement granted when both tenements were formerly under one ownership and no other access is
possible.
Easement in gross
A right of someone who is not a land owner to use the land of another (there is no dominant tenement).
Eaves
The part of the lower roof that projects beyond the walls.
ECOA
Equal Credit Opportunity Act.
Economic life
That period for which a property gives a financial return attributable to the improvements and not the land.
Economic obsolescence
A decline in value or depreciation caused by forces outside the property itself.
Economic rent
Anticipated rental income based on comparable rentals in the marketplace.
Economies of scale
Savings resulting from increased production.
Effective age
The age placed by an appraiser on a structure based on actual condition, not chronological age.
Effective gross income
Gross income minus the vacancy factor and collection losses.
Effective interest
The actual interest rate considering loan fees and so on. (The nominal rate is the rate stated.)
Elder abuse law
Requires broker to notify authorities if it appears that fraud, theft, or undue influence has influenced an elderly person as to a transaction.
Ejectment
A legal action to oust a trespasser or an encroacher.
Eleemosynary
Charitable.
Elevation
Views of a structure from various sides found on builder’s plans.
Ellis Act
Allows owner to withdraw property from rental market and go out of business.
Ellwood tables
An appraising method to determine the capitalization rate.
Emancipated minor
A minor who is allowed by law to contract as an adult.
Emblements
Cultivated crops (a tenant has the right to take the crops after the tenancy has ended if they are the product of his or her labor).
Eminent domain
The right of government to acquire private property for public or quasi-public use. The owner is compensated for value at the time the property is taken.
Enabling legislation
Laws that give powers to government units such as zoning authorities.
Encapsulation
Sealing off hazardous material such as lead, paint, or asbestos.
Encroachment
A form of trespass in which a building or improvement is placed on or over the land of another.
Encumbrance
Anything affecting title or use, such as liens, easements, and covenants.
Endangered Species Act
Act protects endangered species from government interference and private harassment.
Endorsement
Signing of one’s name on the back of a negotiable instrument.
Energy Conservation Retrofit Law
The seller is obligated to pay for any retrofitting required for energy conservation. The more efficient the higher the EER.
Energy efficiency ratio (EER)
The efficiency rating of appliances, water heaters, furnaces, and air conditioners.
Environmental impact report (EIR)
Required for all projects that may have a significant effect on the environment. It is required under the Environmental Quality Act of 1970.
Equal Credit Opportunity Act
A federal act prohibiting discrimination in credit.
Equal Dignities Rule
If an act must be in writing, authorizing an agent to perform the act must also be in writing.
Equitable title
Right of a trustor and vendee under land contract to obtain legal title.
Equity
A person’s financial interest in property; the difference between its value and what is owed against it. The term also means “justice” or “what is right.”
Equity of redemption
The right of a mortgagor to redeem his or her property after foreclosure. The time limit is one year in case of foreclosure by court action when the sale is for less than the balance owing.
Erosion
Wearing away of land by action of water
Errors and omissions insurance
Malpractice insurance covering errors or failures.
Escalator clause
A clause in a contract or lease providing for adjustments in costs upward or downward.
Escheat
The reversion of property to the state when a person dies without either a will or heirs.
Escrow
A neutral depository for documents and funds to carry out instructions in a real estate transaction.
Estate
An interest in property.
Estate at will
An estate that can be terminated without notice by either party (not valid in California).
Estate for life
A freehold interest that a person has in property for the duration of his or her life or someone else’s life. The person’s interest is not inherited by his or her heirs but either reverts to the grantor or goes to someone having a remainder interest.
Estate for years
An interest for a definite period of time (such as a lease for a specified period).
Estate of inheritance
An interest that may be inherited.
Estate on condition subsequent
An estate that can be lost upon a condition happening.
Estate on condition precedent
An estate that does not vest until some happening.
Estoppel
A doctrine whereby a person is barred from raising defenses when, by previous statements, he or she induced another person to act to his or her own detriment.
Estoppel Certificate
Statement by borrower that borrower has no offsets or defenses against lender when loan is sold or a statement by a tenant that the tenant has no offset or claim against landlord should the property be sold.
Estovers
A tenant’s reasonable right to use timber from the premises for fuel, fences, and so on
Et al.
“And others.”
Ethics
Principles of conduct toward others. (The REALTORS® Code of Ethics comes from the NAR.)
Et ux.
“And wife.”
Eviction
Dispossession by process of law pursuant to a court judgment.
Exception in deed
Exclusion of a part of the property from a grant.
Excess land
Land that does not economically contribute to a property value (more land than can be utilized).
Exchange value
The value in terms of other goods that could be obtained for the property.
Exclusionary clause
A clause in a deed excluding part of the property from the grant.
Exclusionary zoning
Zoning that excludes specified uses.
Exclusive agency listing
A listing whereby the agent is entitled to a commission if anyone other than the owner procures a buyer.
Exclusive right-to-sell listing
A listing whereby the agent is entitled to a commission if the property is sold by anyone during the listing.
Exculpatory clause
A clause in a contract excusing one party for injuries that may result. Frequently inserted by lessors in leases.
Execute
To sign or to complete.
Executed contract
A contract that has been performed.
Executing judgment
Having the sheriff collect on a judgment by going against the property of the debtor
Executor
A man named by will to administer the estate of the deceased. (A woman would be an executrix.)
Executory contract
A contract that has not yet been fully performed.
Exemplary damages
Damages in excess of the actual loss, awarded for the purpose of punishment (punitive). They are awarded when the damage is willful or outrageous.
Expandable home
A home designed for future expansion.
Expansion joint
A fiber joint in concrete to prevent cracking.
Express contract
A contract that is stated (written or verbal) rather than implied.
Extension of lease
Continuing under the old or existing lease, as opposed to renewal of the lease, which would be a new lease.
Facade
The front of a building.
Fair Credit Reporting Act
An act that allows a person access to information in his or her credit file and the right to have information corrected. It also allows a person to insert his or her own statement in the file. If denied credit because of an unsatisfactory report, the borrower must be so informed.
Fair market value
The amount that would be paid by a willing, informed buyer to a willing, informed seller.
Fannie Mae (Federal National Mortgage Association, or FNMA)
A private corporation that sets the market in FHA and VA loans by buying and selling existing loans.
Farm Home Administration (FmHA)
This agency guarantees loans made by private lenders and insures loans that are made and serviced by the agency. No points are allowed on loans made by the agency, and preference is given to veterans. The agency provides assistance to farmers and others living in rural areas where financing is not available at reasonable terms from private sources.
FDIC (Federal Deposit Insurance Corporation)
Insures bank and savings and loan deposits.
Federal Home Loan Bank (FHLB)
A bank that lends to member savings and loan associations.
Federal Land Bank System
A government agency that offers long-term farm loans.
Federal Reserve
The federal agency that regulates the U.S. money supply and interest rates.
Fee
An estate of inheritance.
Fee simple
The highest possible form of ownership. There is no time limit; it can be transferred or inherited
Felon
A person convicted of a felony.
Felony
A crime punishable by imprisonment or death.
Feudal tenure
A system in which title was with the crown but lesser interests of use were granted to vassals.
FHA (Federal Housing Administration)
The federal agency that insures housing loans.
FICO score
A credit scoring system devised by Fair Isaac and Company used by most lenders.
Fictitious mortgage
A mortgage that is recorded and is to be referenced by other mortgages. Its sole purpose is to set forth terms and conditions.
Fictitious name
A name that does not include the surname of every principal.
Fidelity bond
A bond covering employee honesty.
Fiduciary
A person in a position of trust and loyalty.
Filtering down
The tendency of housing to pass to lower- and lower-income groups.
Financing statement
A notice filed by a lender with the secretary of state to give public notice of a security interest in personal property.
Finders fee
A fee paid for an introduction. Cannot perform any act requiring a license.
Fire stop
A solid board or wall to prevent fire from spreading.
Firm commitment
A loan commitment made when the borrower is a known person, as opposed to a conditional commitment.
FIRPTA (Foreign Investment in Real Property
Tax Act)
Provide for buyer withholding of taxes when seller is a foreign national.
FIRREA (Federal Financial Institutions Reform,
Recovery and Enforcement Act)
Requires state licensing and certification of appraisers for federally related loans.
Fiscal year
A business year, as opposed to a calendar year.
Fixture
An item of personal property that has been so affixed to realty as to become part of the real estate.
Flag lot
A lot behind another lot having a long easement or driveway that resembles the handle on a flag.
Flat lease
Level payment lease.
Flood plain
Land adjoining waterway that is prone to flooding.
Floor space
Interior square footage.
Footing
Poured concrete at the bottom of a foundation that spreads the building load to the soil
Forecasting
Used in the income approach to estimate future net income.
Foreclosure
A procedure whereby property used as security for a loan is sold to pay the debt in the event of default.
Foreclosure by action
Foreclosure through the courts (there is the possibility of a deficiency judgment).
Foreshore
Land lying between the high and low water marks.
Forfeiture
Loss of money or property because of failure to perform.
Foundation
The supporting part of a building (masonry substructure).
Foundation plan
Construction drawing that shows footings, piers, foundation slabs, and so on.
Four-by-fouring
The illegal practice of breaking up parcels into four parcels and then having the buyers again break each of these into four more parcels.
Franchise
A marketing plan to which a person is not otherwise entitled.
Franchise Investment Law
A part of the Corporation Code that prohibits the sale of franchises where there is a likelihood that the franchisor’s promises will not be fulfilled or where fraud is present.
Fraud
Intentional trickery or deceit used to induce another to act to his or her detriment.
Freddie Mac (Federal Home Loan Mortgage Corporation)
Deals in the secondary mortgage market.
Freehold
An interest in land either for life or in fee simple.
Free-lot scheme
A lottery in which lots are given away (everybody wins) but a large charge is applied for transfer expenses. Free-lot schemes are no longer allowed.
Front-end ratio
Loan qualifying ratio of family gross income to total loan payments (PITI).
Frost line
The depth to which frost penetrates in the ground. Building footings are placed below the frost line.
Fructus industriales
Cultivated crops and trees (personal property).
Fructus naturales
Naturally growing plants and trees (real property).
Functional obsolescence
Obsolescence due to the design or construction of a building (built-in obsolescence).
Functional utility
The suitability of a property for its intended use.
Funding fee
A fee paid by a veteran to the VA for a VA-guaranteed loan.
Fungible
Describes goods that are like and can be replaced by measure, such as oil and corn.
Furring
Strips of wood applied to a wall to give the wall a smooth finish prior to paneling or other treatment
Gable roof
A roof in which two sides slope and meet at the top.
Gambrel roof
A roof with a steep lower slope and a flatter upper slope (as on Dutch colonials and barns).
Gap loan
A short-term loan. It usually covers the gap between the construction loan and permanent financing.
Garnishment
A legal seizure of funds or property of a debtor
GDP (gross domestic product)
The total of all goods and services produced by a nation during a year.
GEM (growing-equity mortgage)
A mortgage with increasing payments in which the increases apply to the principal.
General agent
Agent with broad powers to conduct a business
General license
A license for the sale of all alcoholic beverages; either off-sale or on-sale, but not both.
General lien
A lien against all property of a debtor (such as a judgment lien).
General power of attorney
Power given by a principal to his or her agent to do anything that the principal can do; as opposed to a power for a specific purpose.
General warranty deed
A deed in which the grantor warrants the title against claims of all others. See Special warranty deed.
Geodetic survey
A U.S. government survey
Gift causa mortis
A gift made in contemplation of death. Treated for inheritance tax purposes as being part of the deceased’s estate.
Gift deed
A deed in which the only consideration is love and affection.
Ginnie Mae (Government National Mortgage Association, or GNMA)
Provides special assistance for federally aided housing projects.
Girder
A horizontal beam that supports the joists.
Good faith estimate
Estimate of closing costs required by RESPA.
Good funds
A term used by escrows to designate cash or checks that have cleared. Escrow funds cannot be disbursed until they are good funds
Good Neighbor Fence Act
Requires neighbor to split cost of fence maintenance if properties are completely fenced.
Goodwill
The value given to the expectation of continued public patronage.
Gore
A triangular piece of land.
Governmental loan
A loan made by a conventional lender with a government guarantee or insurance.
Government survey
A method of describing
property measuring from base lines and
meridians.
Grace period
Period allowed for late payments before penalization.
Grade
The ground level or slope
Graduated lease
A lease providing varying rents based on changes that might occur.
Graduated payment mortgage (GPM)
Loan with regularly increasing payments. (Initial payments are low.)
Grandfather clause
A clause that permits or exempts existing things but applies to new ones. A grandfather clause would prohibit retroactive zoning.
Grant
A transfer
Grant deed
A common deed of transfer in California.
Grantee
A person who receives title
Granting clause
A clause in a deed indicating that title is passing.
